Zimbabwe: British American Tobacco Lays Off 170

Source from:  Financial Gazette (Harare) 07/02/2004

BRITISH American Tobacco Holdings Zimbabwe (BAT), reeling from the fall in tobacco output due to disturbances in the industry, has wielded the axe on 170 workers. Sources said BAT was working out packages for the 170 as the company restructures to stay afloat. The workers' plight has not been helped by the fact that BAT, reeling from a two-year recession in exports, had embarked on technology upgrades at some of its tobacco processing plants. BAT, the country's largest manufacturer of cigarettes, suffered a 21 percent dip in exports in 2003 mainly because of increasing competition. The retrenchment, which comes amid increased worker unrest in the tobacco industry, is also said to have claimed the scalps of nine senior managers at the tobacco processing and exporting firm. "About 170 workers have been told to go and management and the workers' union are still working out the packages," said a source. Efforts to get a comment from BAT managing director Kennedy Mandevhani were fruitless as he was said to be out of the country. "The major reason given for the retrenchment exercise has been that sales have been going down. The company has also said it is advancing its technology and would need to reduce staff," the source said. The source added that no agreement had been reached yet on the retrenchment packages and that negotiations were still underway. In its 2003 annual report, BAT said volumes for domestic shipments had gone down by about six percent compared to the prior period. "Domestic shipments recovered in the second half of the year but the full-year volumes decreased by six percent over the same period last year. The aggressive pricing policy together with a malperforming economy were largely responsible for this," BAT chairman Samuel Rushwaya said in the report. "Exports finished the year 21 percent lower than 2002 as a result of increased competition in the relevant markets," he said. During the period under review, the company reported a 616 percent jump in operating profits to $20.5 billion, with pre-tax profits rising by 731 percent to $21.9 billion. Zimbabwe, which exports both raw and processed tobacco, has suffered from a reversal of fortunes in the industry, once the country's largest employer and foreign currency earner. Output and exports of the golden leaf have fallen drastically, against remarkable increases in regional growers of flue-cured tobacco, with neighbouring Zambia expecting 16.6 million kilogrammes in 2003, up from 7.1 million kgs in 2003 and five million kgs in 2002. Tanzania has increased output by a third to 39 million in 2004, while South Africa is expecting 27.8 million. Industry experts note that, globally, Brazil is now the dominant producer of flavour-style flue-cured tobacco and has long since surpassed Zimbabwe and the United states in both production and exports. Enditem