Group Five shake-up puts jobs on the line
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.
Group Five has revised its strategy and may have to close some of its businesses, which could impact on employment.