Bridgestone – world largest tyre manufacturer hits brick wall in SA
Japanese tyre maker Bridgestone has come out in support of legal action by the Brits Industrialists Association (BIA) against the Madibeng Municipality in South Africa’s North West Province. Bridgestone alleges its Brits tyre plant is one of the factories to which electricity was unlawfully disconnected by the municipality last week.
Brits is a small farming and industrial community about 50km from Pretoria. It used to be a hub of manufacturing including international giants such as Alfa Romeo, until politics scuttled its potential.
Bridgestone’s massive tyre production facility employs more than 800 people and was shut down from midday on Friday, 13 January until early evening on 16 January after the municipality defied a court interdict preventing it from cutting the factory’s power. Bridgestone is the world’s largest tyre maker, with over 180 manufacturing and research facilities in 25 countries. Its South African arm includes two tyre manufacturing plants, numerous satellite offices and a network of over 300 commercial and retail outlets.
Not only does Bridgestone manufacturers the well-known range of Bridgestone tyres, it also makes such iconic brands as Firestone and the company is closely aligned to Supa Quick.
“Bridgestone South Africa was one of the applicants in the BIA case in which an interim interdict was successfully obtained in 2014 challenging Madibeng’s electricity tariff increases pending a court review,” said Bridgestone CEO, Gavin Young. “Until the review is heard, Bridgestone’s electricity tariff is the figure determined by the court in the interdict.”
Young said that by cutting off electricity supply to the members of the BIA, the Madibeng Municipality directly violated the conditions of the 2014 court order.
The Brits Industrialists Association said that the cutoffs were in defiance of a court interdict obtained in 2014 which prevented the municipality from taking such action.
“Several factories operated by our members were unlawfully disconnected from the power supply between 12h00 and 13h00 on Friday, 13 January,” said the chair of the Brits Industrialists Association (BIA), Wimpie Greyling.
The BIA launched urgent legal proceedings in the North Gauteng High Court in Pretoria on Monday 16 January, seeking to hold the Madibeng Municipality in contempt of court. The court ruled in favour of the BIA and ordered the municipality to restore power to the affected factories by 18h00.
Greyling explained that in terms of the interdict, the BIA members affected by the recent cutoffs were only required to pay for electricity at the tariff defined by the court until the matter is reviewed in court later in 2017. The interdict also prevented the municipality from disconnecting the power supply of the applicants.
“The rate stipulated in the interdict has been paid by the affected members in accordance with Madibeng’s billing of their electricity consumption,” Greyling said. “To the best of the BIA’s knowledge, all these members are fully compliant with the terms of the interdict and their obligations towards Madibeng Municipality.”
Greyling said that when the BIA became aware of Eskom’s intention to cut power to Madibeng Municipality, the association convened a meeting with the mayor and municipal manager on the morning of Friday 13. During that meeting, the mayor informed the BIA that unless the interdict applicants paid the difference between Madibeng’s tariff and the tariff specified in the interdict, she intended to disregard the interdict and cut off the electricity to their factories.
The Bridgestone South Africa CEO said that Madibeng Municipality should have been more sensitive to the impact of its actions on the broader community, with Bridgestone employees being the breadwinners for thousands of residents in the Madibeng area. “Madibeng’s unlawful power cutoffs placed livelihoods in jeopardy and had the potential to harm our standing with Bridgestone’s Japanese parent company,” Young commented. “It is essential for investor confidence that arms of government operate within the law.”
He said that Bridgestone was not ruling out further legal action against Madibeng Municipality to recover the costs of the shutdown and lost productivity. “Now that the plant has been re-started, we will begin to quantify our commercial losses, and our executive team will be taking legal advice on the relief available to us,” he concluded.