Dunlop Tyres Zimbabwe Shuts Down

Dunlop Tyres (Pvt) Limited, Zimbabwe’s sole tyre manufacturing firm, has shut down with the loss of 820 jobs, leading to concerns about road safety in the country.

Officials at the tyre manufacturer and exporter said the firm had shut down its plant last week due to shortages of foreign currency, which has resulted in the company failing to procure raw materials, newzimbabwe.com has reported.

Phil Whitehead, Dunlop managing director said the company has not been receiving foreign currency allocations from the Reserve Bank of Zimbabwe (RBZ) since 15 July 2005. The RBZ, under whose regulations all Zimbabwean export firms surrender 50 per cent of their export proceeds, is also responsible for allocating foreign currency to industry as well as various arms of government.

“We stopped production last week and workers are at home. This is a huge disaster. You can not run an economy without tyres,” Whitehead said. Whitehead said his firm’s plight has been worsened by an exclusive arrangement entered between Dunlop and RBZ where the tyre manufacturer undertook to surrender 100 per cent of its export proceeds. Whitehead said Dunlop last month surrendered US$687 000, its average monthly export earnings, to the central bank.

“We honoured our part of the agreement with the RBZ but they are reneging. They are using the money for food and fuel imports at our expense,” Whitehead fumed. Zimbabwe’s agriculture-based economy has been in free fall since the government embarked on a controversial programme to seize white owned commercial farms in 2000.

According to the news source, Dunlop requires $50,000 to manufacture tyres on a daily basis but Whitehead said it would cost $100,000 to import the same tyres. “The army, police, CMED and Willowvale motor industry are some of our biggest customers and imagine the army and police operating with no tyres,” the managing director commented.

Prior to its closure Dunlop’s major export market was Zambia, which consumed 43 per cent of the factory’s products, followed by South Africa and other nations in the Southern Africa Development Community (SADC) region.

Dunlop Zimbabwe is the country’s main manufacturer of tyres. Its major shareholder is Dunlop Tyre International accounting for a 75 per cent stake of the group’s issued share capital.

This is because companies operating in the country require double the amount of foreign currency to import a tyre compared to when they import the raw materials and manufacture the tyres locally, according to Whitehead.

An imported light truck tyre costs about Z$17 million compared to only Z$3 million for a Dunlop manufactured one.

In its latest report on the Zimbabwe economy the International Monetary Fund (IMF) projected a 7 per cent decline in GDP in 2005.