File picture: Supplied
CAPE TOWN - Evowood, (formerly known as Masonite), a company that has been manufacturing locally since 1942 and abroad in recent years, and one of the biggest hardboard makers in the southern hemisphere, has been placed in voluntary liquidation by the Companies and Intellectual Property Commission (CIPC).

Evowood director Nkosinathi Nhlangulela said yesterday that the Estcourt-based mill, which provided products to a range of construction-related markets, ceased operations earlier this month after having consulted staff.

It was the town's biggest employer.

The closure resulted in the loss of 460 permanent jobs as well as temporary jobs.

He said 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 R300million cash injection.

However, in February 2017, the company endured a protracted illegal strike, which led to lost production time and damage to the plant and 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, he said,

Operating any business in the current South African climate was challenging, particularly when there were low levels of global confidence and there was no protection for manufacturing companies against import competition, he said.

“At a time when the government is calling for industrialisation and job creation, it is sad to see the demise of one of the largest hardboard mills in the southern hemisphere.”

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.

Some R78m 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 50percent.

Nhlangulela said provisional liquidators would be appointed by the Master of the High Court in due course.

BUSINESS REPORT