Bigwigs close major Estcourt employer

The liquidation of the timber factory that employed more than 1 000 people has caused some to question if management bungles left these small-town residents with few prospects.

In the past four years, upwards of 1 000 workers in Estcourt in the uThukela District of KwaZulu-Natal have lost their jobs at the Evowood factory, the economic engine of the town. 

The factory opened in the 1940s and produced steam-cooked, pressure-moulded wood for cupboards. Generations of locals have worked in what was once celebrated as the biggest plant of its kind in Africa. 

The closure, which devastated the people who watched their livelihoods implode, has made some suspicious of the purported reasons for the shutdown, including financial woes. They are demanding full probity during the liquidation.

Evowood emerged out of the ashes of Masonite Africa, owned by a Canadian firm. Late in 2015, Masonite Africa went into a controversial voluntary business rescue because the Canadians, with a 78% shareholding, wanted out.

Going for a song

By mid-2016, a consortium headed by Jacobs Capital had bought and renamed the company, sweeping aside bids from big wood firms Sappi and TWK. At the time, minority shareholders panned the deal because Sappi’s offer was R100 million more than the winning bid and it would have retained the company as a going concern and allowed workers to keep their benefits. 

Seasoned finance journalist Ann Crotty wrote in Business Day how minority shareholders baulked at the rescue deal and its unseemly haste. “Fearing they could be accused of reckless trading, the board opted for [unnecessary] business rescue.” Masonite was “struggling” but “was far from insolvent”. Nonetheless, majority shareholders steamrolled the deal.

The company’s timber farms were sold to a local forestry family for R385 million, and the mill assets sold to Jacobs Capital for a nominal amount. “The consortium is essentially getting R220m worth of assets (excluding plant and equipment) for nothing,” Crotty wrote.

Business rescue practitioner Pierre Berrangé reportedly earned R17 million in fees, but the new owners say they had nothing to do with that.

7 August 2019: Wood scientist Thomas Brown addresses former Evowood colleagues outside the factory in Estcourt.

The fall

A photo accompanying a September 2016 press release showed a beaming Wessel Jacobs from Jacobs Capital and fellow shareholders Nkosinathi Nhlangulela and Siyabonga Mncube from Blackbird Capital in suits and hard hats at the plant. 

Evowood was poised for a turnaround and a promised R300 million injection. Masonite creditors, Jacobs and Blackbird Capital added, were paid 100 cents on the rand, leaving the firm with R85 million working capital and R100 million in stock. 

Two months into trading, Evowood workers said the firm asked them to accept a 12% pay cut from February 2017 on the promise of a bonus in November 2017. They reluctantly agreed. 

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In February 2017, the firm changed payday from five days before the end of the month to the last day of the month, which provoked a month-long strike. Most workers represented by a Cosatu affiliate, the Chemical, Energy, Paper, Printing, Wood and Allied Workers’ Union, and Uasa were fired. 

Then, management called the remaining workers to a meeting. Bosses told workers the business was closing down. They were given 48 hours to accept retrenchment packages or wait 18 to 22 months for liquidation. They accepted the packages.

Louis Marais, then chief executive of Evowood, told a local newspaper in May 2017 that the mill had reopened and was operating. He said 242 of the 733 workers who had originally lost their jobs and accepted retrenchment packages had been re-employed on contract. 

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A labour brokerage owned by Jacobs Capital rehired the workers on a monthly basis at 10% less than what they had previously earned and without any benefits. The workforce of 800 shrank to 300 and then grew to 600. Workers say the labour brokerage earned hundreds of thousands in monthly fees. Jacobs said fees were market related.

In October 2018, about 430 workers were re-employed full time as the company sought government support. It never materialised and, in July 2019, the company went bust, blaming the strike and the bad economy.

It said that in spite of spending R78 million on repairs, it could not ensure continuity of supply. The hoped-for R300 million cash injection from an overseas investor was withdrawn, purportedly because of the strike, even though it had happened more than a year and a half earlier. Without additional funding, the new owners said they were unable to recapitalise the company, a situation worsened by a timber shortage owing to rain and plant breakdowns.

What happened?

Worker representative Yacoob Rehman said Masonite disinvested after denuding South Africa of its natural resources and enjoying apartheid-era cheap labour. It sold the company to an outfit without wood experience when there were better offers, which eventually resulted in workers losing their jobs and their benefits.

Rehman can’t work out how the company went bust. He admits the strike had an impact, but the new owners were publicly bullish about Evowood’s prospects, had stock worth more than R100 million and sold major assets.

“We can’t make sense of everything, but you can’t blame this on strikes and bad trading. We don’t know if the owners spent the money they said they did. We were doing patch-up jobs and recycled old oil, for example.”

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Rehman and local labour expert Sonja Vorster, whose husband worked for the mill, are demanding full transparency into the firm’s finances during the liquidation. Rehman and former staffers said the new owners came in, made a big noise and then “buggered everything up and we lose”. They say the owners have other companies that generate billions, according to their websites, so they won’t starve. 

Vorster’s husband, Rico, says workers were flummoxed by the business rescue. “The company’s most valuable assets were sold. It is like having a secondhand car and the only thing of real value is the engine, the rest is broken. Then you sell the engine and expect the car to go.”

Rehman, the Vorsters and other workers say Evowood’s owners didn’t have the community’s interests at heart, unlike former mill managers who lived in the town. 

“We are angry and frustrated. We begged them to maintain the plant, but workers were completely shut out of the picture. We are the most critical stakeholders, and we didn’t know what the new owners were up to. Some fat cats made money, and now we are broke,” Rico Vorster says. 

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Rehman says the workers felt deserted by the unions and tricked by the new owners. Their company was “captured”. 

Workers have seen trucks leaving the plant and fear equipment is being stripped. A statement from the owners and provisional liquidator Kurt Knoop said scrap was being sold to pay a security company and some stock had been sold, but this was being monitored. A report of theft had been made to the police and liquidators were cooperating. Knoop said there was no evidence of asset-stripping and the company accounts did not suggest it had been mismanaged.

Sonja Vorster says: “Who will step in and save this plant? The workers’ livelihoods have gone because big shareholders wrote the business off in a rescue that wasn’t needed. Then the new owners paid their friends big bucks to run the company, and they blew it. Now the workers have nothing and the town is at risk. It is shameful. We need to shine a big spotlight on this.”

Workers pay

All of this doesn’t allay workers. Some feel scammed, others want to know if they were victims of incompetence and others shrug. Maybe they are casualties of a floundering economy in a town with no leadership.

Johannes Khumalo, 66, is gutted. He has made his way from his home in Loskop to the plant every working day since 1973. The job allowed him and his wife to raise three children.

There’s no chance of getting another job in Estcourt, but he worries more for his younger colleagues. “How do people pay rent or afford to go to the shops for food?”

His colleague, Cedric Fook, was once a manager at Masonite, although he admits that “with a touch of shame” because the business was bungled by people who ought to have been the custodians of an enterprise that supported so many livelihoods.

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Rico Vorster worked at the factory for 17 years, following in his father and grandfather’s footsteps. He says workers “grafted” to keep the mill from failing, desperately enduring pay cuts and sometimes no overtime pay to keep the mill going.

Zaid Zain, 47, a 23-year veteran at the plant, says laid-off workers have had to cancel their children’s education policies. “It is desperate. People don’t have money to pay school fees, or their bonds or for their cars. It is so demotivating. The only thing you have to look forward to is the debt collector coming.”

Angie Lite, 53, worked at the mill for 27 years. She supports her husband, who has cancer, and her daughter at university. Her husband has been in hospital for seven months. She cashed in her provident fund to move him to a private hospital. “If I didn’t do that, he would have died waiting for the operation at the state hospital.” 

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