Denel Saab Aerostructures announces retrenchments

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Denel Saab Aerostructures (DSA) is to retrench staff to cut costs in order to combat insufficient income, the global recession and the delay in the Airbus Military A400M Loadmaster project.

DSA posted a loss of R452.6 million for the year to March, largely because of delays in the A400M programme.

The Solidarity trade union says the company Friday gave notice in terms of Section 189 of the Labour Relations Act (LRA) that it wanted to axe about 119 of the employees.

But DSA CE Lana Kinley disputes this. She says the company indeed Friday issued notice, but no numbers are yet on the table.

“I can’t confirm numbers,” Kinley told defenceWeb this afternoon, “since we haven’t started negotiations yet.”

She confirms though that the company has to cut 15% of its spending, including staff salaries. She says Solidarity may have used that percentage to arrive at a number.

Earlier, DSA in a statement in answer to a press release by Solidarity said “the company is committed to ensuring that the fewest possible employees are affected.”

The statement says the lay-offs are the result of “both the decrease in orders that the business has experienced and efficiency initiatives (to ensure the lowest possible cost base whilst maintaining our technology level).”

Kinley says the company simply will not survive unless it goes through an operational restructuring.

“In January 2010, DSA will begin the official engagement process in terms of dismissal for operational requirements as set out in s189 of the LRA. This stipulates, among others, that the parties involved must be consulted and appropriate measures must be followed in the event of dismissals,” the DSA statement adds.

“The retrenchments will take place despite a successful operational turnaround that has seen the implementation of significant cost cutting measures, production efficiency double and expenditure controls increase within the business.

“Further measures will be introduced to allow the company to achieve break-even and, while this is only expected to happen in the next three years (depending on markets and cost reductions), periodic reviews of DSA’s position will take place on an ongoing basis to ensure that operations remain at their lowest fixed cost base,” says Kinley in the statement.

“The DSA Executive has committed to working closely with staff and trade unions to ensure an equitable process and that those employees who are retrenched receive the necessary support.”

Solidarity spokesperson Jaco Kleynhans says the planned retrenchments are “premature” because several alternative measures for avoiding lay-offs have been identified and the consultations in this regard have not yet been finalised. “The planned retrenchments can be avoided if the alternatives already presented are implemented efficiently,” Kleynhans said in a press releas received this morning.

Solidarity says DSA has indicated that the 60-day consultation period would run from December 4 and that the planned retrenchments would have to be implemented at the end of February. “However, Solidarity has already emphasised in a letter to DSA’s management that the 60-day period should only run from the first consultation meeting planned for January, which would eventually mean that the planned retrenchments could not be implemented before the middle of March.”



Kleynhans says DSA has already reduced its staff 10% this year by employing measures such as the suspension of new appointments as well as not renewing the contracts of fixed-term contract employees.