Olivine shuts down old plants

Published: 24 August 2017

FAST-MOVING consumer goods manufacturer, Olivine Industries, has shut down its Willowvale and Birmingham production plants due to operational inefficiencies which have resulted in high production costs.

The company's acting chief executive officer, Sylvester Mangani, told The Financial Gazette last week that the plants had old technologies, which made production expensive.

The company, he said, was undertaking a rationalisation of the business after the coming in of new investors.

New investors, Singapore-headquartered Wilmar International and SR Amando of Mauritius, now control a combined 65 percent stake in Olivine, while government, through its Industrial Development Corporation (IDC), has a 35 percent stake. Wilmar also owns Chitungwiza-based Surface Investments.

The company is expected to embark on a retrenchment exercise at the end of this month.

"This company used to be great but because of old technology, it is no longer efficient. The candle factory here (Birmingham site) is closed but the people who used to work in there are still there," said Mangani.

"We decommissioned the old soap factory and people who were working in there are still with the company. We now want to cut costs. The technology that is coming now does not require many people. We are in the food industry and with the new technology which is coming, there is need to use very minimum human contact."

Mangani added: "I feel for the affected people but I am looking at it like a business person. Activities at the factories that we have decommissioned had shrunk but we continued paying wages and salaries. The cost of labour is about $600 000 so retrenchments are a necessary thing because we need to be competitive. We are replacing the old plants with the new technologies but it takes time."

The Willowvale factory used to produce cooking oil and had a refinery and silos holding maize and soya beans.

"But we have new investors who have come in who have a similar business in Chitungwiza. They decided to rationalise the business and this is now being done in Chitungwiza. Right now, there is nothing happening at the Willowvale plant. The silos are now just holding maize for the Chitungwiza business. There is no point to continue producing using the old technology at a loss. We decided to close these and outsource."

"We are one of the few companies which are still running. We are bringing in new technology and we are bullish about the future of the company. As we decommission the old soap factory, we are replacing the plant with new technology and we will be able to do soaps for export. It will take time, about nine months, or a year or more. But the new soap lines will require less people."

Olivine Industries board chairman, Peter Madara, weighed in saying it was critical to keep the business profitable.

"Business is about competitiveness. With these old plants, we can't be competitive," Madara said.

Olivine is currently the only company that is producing margarine in the country after the closure of other producers due to difficult economic conditions.

Mangani said a new automated margarine plant would be installed soon.
- fingaz

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