See More

Denel subsidiary may cut jobs

Aug 04 2010 16:36

Related Articles

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

We're talking about:


Scenario planner Clem Sunter says he is as passionate about economic freedom as Julius Malema, but his bet is on entrepreneurs to open up the whole economy.

Money Clinic

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

Voting Booth

Introducing tablets in schools is:

Previous results · Suggest a vote