HomeBusiness DigestManufacturing companies reduce operations

Manufacturing companies reduce operations

Jesilyn Dendere

MAJOR manufacturing companies are scaling down operations due to shortages of foreign currency, raw materials and persistent power cuts.

align=justify>Businesses are also struggling to remain viable because of the rising cost of production.

The situation has also been worsened by government’s new policies to control prices of basic commodities.

Manufacturers of basic commodities interviewed by businessdigest this week said they were still operating below 50% despite claims by the central bank that most companies had raised their capacity utilisation to about 60% after receiving funds under the Basic Commodity Supply Side Intervention (Bacossi) facility.

Companies that received the Bacossi funds said they only managed to increase capacity utilisation from levels below 30% to around 50%.

Officials at Dairibord said retailers who want bulk supplies of milk will have to book in advance.

Its milk brands, Chimombe and Fresh Milk, are not available in the shops.

Delta Beverages said the shortage of sugar had impacted heavily on the production of soft drinks, though the company said it was working with the main suppliers of the commodity.

“The sparkling beverages business is a major user of bottler grade sugar. While the general shortage of sugar impacts adversely on our ability to produce the full range of our brands we are doing our best to cope with these supply challenges,” said George Mutendadzamera, Delta’s general manager for corporate affairs.

“The suppliers of sugar continue to do their best to minimise disruption to our production and we work closely with them all the time,” he said.

Last year, Delta Beverages disposed of their Mr Juicy brand which was launched in 2004 due to serious supply problems of by-products like oranges.

The company sold Mr Juicy and Premium Plus Mahewu in order to concentrate on beer and carbonated drinks.

Barely a month after the Reserve Bank governor Gideon Gono hailed the Bacossi funds as having gone a long way in restoring productivity for beneficiary manufacturers and retailers, StarAfrica Corporation the main supplier of sugar and one of the beneficiaries of the funds, is failing to meet demand of sugar supplies.

“As a result, most companies were operating at capacity levels of below 30% before the introduction of the Basic Commodity Supply Side Intervention Facility on October 1 2007. Most beneficiaries under Bacossi increased capacity utilisation from well below 30% to 50%,” said Gono last month.

A survey by businessdigest revealed that most retail outlets had no sugar. The little that they manufacture finds its way into the thriving black market.

A salesperson at Zimbabwe Sugar Sales, a company that distributes sugar said the shortages were caused by problems at the sugar milling estate.

He said the only available sugar was being given to a few major retailers.

“We are not selling sugar to individuals or those with small shops but we are supplying the little that is there to large retailers and wholesalers who we are asking to collect their own sugar from Chiredzi.”

An official at Hippo Valley Estates said the sugar industry was facing the same problems as other key sectors of the economy.

“With the current shortage of basically everything, electricity, money, water, one should not be surprised by short supply of any commodity.”

National Foods Limited (Natfoods) which was one of the first beneficiaries of the Bacossi funds has also scaled down its operations due to lack of raw material and power outages.

Natffods manufactures mealie-meal, cooking oil and flour. Consumers have been forced to import flour and cooking oil from South Africa.

“We don’t have enough raw materials, that is our major constraint here at National Foods,” said Chekenyere, spokesperson for National Foods.

“Another constrain that has been of major concern is the intermittent power supplies, the disruption in power supply has been costly. We are running a loss every time there is a power cut. For example if the mill is running and power stops we can lose the product or it can be affected. We lose money due to such stoppages.”

He said the company has been battling to get raw materials from the Grain Marketing Board which is their sole supplier.

Unilever South East Africa have been scaling down operations due lack of raw materials and shortage of foreign currency that is needed to purchase raw materials. The company has to import fats which are crucial in the manufacturing of soap.

Unilever also needs foreign currency for import packing material and spare parts.

Unilever has been struggling to manufacture some of its products, which include OMO washing powder, surface cleaner and soap.

Their margarine brand, Stock, has virtually disappeared from the market.

Rama, another margarine brand from Unilever, is also in short supply.

“It has been long since we stopped manufacturing detergents and we have no idea when they will be back because we are currently facing massive raw material shortages and the lack of foreign currency has not made it any better,” said an official in the company’s sales department.

The official said the company now only manufactures per order.

Bata has also been affected by lack of capital and raw materials. There is a serious shortage of leather in the country.

Bata’s branch along George Silundika and another one in Highlands have been temporarily closed.

“They are two branches that had closed due to low levels of supply after the price blitz. These were however just temporary closures, we will be reopening soon,” said an official from Bata.

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