The Solidarity trade union says the resignation of the Denel Saab Aerostructures (DSA) CE Lana Kinley and chief financial officer, Sasa Methola, “are causing warning lights to flicker at the company”.
“These resignations come shortly after the company’s announcement in December that the company plans on retrenching 15% of its workforce,” spokesman Jaco Kleynhans said this morning. The union says up to 120 of the company’s 780 employees could lose their jobs.
Kleynhans says the union is concern over the stability at DSA because Kinley’s resignation allegedly follows after a difference of opinion between her and the DSA board, headed by Llew Jones, previously CE of the State IT Agency. “Losing two experienced top managers at the same time due to an alleged disagreement, with the board in the midst of a retrenchment process, is definitely cause for concern,” says Kleynhans.
Denel group CE has refused to state why Kinley and Methola resigned other than saying it was not coincidental both resigned at the same time last Tuesday.
Kleynhans continues that there are meanwhile already indications that DSA’s international competiveness is “losing momentum”. According “to an investigation into one specific DSA tender, DSA’s price was 30% higher than the fifth competitor in the process. Issues such as this will have to receive serious attention at DSA because if the trend continues, DSA will lose its appeal with both local and international buyers, which will seriously aggravate the already unstable situation,” Kleynhans warns.
He notes DSA is blaming the planned retrenchments on production cut-backs and delays related to the Airbus Military A400M transport aircraft programme and similar challenges with the Agusta A109 light utility helicopter, the Saab Gripen advanced fighter and the Gulfstream G150 business jet “as well as the fact that the government did not place certain expected orders”.
The union amplifies that the company says that while current A400M “top-shelf” and wing-fuselage-fairing orders are secure for the present, additional work from Airbus is out of the question in the short term. In addition, the company has not been able to secure further A109 orders and expected international orders of the Gripen, from which DSA could benefit, has not yet materialised. The global recession hit business jets particularly hard and G150 parts orders fell from a forecast 40 a year to just two. Furthermore, DSA was reportedly unsuccessful in a bid to win wing tip business from Brazilian planemaker Embraer. This left DSA no choice but to mitigate risk and adapt forecasts.
Kleynhans adds that during the consultation meeting that took place last week, Solidarity put pressure on Kinley to provide details regarding the government’s financial support of Denel and to explain exactly how much of the funds eventually reached DSA. However, Kinley answered by saying that she was not at liberty to make the figures available.
“She did, however, undertake to refer the request to the Denel group,” Kleynhans continued. “According to the National Treasury, nearly R8.82 billion in financial aid has already been given to the Denel group of the past four years.” Finance minister Pravin Gordhan allocated DSA R192 million as recently as last October for development work on their workshare or the A400M.
Both Kinley and Methola will meanwhile remain in their posts until a final decision regarding their resignation is discussed at a special board meeting this coming Friday, the union says. The next retrenchment consultation meeting has also been scheduled for Friday.
Neither Denel nor DSA reponed to questions regarding the Solidarity concerns by the time of publication at 1pm.
Picture: A400M
