This week it was announced that British American Tobacco (BAT) was closing down their factory based in Vereeniging. The cigarette factory is the 8th largest under the BAT umbrella and the consequences of this are catastrophic to the region of Southern Johannesburg. I am all too familiar with this factory as I have visited this site on numerous occasions having worked for this group.
The factory in Heidelberg has been operational since 1975 and was responsible for supplying the local market and exports of various brands around the world. Most factories specialize in supplying 2 or 3 brands and are responsible for those brands in other countries besides local supply.
The illicit trade and no government controls is the reason for the closure and they are too blame for the consequences and fallout that will follow. Most people will see the 1500 employees that will no longer have employment, but no that is only the tip of what the final unemployment numbers will be.
The factory over the last 5 years has been operating at only 35% capacity so the numbers are down from when I knew this plant. The factory was so big that when the plant went into full production mode the lights used to dim in the region before going back to full brightness.
The town of Heidelberg relied on this factory for it's employment and is what kept the town going. Shutting this plant will kill the town as every company with in the town relied on this factory for it's revenue either directly or indirectly. This is sad to see this come to this, but what did everyone expect as this is the result of what was expected.
10 000 Jobs Gone Directly And Indirectly
The suppliers or service providers who have now lost a major client is where the biggest knock on effect will happen. The 1500 factory staff will be part of what could easily be up to 10000 people indirectly employed that fed the factories needs.
Packaging suppliers would be a big part of this as there are many processes that needed to be provided by local companies. Farmers supplying the tobacco is another massive industry and all of those working on the farms will now be at risk. Transportation companies that serviced the logistics needs and I know of one such provider who had 30 trucks servicing this factory. Where is he going to find another client that requires 30 trucks on a long term contract? Outsourced security and cleaners which would run into the hundreds of people and I could go on and on as the list is endless. Those service providers then had companies supplying them so one can see how the knock on effect is like a deck of cards folding in on itself.
The revenue the government is losing to theft accounts for around R80 billion annually in an industry worth closer to R100 billion per annum. The illicit trade of black market cigarettes is reportedly being sold in 8 out of 10 retail stores which is seriously shocking. No one is checking and law enforcement is non existent. The raids we used to do was enough to control the illicit trade which used to be a mere 5%. Retailers having their stock confiscated was enough of a deterrent and this is no longer being enforced.
Fact - Open Borders Cost Jobs And Promote Crime
The open border policy is the chief culprit of where and how the tax revenue has been lost. If you cannot control the flow of people how can you control what comes in legally? One has to imagine if this is happening to the cigarette trade then the drug markets around the world must be rubbing their hands as I can guarantee hard core drugs are being manufactured locally and being exported globally. The no law and order with porous borders is a recipe for syndicates to take advantage and they must be here already. SA could easily become the new drug manufacturing haven under the current no law and order conditions.
I know this industry and the fixes are easy if you want to fix them and the answer is they do not as those who are benefitting have no intention of stopping this. South Africa is a movie being played out in real life and the cast is the government who have no concern for the people. This is how Africa behaves and thinks and don't expect anything to change.