Somta says ‘arigatou’

2016-11-21 10:35
Celebrating a deal with Japanese firm Osawa Screw Grinding to prevent the closure of Somta Tools, were (from left) Numsa shop steward Zama Ngidi, Pietermaritzburg Chamber of Business chief executive officer Melanie Veness, Somta Tools managing director Allan Conolly, Somta operations director Graeme Holmes, Msunduzi Mayor Themba Njilo, Msunduzi general manager of economic development Dr Ray Ngcobo, Uasa shop steward Asharaf Ismael and Narusha Jairam, trustee of the Somta Employee Trust.

Celebrating a deal with Japanese firm Osawa Screw Grinding to prevent the closure of Somta Tools, were (from left) Numsa shop steward Zama Ngidi, Pietermaritzburg Chamber of Business chief executive officer Melanie Veness, Somta Tools managing director Allan Conolly, Somta operations director Graeme Holmes, Msunduzi Mayor Themba Njilo, Msunduzi general manager of economic development Dr Ray Ngcobo, Uasa shop steward Asharaf Ismael and Narusha Jairam, trustee of the Somta Employee Trust. (Ian Carbutt)

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Africa's largest cutting-tool manufacturer Somta, can say doumo arigatou, “thanks a lot” in Japanese, after an investment from Japan has saved the well-known Pietermaritzburg company from closing down.

Starting from humble beginnings in 1954, Somta Tools has found itself in financial trouble in the past few years and had to implement three large retrenchment phases, cutting more than 300 loyal staff since 2009.

About to close its doors and retrench its remaining 350 employees, Japanese tool-manufacturing company Osawa Screw Grinding (OSG) decided that Somta was their gateway to the African market.

With facilitation and support from the Msunduzi Municipality, Trade and Investment KZN and the Pietermaritzburg Chamber of Business, OSG is now the controlling shareholder in the company.

Somta managing director Allan Conolly said rapidly rising input costs had meant that the company was struggling to compete in the international arena. The company reached its lowest point earlier this year when it closed down the high-speed steel factory that had made up 90% of the business.

“The great thing with OSG is that they specifically want to keep the high-speed steel factory open,” Conolly said.

In an effort to attract the Japanese investment, the Msunduzi Municipality offered a “small” incentive to the overseas company. Conolly did not disclose the details of the incentive but said the Japanese were pleased by the offering. “I was actually quite surprised at how much the incentive meant to the Japanese investors. They felt welcome to the city and said this was now their African hub,” he said.

Although the official Japanese take-over is effective from December 1 this year, Conolly said Somta has already held a ribbon-cutting ceremony and lunch for all its staff in celebration.

“We believe that with OSG’s support, Somta’s factory will not only remain in operation, but the deal will also give Somta access to leading Japanese technologies and expertise that will help to improve its manufacturing process, quality of tooling and technical capabilities,” said Conolly.

“This will potentially create not only stability at Somta, but also growth in time to come. Somta will also be able to generate increased sales volumes through OSG’s worldwide sales distribution networks,” Conolly said.

He said the investment would revive the growth of current staff.

As part of Somta’s black-empowerment initiatives, Somta employees will continue to own a stake of the business through the Somta Employee Trust, and they hope to benefit from this in the future as the company grows and improves profitability.

Somta will also be able to expand its support for the automotive industry and ensure that more and more tooling is made locally, said Conolly.

Msunduzi Mayor Themba Njilo said the municipality is happy to help save a company that employed many Pietermaritzburg residents.

General manager for economic development in the city Dr Ray Ngcobo, said there was “no way we could lose the historical brand of Somta Tools” in Msunduzi. “We are giving our undivided attention to industries and their well-being,” Ngcobo said.

Celebrating the huge investment opportunity in the city, CEO for the Pietermaritzburg Chamber of Business Melanie Veness, said they are “absolutely thrilled”. “We most definitely welcome the Japanese investment and we know that this will grow into a force in the tooling industry,” she said.

Veness also shared her joy that the Msunduzi Municipality showed it commitment by offering incentives to the investors. “This is a winning combination for the city,” she said.

Read more on:    pietermaritzburg  |  somta

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