Dunlop Tyres set to re-open

Dunlop Tyres set to re-open

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By Alison Musekwa

DUNLOP Tyres -- Zimbabwe’s sole tyre manufacturing firm -- could soon reopen following the intervention of Industry and International Trade Minister, Obert Mpofu.

Dunlop shut down three weeks ago and sent its 820 workers home after the Reserve Bank of Zimbabwe failed to pay the firm its foreign currency allocations under an exclusive agreement.

The government is now expected to pump up US$350 000 into Dunlop towards imports for raw materials. It is envisaged that Dunlop will have a three-day working week until foreign currency inflows normalise.

"The government injected US$350 000 into Dunlop last week to provide temporary relief to the company while the RBZ is working on a more substantial foreign currency allocation to enable normal operations," Mpofu told state media.

Last Thursday, RBZ governor Gideon Gono observed Dunlop's stategic importance to the economy. It is believed that imported tyres cost four times more than the price of locally-produced tyres.

Phil Whitehead, Dunlop's managing director said the company has not been receiving foreign currency allocations from the RBZ since July 15, 2005.

The RBZ, under whose regulations all Zimbabwean exporting firms surrender 50 percent of their export proceeds, is also responsible for allocating foreign currency to industry as well as various arms of government.

“We stopped production and workers are at home. This is a huge disaster. You can not run an economy without tyres,” Whitehead said in a recent interview with New Zimbabwe.com.

Zimbabwe, whose gross domestic product (GDP) is expected to plummet by a further 7 percent in 2005, is grappling with severe foreign currency shortages as well as bitter food, fuel and electricity shortage.

The closure is also going to hit hard various arms of government such as the Zimbabwe National Army (ZNA), Zimbabwe Republic Police (ZRP) as well as the Central Mechanical and Equipment Department (CMED), which had placed huge orders of tyres to Dunlop.

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 percent 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.

Dunlop requires US$50 000 to manufacture tyres on a daily basis but Whitehead said it would cost US$100 000 to import the same tyres.

Whitehead the effects of Dunlop closing down are even worse off on the downstream industry and their customers.

“The army, police, CMED and Willowvale motor industry are some of our biggest customers and imagine the army and police operating with no tyres,” Whitehead said.
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