• 10 tips to find bargains

    Susan Erasmus gives advice on how bargain hunters can get the most bang for their buck.

  • Inside Labour

    Labour's bitter breaches need to be seen in historical context, says Terry Bell.

  • Rich getting richer

    Economists differ on how to tackle the chasm between rich and poor, says Leopold Scholtz.

See More

Denel subsidiary may cut jobs

Aug 04 2010 16:36

Related Articles

Denel nabs Malaysia deal

Denel appoints new CEO

Denel wage hike 'unacceptable'

UASA demands Denel Saab probe

Business as usual at Denel Saab

Denel learnerships: blacks only

Johannesburg - Denel Saab Aerostructures (DSA), a subsidiary of Denel, is considering cutting jobs by almost half as it embarks on a
turnaround plan, the company said on Wednesday.
"As part of the turnaround plan, DSA management is considering a reduction of the current workforce of approximately 670 by an
estimated 300 positions," DSA said in a statement.
These reductions would be achieved through the concluding of fixed-term contracts and the termination of foreign contractor agreements, among others.
"Should further reductions be required the company will consider forced retrenchments in terms of section 189A of the Labour
Relations Act."
The turnaround plan was expected to reduce costs and enable it to reach break even on its balance sheet within five years.
"The restructuring involves a renewed focus on core business activities, a reduction in the current workforce and a sharing of services with Denel Aviation, another subsidiary within the Denel group."
DSA is responsible for the design and manufacturing of advanced aerostructures for the aviation industry.
The company said the global recession and delays to the Airbus 400M programme had had a negative impact on DSA's order book in
recent years.
DSA made a net loss of R328m during the 2009/10 financial year.
"The restructuring should ensure the longer-term survival of the business and enable it to meet its contractual obligations."
To achieve this, certain functions within DSA, such as design-to-build, would be downscaled significantly.
Among the main cost drivers identified by DSA were material, labour and rental costs.
"DSA has already embarked on an initiative to reduce significantly its material costs through developing long-term agreements with suppliers and scaling down its rental footprint through the optimisation of space."
The company was also investigating the possibility of outsourcing certain production processes such as sheet-metal manufacturing and conventional machining to domestic and other industry players to further reduce fixed costs.
"This will enable DSA to focus on its core activities of assembling, high-end machining and special processes in the future."
DSA said it was consulting with Denel Aviation on how to share support services in functions such as human resources and information management to reduce overhead costs further.
Management was consulting with stakeholders, including organised labour, on the progress made on the turnaround plan.
"Once approval has been given DSA will initiate a S189A process during August 2010."

- Sapa



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

Brought to you by BizNews

More from BizNews

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

Top 10 richest musicians of all time

Check out the gallery to find out who they are!


Luxury living

Seven of the most expensive children's toys ever made
5 millionaires turned murderers
The youngest billionaires in the world and how they made it
Watch: Flying first class has never been this luxurious!

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How do you see your boss? He/sheis:

Previous results · Suggest a vote