29 Aug 2012 Foodcorp saves 250 jobs by keeping Molteno factory running

Foodcorp, South Africa’s third-largest food producer, will invest R46m in a new 8,000m² factory in the Eastern Cape, despite costs associated with retaining a presence in Molteno, CEO Justin Williamson said this week.

Last year the company considered moving the production of Ouma Rusks to its Randfontein operations in Gauteng, a move that would have resulted in a R6m saving in transport and associated costs.

Intermittent electricity supply, poor water quality and poor road conditions reinforced the need to move, the company said.

However, to protect the 250 workers employed by the company, Foodcorp and the Eastern Cape government have developed a public-private partnership to keep Ouma rusks in its original home.

“We have a strong connection with Molteno, and understand our role and responsibilities as active participants in the local economy. And so I persuaded my board to agree to us reinvesting in Molteno on moral and ethical grounds — financially it is a poor decision, but it was absolutely necessary,” Mr Williamson said.

As part of the deal, Eskom will deliver power directly to the factory, while the municipality and the government have invested in a water purification system.

In addition, R4m in incentives from national government departments including the Department of Trade and Industry will go towards the laying of the new factory foundations, while the provincial roads and public works department is working towards providing a grader for the Molteno municipality to clear roads following heavy snowfalls that block access to the town during winter.

The production capacity of the factory will increase by 25% to 23 tons a day, the company said. It will be completed in December.

“Geared for expansion in a category that has seen year-on-year organic growth of 16%, the new facility is built to accommodate a third production line in the future,” it said.

Eastern Cape economic development, environmental affairs and tourism MEC Mcebisi Jonas said the partnership proved private enterprises and the government could successfully work together to the benefit of the communities that they serve.

Source: BDLive.co.za