The lockdown, its impact on manufacturing, jobs, labour disputes and the ripple effects to the distribution trade and consumer. These are just some of the critical points of discussion that surfaced in our recent exclusive interview with CEO of Sumitomo Rubber SA (Dunlop), Riaz Haffejee, who talks us through the unfortunate consequences of a global pandemic, no one could have foreseen. But there is some light at the end of this dark tunnel.
Thank you for making the time to speak with us Riaz. We believe the Dunlop plant in Ladysmith is experiencing labour unrest. What prompted this?
Yes, unfortunately, a workers’ strike became effective on Monday 12 October, due to multiple factors. The 12th marked the conclusion of the 60-day notice period for some of our staff, who had been informed of the company’s need to reduce the headcount by 115.
Over the last four years, our plant has been running on a seven-day week cycle, however, a notable decline of 8 percent in the replacement market in 2018-19, coupled with an estimated 15- 20 percent drop in 2020, necessitated the introduction of more flexible hours along a five-day week cycle, as well as some inevitable job casualties.
Whilst regrettable, this was inevitable. I am pleased to report, however, that in the end, only 32 members of staff were let go. 47 were recipients of severance packages, with the balance being absorbed into the company.
Are you confident that union demands will be swiftly resolved?
At present, the company is engaged in The last three months of operation have performed better than expected. continuous consultations with NUMSA and employee representatives to come to a consensus. We are confident that the issues, which have led to the current strike action, will be resolved soon.
On a positive note, the last three months of operation have performed better than expected, and we are confident that 2021/22 will see a pleasing recovery in the market.
How have your franchisees been impacted?
Dealers operating in metropolitan areas are recovering faster than our initial projections. Interestingly, those located in the rural areas were largely unaffected by the lockdown, likely due to the agricultural sector which remained strong. Retailers focusing on ultra-high performance passenger tyres were also fortunate to escape the ravages of the lockdown, as the high-end of the market was not as severely impacted.
What sort of assistance were you able to provide your franchisees during the lockdown period?
The main thrust of the message to our distribution network was, ‘How can we help you?’ We knew we needed to first understand their needs, before we could assist them, so chose to engage one-on-one and via webinars during the lockdown. Our goal was to gain an understanding of the current situation and introduce and provide resources that would support our dealers during this challenging time.
Once we established their primary needs, and where they felt most vulnerable, we supported our network via the introduction of payment plans, cash flow management webinars and increased online engagement. We highlighted the tools dealers had at their disposal for better financial planning, as well as outlined key activities to prioritise in the digital space such as Google My Business, Facebook pages etc to create an online presence during the lockdown.
Engaging with dealers on business fundamentals in the retail space, such as cash flow, debtors book management and checking in with current and old customers proved to be both informative and positive.
How are your franchisees finding the market in general at this time? Is the current market dynamic changing consumer behaviour?
With disposable income shrinking even further following the lockdown, price continues to play a big role in the purchasing decision, although interestingly, at the same time, we are finding that a good service offering is superseding concerns over price. Of greater concern, is the growing number of unlawful tyres in the marketplace. The National Road Traffic Act clearly stipulates that tyre tread should be greater than that of the tread indicator of 1.6mm. Sadly, this is not always being adhered to.
Traditionally law enforcement has not been effective in stamping out this alarming trend. The extent of the problem goes a lot deeper, often starting with the dealer chain. Dealers are obliged, by law, to mutilate any illegally worn/waste tyres so that they cannot be reused, but unfortunately, we find that the trade does not always play its part. Instead, they are disposing of their scrap tyres via waste collectors who then resell these dangerously worn tyres to the second hand tyre market and onto the unsuspecting consumer.
Thankfully, the Department of Environment, Forestry and Fisheries (DEFF), is beginning the recognise the severity of these illicit practices in the marketplace. Last year in October, DEFF Enforcement Agency conducted an important operation, following discussions with key figures in the tyre sector, that involved identifying and clamping down on dealers who were not complying with their mutilation duties.
Such was its success, that they are planning to conduct similar operations going forward. To quote department officials, ‘Now that we have seen taking place in the market, we cannot unsee it’.
Speaking of waste tyres, what, if anything, is being done to finalise the long-standing issue of waste tyre disposal in SA?
As you know, having come to realise that the Section 28 process that required outsourcing a waste tyre management plan to an outside contractor was flawed, the newly implemented Section 29 process now returns the ownership to government.
In the meantime, until such time as a new government-owned plan is agreed upon, the Waste Management Bureau is continuing to collect and dispose of scrap tyres.
How well is the Bureau executing its duties in this regard?
Overall, the Waste Management Bureau is managing the process quite well. The only concern, and going back to my earlier point, is that we seem to have created a ‘monster’ if the growing number of collectors who are illegally reselling these tyres into the market, is anything to go by. The Waste Bureau does not have the time or resources to police this.
Why is it taking so long for government to come up with a concrete plan?
As per the minister’s request, the CSIR was tasked to come up with a viable plan. A number of proposals have been made, but thus far, all proposed plans had imminent flaws in that they did not represent the interests of all parties within the industry.
More discussions and collaboration need to take place in order to get this right.
Riaz, Dunlop embarked on an exciting expedition that involved taking technology into places where Google has never been. Tell us more about this.
The Covid period has served to illustrate how things have changed in South Africa and the world at large. As a company, we identified three key areas of major change: the move towards greater awareness for all humanity; the growing need to source/buy local; the digital push that will bring about a digital revolution that will influence buying habits and consumer behaviour forever.
This new digital world we are entering into needs to be embraced by all and has major relevance in a contracting economy. Whether we like it or not, online buying is on the rise and will become even more popular in the future. In a bid to address the second key area of change, that of promoting South African tourism and supporting the move towards ‘buying’ local, we embarked on an exciting journey that saw our Dunlop Grandtrek shod vehicles, navigate new and uncharted territory across the length and breadth of our beautiful country.
Our aim was to set out to capture some of the spirit, with a modern twist, of the adventurers who, in the old days, would map out the new places they discovered, and encourage South Africans to go places that until now, even Google had not yet been. By means of a 360-degree camera, we have showcased the proverbial road less travelled and made it safer for travellers planning their journeys.
Not only were we able to chart the uncharted, but we are playing a pivotal role in encouraging South Africans to get back out there after lockdown and explore from the mountains to the deserts and the coast, playing a part in reopening both the economy and the hard hit tourism sector.
A remarkable initiative Riaz, and one that bears testament to your slogan – Take the Road!