Metair weathers market challenges
CAPE TOWN - Metair Investment, South Africa’s biggest auto parts manufacturer, said yesterday the financial impact of running at 50 percent capacity levels - the level allowed under Phase 4 of the National Lockdown - could be the same as being in a complete lockdown.
The group, which also has operations in Turkey, Germany and Kenya, said in a Covid-19 update that its businesses operate best in a market pull scenario with a stable production environment and a buffer between it and the market.
“We now need to respond directly to new unknown market conditions, resulting in a push system that will allow us to learn our new market, but this will take some time,” Metair’s management said.
Motor industry organisations and companies managed to lobby the government to have the lockdown level changed from Level 3 initially, to Level 4.
Metair's “selected employees” returned to work on May 4 after standard operating manuals to start manufacturing were approved.
The return to work processes had run smoothly with only some minor labour incidents experienced as businesses dealt with the difficulty of selecting, allocating and rotating employees according to the government imposed 50 percent employee participation rate.
“We believe the labour relationship environment will remain challenging and fragile during a partial return to work scenario,” the management said.
To date,the extraordinary start-up cost was estimated at R13 million for 2020. All subsidiaries had also developed Covid-19 recovery plans.
“Metair needs to focus on the new model launch projects and ensure optimal execution on them, as well as focus on the selection of the most sustainable projects, customer, models, and markets,” the group said.
"We are currently completely disconnected from the OEM (original equipment manufacturer) and aftermarket demand, and we will look to structurally adapt our cost base and business activities with the first wave of market adjustments. We will increase our interaction, transparency, communication, and customer engagements as we aim to gain insight into the new market conditions as soon as possible.”
Employees had dropped to 50 percent of normal pay through the lockdown - salaried employees had been informed that group support for the first month will be at 50 percent of normal pay, the second month would be 25 percent of normal pay, and the third month will be R3 500 per employee.
Two Covid-19 cases had been reported among staff in South Africa. In Turkey, where the government took a “very different” Covid-19 risk management approach, Metait had 19 Covid-19 cases and 102 tracked and traced employees under self-quarantine.
In Kenya, where the group was allowed to operate fully, but under strict health and safety measures, the total employee welfare cost to date is R52m.