24 July, 2019
Evowood (formerly known as Masonite) placed in voluntary liquidation
Engineered wood producer Evowood (formerly
known as Masonite), has been placed in voluntary liquidation
by the Companies and Intellectual Property Commission
Nkosinathi Nhlangulela, a director of Evowood,
confirmed this week that the Estcourt based mill ceased
operations earlier this month after having consulted staff.
Closure of the mill has resulted in the loss of 460
permanent jobs as well as temporary jobs.
He said that the company, which had been placed
in business rescue by its international parent company in
December 2015, initially had a promising future. It was
acquired by the Timber Investment One consortium, which was
eager to implement a business turnaround strategy based on a
R300 million cash injection.
However, in February 2017, the company endured
a protracted illegal strike, which not only led to lost
production time and extensive damage to plant, but also
resulted in uncertainty among Evowood's customers.
Nhlangulela said this was compounded by
economic turbulence in the country that impacted heavily on
the construction industry, which accounted for the bulk of
the company's business.
"This and the time needed to rebuild the
confidence of our customers who had begun looking for
alternative suppliers provided an opportunity for cheap
imports to flood the South African market. This prolonged
the turnaround phase," he said.
These factors resulted in the withdrawal of the
international funding that was urgently
needed by the struggling business.
Operating any business in the current South
African climate is challenging, particularly when there are
low levels of global confidence and there is no protection
for manufacturing companies against import competition.
Nhlangulela said that at a time when government
was calling for industrialisation and job creation, it was
particularly sad to see the demise of the one of the largest
hardboard mills in the southern hemisphere. It was one of
the biggest employers in the Estcourt area.
He said Evowood had never really recovered from
the substantial losses incurred during the strike and,
despite having brought in international engineers to attempt
to repair equipment that was old and regularly breaking
down, it was unable to ensure continuity of supply.
A total of R78 million was spent attempting to
repair and maintain machinery and rebuild the mill. However,
much of the equipment was old and unreliable. By June 2018,
this had cut capacity by 50 percent.
This year, a timber shortage due to excessive
rain and further plant breakdowns compounded liquidity
Employee safety had always been the priority of
the shareholders and without a massive cash injection into
the upgrade of machinery, the group felt it was no longer
safe to continue operating, he added.
Nhlangulela said that staff were preferent
creditors in the winding up of the company, and provisional
liquidators would be appointed by the Master of the High Court in due