By Oscar Nkala
The State-owned Zimbabwe Defence Industries (ZDI) said it would be better to be shut down due to poor economic conditions and halted production lines.
ZDI is a Zimbabwe Defence Forces (ZDF) owned military industrial complex which manufactures small arms ammunition in 7.62×39 mm and 7.62×51 mm calibres.
It also has a mortar shell filling plant which produces 60 mm, 81 mm and 120 mm mortars, 155 mm artillery shells, rocket launchers and hand grenades.
However, company general manager (Retired) Colonel Tshinga Dube told the Sunday News it is in dire straits because of a tight liquidity crisis precipitated by Western sanctions which have prohibited its US and European Union (EU) customers from doing business with it since 2002.
Dube said the company’s woes have been actively compounded by high local production and costs for small arms ammunition – its remaining principal product – when compared to mass producers like China. A huge salary bill is also seen as weighing down output.
“For instance, manufacturing one round of cartridge or bullet will cost $1.50 (in Zimbabwe) yet in China it costs only 10 cents. Our wages and salaries are also too high, especially for a country which is struggling economically like ours. In China a general hand worker gets about $50 (per month) and here the minimum (monthly) wage is about $300 yet our overheads such as electricity and water charges are higher.”
The company has temporarily ceased operations while contemplating a final shutdown after failing to sell its stockpile of small arms ammunition due to a lack of funding from the ZDF and the Zimbabwe Republic Police (ZRP), which had remained the principal consumers after the US-EU embargo shut down the external market.
“At the moment we are not producing at all because our clients – the ZRP and ZNA – have a challenge when it comes to payment. They take up to six months to settle their accounts due to funding constraints.
“We are only able to manufacture as per order and of course, with payment upfront to enable us to buy raw materials. However, with the prevailing economic environment we are very pessimistic about our future because at this rate (of decline) it will be better to close shop,” Dube said.
The company needs at least $20 million to refurbish and replace most of its antiquated machinery. An additional $10 million is required for the acquisition of raw materials and the payment of immediate overhead costs, which include salaries.
Last year, ZDI workers dragged their employee to court in a bid to enforce the payment of salary arrears backdated to nearly a year ago.
Last year, the company made two unsuccessful bids to diversify from its core business of military supplies, first venturing into the acquisition and sale of scrap metal and latter into the external procurement and importation of foodstuffs for the two arms of the ZDF.
The scrap metal venture collapsed after ZDI was found to operating without necessary permits from the Ministry of Mines and Mining Development.
The ZDF food importation tender also ended babdly with the Zimbabwe Revenue Authority (ZIMRA) stopping the trade on allegations that ZDI was evading the payment of relevant import duties.
Most of the company’s workers were reportedly sent on forced leave in the course of the last year. Defenceweb.co.za