Pupkewitz takes ‘drastic action’

Phillepus Uusiku – The “substantial deterioration” in the economy over the past four years, worsened by the impact of the Covid-19 pandemic have forced the Pupkewitz Group to offer all of its 1 860 employees a voluntary separation package.

A redundancy process will follow by the end of June, the group said in a statement yesterday.

“The group finds itself in a position where more drastic actions are required to restore some of our businesses to financial health,” said the chairman of Pupkewitz Holdings, Mike Leeming.

“Despite hopes, an [economic] recovery is not within sight,” the statement added.

“Arriving at the decision to restructure has been very difficult given the responsibility the group feels towards its people, their families and the greater Namibian community. We believe that this decision will allow us to serve the greater good by securing the jobs of the vast majority of our 1 860 employees,” said Leeming.

‘Ensuring survival’

“In order to ensure the survival and ongoing stability of our business during this time, some businesses will be restructured to achieve a more sustainably sized workforce,” he added.

The group has negotiated a number of optional re-skilling courses to be offered free of charge and to assist individuals in transitioning to new income-generating opportunities. Emotional and financial counselling will also be made available to the affected individuals, Pupkewitz said.

“The Pupkewitz Group has always prided itself in being a caring and responsible Namibian business, which includes the creation of secure employment and maintaining a working environment in which its people can thrive for the long term. This has been underpinned by a careful approach to business to ensure ongoing resilience and continuity regardless of the circumstances,” the statement read.

Ripple effects

The group’s main businesses are exposed to the construction industry, the motor industry and the tourism and hospitality industry - all of which have experienced severe downturns over many years and magnified in recent months, said Leeming.

“The construction industry has shrunk for 16 consecutive quarters and is estimated to be only 40% of what it was in 2016. A further 16% reduction is forecast by the Bank of Namibia for 2020. The motor industry had shrunk to almost a quarter of its size compared to 2016 even before Covid-19 hit,” he added.

Only 50 new vehicles were sold in the whole of Namibia in April and new car sales are unlikely to return to their former heights in the foreseeable future, Leeming said.

“The impact that the poor state of the economy has had on consumers, especially their ability to purchase cars and homes, is notable.”

In addition, “unprecedented difficulties are being faced with tourism having been brought to a virtual standstill as a result of the global pandemic,” he said.

‘Unsustainable’

Despite efforts by the group to reposition its businesses, such initiatives have not been sufficient to offset the decline in its traditional markets, Leeming continued.

“Large cost cutting exercises have been carried out across the group over four years in an attempt shrink costs in line with falling revenues. We have actively pursued options that would allow us to avoid retrenching staff and have managed personnel costs on the expectation that our markets would rebound.

“Unfortunately, the further turmoil that Covid-19 has unleashed renders the current circumstances unsustainable,” Leeming said.

“We deeply regret the impact that letting go of some of our staff is going to have on all of our people and their families during this challenging time in the world and in Namibia in particular,” he concluded.