FILE PHOTO: Denel company logo is seen at the entrance of their business divisions in Pretoria. Picture: Siphiwe Sibeko/Reuters
FILE PHOTO: Denel company logo is seen at the entrance of their business divisions in Pretoria. Picture: Siphiwe Sibeko/Reuters

Denel cuts management salaries on sliding scale

By Mwangi Githahu Time of article published Jun 19, 2020

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Cape Town - State-owned arms manufacturer Denel was unable to pay full salaries for those in top management but employees at the lower scales got theirs, using a sliding scale, according to chief executive Daniel du Toit.

This emerged at a briefing of the portfolio committee on public enterprises and the select committee on public enterprises and communications on progress made in the implementation of its turnaround strategy.

Du Toit, said: “The 2018/19 financial year was characterised by fragmented, defocused, loss-making, ineffective, weak business systems and poor governance.

“The second phase towards the turnaround strategy is to stabilise and reform the entity by doing away with onerous contracts, improving commercial skills, and focusing on performance improvement.”

Responding to the concerns expressed by the committees about some of its activities, Du Toit said: “The venture of building ventilators and ambulances is not a diversion from our core functions. It is the right thing to do, looking at the current situation the country is faced with.”

Denel said it had made progress towards the certification of products, working with the Health Department.

On the firm’s financial stability, chief financial officer Carmen le Grange said: “We have run the numbers with the shareholders’ support and we are putting mitigating actions in place such as negotiating with our suppliers. We can be a going concern.”

In its presentation to Parliament, the firm said the National Defence Industry Council had warned that Denel’s problems threatened to lead to an exodus of skilled defence industrial personnel, seeking work abroad.

Covid-19 lockdown measures have forced many South African companies to make major cutbacks.

The Denel presentation to Parliament came as Edcon, the country’s biggest non-food retailer, confirmed that it had sent 22000 retrenchment notices to staff across the country working in Edgars, Jet and other stores.

Contacted for comment on the job losses, spokesperson for the Southern African Clothing and Textile Workers’ Union (Sactwu) Nazmia Leite said: “As Sactwu, we are concerned because this will have a ripple effect on the members that we represent who work in the clothing, textile, footwear and leather sectors.

“Edcon does the most local sourcing of all the retailers and should Edcon close, it will definitely bleed into other supplier sectors.

“Edcon’s challenges will definitely affect the poorest of the poor. The majority of the workers in our industry, are single mothers and they each support at least five family members on their salaries”

“If Edcon closes and still owes money to manufacturers, this could then also lead to more job losses in our industry,” said Leite.


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Cape Argus

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