Silent Factories

I went into a tyre dealer this morning to have the front wheel alignment on a truck checked. The staff were all sitting in the reception, the manager on the forecourt and not a customer in sight. I was attended to and in 30 minutes was able to drive out with a much-improved steering performance on the 8 tonne truck.

The Manager said to me. “We are so quiet that we wonder how much longer we can carry on like this?” The City certainly was quiet – very little traffic and I did not have to wait or queue anywhere. Great for me – not so great for the business managers I was dealing with.

Yesterday, after leaving Hwange once the game count was over, we traveled north to meet MDC leaders in the town of Hwange. This town is a large rambling place, typical of company towns all over the world. Two geologists working for Cecil Rhodes first pegged coal here in the late 1800’s. It has three main reasons for being – the coal mines themselves, a large 840 megawatt coal fired power station built before Independence in 1980 and some Coke ovens that can be used to produce coke and asphalt for the roads.

As we arrived and climbed the hill overlooking the mines and the power station I immediately noticed that the power station was not working. No smoke or steam from the stacks and the cooling towers. At the meeting I asked a senior Hwange Coal Mine official who is a MDC leader, what is happening? He told me the conveyor for coal to the power plant is broken down and they did not have sufficient equipment to keep the plant supplied by other means.

Now that is a disaster – to stop a coal fired power station is an expensive and wasteful exercise. They are designed to run continuously for long periods, shut down only for major servicing and repairs. We also only have the two main stations – Hwange and Kariba and these together are required to supply the major part of our national requirements of about 2000 megawatts. Take out the Hwange station and we are left with less than half our needs even if Kariba is running at full capacity.

It goes beyond this of course. The mine has been unable to supply more than a fraction of national demand for some time and a common sight at the mine is the large numbers of 30 tonne carriers standing waiting – sometimes for weeks – to be loaded. The coal crisis is so bad in fact that some large consumers are importing coal from South Africa. The Coke ovens – a wonderful, simple and profitable business are also not functioning. They need major refurbishment and relining.

Then there is the Zimbabwe Iron and Steel Company. A plant built in the midlands to process local iron ore into steel at the rate of about 100 000 tonnes of finished product a month. The equipment is state of the art and comparatively new. The South African Iron and Steel Corporation has been eying this huge investment for years – they say it would fit in with their own South African plants well and could be highly profitable. Indian steel magnates agree and some months ago a major Indian steel company was persuaded to take up a management contract at the plant.

They were promised the full cooperation of the State, although the people negotiating the deal never discussed it with the Board or management. The Indian team arrived with facilities for up to US$400 million in new financing. They took up residence but within weeks they knew it could never work. How do you run a plant like this in the middle of Africa with a defunct railway system and no coal? After a futile visit to Hwange, the CEO of the plant left the country with his money and has not come back. I can understand why.

What astonishes me even more is that those responsible for this state of affairs seem to be incapable of dealing with these situations in any sort of coherent way. It does not take a rocket scientist to run these businesses. They are relatively straightforward large-scale operations that require sound management and maintenance. The skills are there – the money has been invested and is available to turn these operations around. Those responsible are just incapable of doing what needs to be done.

This year will be the last year of operation for the massive tobacco processing plants in Harare – next years crop at about 20 000 tonnes or 10 per cent of the recent past, is just too small to warrant keeping the plants in being. There may be some rationale for bringing in tobacco from the region to process in Harare but the pressure is going to be there to move the capacity to other countries – countries where a more rational business environment exists.

Unilever is downsizing in Zimbabwe, Heinz is struggling to maintain their investment. National Foods is down sizing after trying to hold their operations together for some years. Most other firms are running on 30 per cent of capacity – hoping for better days.

My own bakery is a small operation but it is closed at present – not for price control reasons but because I do not have any flour. Today in Bulawayo bread was very scarce and the larger supermarkets were selling “fancy” loaves for Z$350 – substantially above the controlled price for the larger conventional 700 gram loaf of Z$295. In my view this price is extortionate – but that is what you get when you cannot keep the shelves full.

Fuel is selling at Z$1300 to Z$1400 a litre in Bulawayo and Harare and is in short supply. People are bewildered by the prices and the shrinking value of the money in their pockets. Customers in my own supermarket throw away the smaller denomination notes as not worth carrying. The Z$1000 note has become the most common note traded. Remember, that is a million in the old currency!

Silent factories, empty streets, frustrated and scared shoppers. Where will this all end? We now know that it will not end until Mr. Mugabe can be persuaded that he has failed and must step aside for new leadership. Only when that happens can we expect things to begin to improve. What a sad situation where the man who once was the hope of a brighter future for all Zimbabweans, is now a failed leader who is the main impediment to change and recovery.

Eddie Cross
Bulawayo, 9th October 2006