ZDI faces closure

via ZDI faces closure Sunday, 03 November 2013 by Simba Jemwa SundayMail

The managing director of firearms and ammunition maker Zimbabwe Defence Industries (ZDI), Colonel Tshinga Dube (Retired), has revealed that the company faces closure if the prevailing economic conditions do not improve. Speaking to The Sunday Mail last Thursday, Rtd Col Dube said the company was facing operational challenges brought about by the illegal sanctions imposed on the country by the West at the behest of former colonial power Britain.

He said ZDI had been operating very profitably until 2008 when the country experienced an economic meltdown. He revealed that the company had since cut down its staff complement from about 400 during peak production to 100.

ZDI had not been spared by the problems that have caused the closure of many industrial firms. Rtd Col Dube said apart from suffering from the effects of sanctions, the company was also feeling the pinch of the prevailing liquidity challenges and high import duties levied on raw materials.

“Like every other manufacturer in Zimbabwe, we have been seriously affected by the sanctions placed on the country and the global liquidity crises. As a result of these problems, we have been forced to cut down on labour costs by laying off about 300 employees from the 400 we had when we were in full production. We now have about 100 employees only.

“We are faced with a myriad of problems ranging from under-capitalisation to high import duty on raw materials and all of these problems have led to viability issues at ZDI that might lead to our closure. There is a high likelihood that we may stay open as a strategic industry and not a commercial entity.”

The ZDI chief said the influx of products from Eastern Europe and Asia was having an adverse effect on the company’s productivity.

He said ZDI’s major customers, particularly from Sadc and countries such as the United States of America and Sri Lanka, were now acquiring their defence requirements from other suppliers because they are cheaper than ZDI products.

“Under-capitalisation and the import duties have made our products more expensive compared to those from Eastern Europe and Asia and this has made us lose our traditional customers to these suppliers.

“We had customers in the US who were buying hunting ammunition from us, but since the imposition of sanctions we lost this business. Our customers from Sadc are now looking to Eastern Europe and Asia for their needs because our products have become too expensive.

“We are struggling to compete with these companies because they have lower production costs due to cheaper labour and readily available cheap raw materials. As long as foreigners are allowed to reign supreme on local markets, our industry will keep suffering because we do not currently have the capacity to lower our production costs and this means we cannot compete with imports that are flooding our markets. The only way we can lower our production costs is if we recapitalise and improve our production methods and if we have cheaper raw materials.”

Rtd Col Dube called on labour unions to carefully tackle salary issues bearing in mind the economic climate.

He also called on banks to revisit their interest rates regime as lending costs were prohibitive.