Hulamin Extrusions mulls to close its Olifantsfontein facility due to rising overhead costs

According to a recent report, Hulamin Extrusions on Tuesday, May 28, circulated retrenchment notifications among its personnel. In a letter, Hulamin said it was considering closing the Olifantsfontein facility and restructuring the Pietermaritzburg plant and supporting services operations. In two of the facilities, the subsidiary of Hulamin Limited employs about 400 staff, which equates to about 20% of total group employment.

An anonymous source said the company could lay off as many as 200 employees. However, the news could not be verified with Hulamin as attempts to get a comment from the firm were not successful.

According to one of the letters issued to the employees, the consultation over the retrenchments will start from Wednesday, May 29, and will expectedly come to a conclusion by July 31. In the letter, the company mentioned that since 2015 it consistently underperformed in the extrusions market and conversely continued to grow.

“The Company’s competitors have consequently taken up a substantial portion of the local market share and at the same time expanded successfully into new and emerging markets,” it said.

Hulamin further added that imports of aluminium semi-finished products in South Africa incrementally replaced local supply. As a result, South African extruders and downstream activities are affected by the pressure on margins that have been brought to bear by cheaper imports.

In the letter, the company also cited that rising overhead costs are another factor for the decision. The escalating costs have constrained its ability to spend on capital investment.