Gloomy outlook for ailing firms

United Refineries Limited chief executive officer Busisa Moyo

Published: 10 December 2013

BULAWAYO ailing firms going on annual shutdown facing economic challenges are likely not to re-open next year, economic commentators said yesterday.Traditionally, companies go on annual shutdown a week before Christmas and reopen in the second week of January.

During this period, a number of companies embark on their annual plant maintenance. In the past few years, due to operational constraints facing some firms in Bulawayo mainly in the clothing and textile sector, some have failed to bounce back after the annual shutdown.

Lack of working capital, obsolete machinery and stiff competition are some of the major challenges that continue to weigh down industrial recovery in Bulawayo.

In separate interviews, the industrialists said the economic challenges facing the economy will persist in 2014, a development likely to see firms that would have closed citing operational constraints not to re-open after the annual shut down.

"I foresee companies re-opening as usual after the holidays but those that will close during the festive season for economic challenges will not reopen next year.

"May be, most of them that will use the annual shut down to do plant maintenance would have opened around this time in January," said Astra managing director, Jabulani Nkomo.

Nkomo said his company would not be going for annual shut down because it was into retail business compared to those that were into manufacturing.

An economic commentator, Wendy Mpofu concurred with Nkomo adding that struggling companies were likely to fall by the wayside in 2014 as their situation was expected to worsen.

She said it was imperative for the firms to restructure their business models to suit the prevailing operating environment.

United Refineries Limited chief executive officer Busisa Moyo said his organisation would not be going on annual shut down because their entity was a fast moving consumer goods.

Moyo said this entailed that United Refineries would be having a lot of business during the festive season. Stakeholders in the labour market have predicted that industrial performance going into 2014 would remain subdued due to liquidity constraints as well as depressed aggregate demand.

The country's economy continues to be threatened by "over-borrowed" individuals and corporates, company closures and scaling down of business operation, shortage of working capital and high imports from countries such as China and neighbouring South Africa.

According to the Confederation of Zimbabwe Industries (CZI) manufacturing survey report released in September this year, working capital constraints remained the major fundamental deterrent to industrial performance.

Capacity utilisation in the manufacturing sector this year dropped to 36,9 percent from 44,4 percent in 2012. Official figures from the Ministry of Public Works, Labour and Social Welfare show that between January to September this year, 1,560 employees across different economic sectors of the economy had been retrenched compared to 1,632 during the same period last year.

During the year, the economy did not perform to expectations as witnessed by the Government's downward review of forecast economic growth from five percent to 3,4 percent.
- chronicle