17 March, 2017
Evowood's Estcourt mill remains closed after protracted strike action
manufacturer, Evowood (formerly Masonite), has unfortunately
had to dismiss 434 workers at its Estcourt mill in the wake
of protracted strike action.
Marais, the chief executive of Evowood, confirmed that the
Labour Court had issued an interim court order preventing
employees from continuing on an illegal strike on Monday 27
February 2017. On Friday 10 March 2017, the court issued the
also confirmed that the company has acted on the findings of
an independent commissioner and today issued a notice to
dismiss 434 workers following a disciplinary process related
to the illegal strike that brought production to a halt
three weeks ago.
the disruption at the mill, Evowood's head office, regional
branches and distribution centres remain fully operational
and contingency plans are already in place to
minimize the impact of the production stoppage on valued
customers and suppliers.
present production stoppage is costing the company more than
R2 million per day and the accrued costs may prove a major
setback in the implementation of a comprehensive business
turnaround plan aimed at returning the company to
present, shareholders are negotiating with all affected
stakeholders and examining all possible options to resume
production at the mill as soon as possible.
Marais explained that the Masonite mill was on
the brink of closure in December 2015 when it was acquired
by a Black Empowerment consortium comprising Black Bird
Capital and Jacobs Capital. The shareholders, who brought
the company out of business rescue and took control in
August 2016, conducted an extensive due diligence
investigation with a view to putting in place a
comprehensive business plan that would not only turn around
the business but also create a sustainable long term future
This strategic plan entailed upgrading the
equipment, rebranding the company as Evowood and controlling
spiralling costs at the mill.
"Our turnaround plan not only included
injecting capital into the business in the short term but
also putting in place a long term capital investment
programme that would enable the company to reach its full
potential through improving processes, products and service.
However, we always recognised that no plan would be viable
if all stakeholders did not come to the table to help us to
rebuild the company," explained Nkosinathi Nhlangulela, a
director of majority shareholder, Black Bird Capital.
Because the overall cost structure of the mill
was not aligned with the long term viability of the
business, cutting costs and improving efficiencies formed a
key part of the turnaround plan for the business.
After a lengthy negotiation process, the
workforce signed an agreement on 29 November 2016. This
stipulated a reduction of 12 percent of the basic salary of
every employee to be implemented from 1 February 2017.
The formal agreement, signed by all
stakeholders, ensured that there would be no retrenchments
at the mill. It was concluded to ensure that the
shareholders could save all 733 jobs at the company.
The agreement also provided for a minimum seven
percent wage increase as per the existing bargaining council
agreement. This increase would have been implemented from
July 1, 2017.
In light of the entire workforce's commitment
to turning around Evowood, Black Bird Capital and Jacobs
Capital invested over R50 million in rebranding the business
and upgrading the plant at the mill during December. However, a faction within the workforce reneged
on this agreement leading to the illegal strike.
With costs building up and now jeopardizing the
viability of this rescue plan, the company's shareholders
are now investigating longer term options which could
include scaling down production at the Estcourt operation
and insourcing some materials to ensure consistency of
The Evowood mill is one of only 25 large
hardboard manufacturing operations and is amongst the top
three in the southern hemisphere. It is also South Africa's
only hardboard production facility.
The shareholders understand and are concerned
that the loss of an operation such as this would be a
serious blow to government's endeavours to boost economic
development through the beneficiation of raw materials and
the promotion of manufacturing and re-industrialisation.
"We are not taking any decisions lightly as we
are aware of the potential negative impact on the local
economy. We remain committed to building sustainable
businesses and to economic growth in KwaZulu-Natal. Because
of this, we are open to continued communication with key
stakeholders who are able to work with us to develop a
viable plan," said Nhlangulela.
Wessel Jacobs, the chief executive of Jacobs
Capital, said that the shareholders were weighing up their
options in order to ensure that the customers' supply was
maintained in the short term and to find long term
"Our business is to grow ‘built to last'
companies. We invested extensively in this business in
December in good faith and have put in place significant
operational resources as well as employed outside
consultants to ensure the best outcome for Evowood," he
Observing that, without the support of labour,
it was impossible to take this process forward, he said the
shareholders remained committed to resolving the impasse.
Marais concluded that the company would keep
all stakeholders appraised on further developments going