Group Five shake-up puts jobs on the line

Cape Times - - NEWS - Roy Cokayne

FUR­THER re­trench­ments are loom­ing at Group Five fol­low­ing the re­vi­sion by the listed con­struc­tion and en­gi­neer­ing group of its strat­egy.

The group re­ported last week it would mi­grate its con­struc­tion op­er­a­tions into stream­lined, smaller busi­nesses that had a com­pet­i­tive edge and planned to dis­pose of its man­u­fac­tur­ing busi­nesses “in due course”.

But Group Five chief ex­ec­u­tive Themba Mo­sai con­firmed this week that those busi­nesses that did not fit the re­vised strat­egy would be ex­ited.

Mo­sai said this would ide­ally be through a sale. How­ever, the group would up­date the mar­ket on the process.

But Mo­sai con­ceded that some busi­nesses may need to be closed, which would have an im­pact on em­ploy­ment.

In the an­nounce­ment last week, Group Five said its con­struc­tion clus­ter and en­gi­neer, pro­cure and con­struct (EPC) clus­ters had been eval­u­ated against the group’s re­vised strat­egy and the set cri­te­ria and busi­nesses that did not meet all three cri­te­ria “will be, and have started to be, ex­ited”.

It added a core fo­cus area for the con­struc­tion and EPC clus­ters re­mained the re­duc­tion of cor­po­rate and busi­ness over­heads.

Mo­sai said the group’s man­u­fac­tur­ing busi­ness em­ployed about 700 peo­ple and when it sold this busi­ness, the peo­ple would go with the busi­ness be­cause they were key.

The ma­jor aim of the re­vised strat­egy was to ad­dress un­der-per­form­ing op­er­a­tions and achieve the de­liv­ery of ac­cept­able re­turns in a rapidly-chang­ing and chal­leng­ing mar­ket land­scape.

The group has al­ready un­der­taken sev­eral re­struc­tur­ing and re­trench­ment pro­grammes in re­cent years.

Group Five re­ported in May this year that it had stream­lined the busi­ness units in its E&C clus­ter from 11 to four, re­sult­ing in a sim­pli­fied man­age­ment struc­ture and a re­duc­tion of 13 per­cent or 149 in the salar­ied em­ploy­ees in the busi­ness.

The stream­lin­ing of this clus­ter formed part of a re­struc­tur­ing by Group Five in Fe­bru­ary that it con­firmed would re­sult in fur­ther vol­un­tary and forced re­trench­ments.

Group Five had by then al­ready slashed its staff num­bers by 23.5 per­cent or 2 841 peo­ple be­tween June 2015 and June last year.

The Con­struc­tion In­dus­try De­vel­op­ment Board (CIDB) re­ported last week that the sec­tor had shed 140 000 jobs be­tween the first and sec­ond quar­ters this year and job losses could to­tal about 240 000 this cal­en­dar year.

Listed con­struc­tion and en­gi­neer­ing group Aveng axed about 1 400 peo­ple in its fi­nan­cial year to June this year.

Eric Di­ack, the ex­ec­u­tive chair­per­son of the group and act­ing chief ex­ec­u­tive, said in Septem­ber an un­ac­cept­able op­er­at­ing per­for­mance by June had led to op­er­a­tional in­ter­ven­tion, with fixed over­head ex­penses re­duced 18 per­cent or R503m in the year and 1 400 re­trenched.

“Our order books are rea­son­ably good so we are hop­ing there are not go­ing to be any ma­jor re­trench­ments dur­ing the year (ahead),” he said.

The CIDB ex­pressed con­cern in its lat­est con­struc­tion mon­i­tor that the fore­cast de­cline in real gross fixed cap­i­tal for­ma­tion over the short to medium term would re­sult in job losses. It also stressed gov­ern­ment un­der­spend­ing re­sulted in lost em­ploy­ment op­por­tu­ni­ties.

PHOTO: SIMPHIWE MBOKAZI

Group Five has re­vised its strat­egy and may have to close some of its busi­nesses, which could im­pact on em­ploy­ment.

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