Public private partnership saves Molteno

South Africa's coldest town in winter, Molteno has an unforgiving climate and scant opportunities for local residents, most of who are supported directly or indirectly by the factory.

The factory had previously been plagued by inconsistent electricity supply and poor quality municipality-sourced water, which was insufficient for food manufacturing. The company had to rely on borehole water to keep the factory going but this had come under increased pressure in recent months, due to its proximity to the town's cemetery. Legislation stipulates a separation of at least 1.5 km.

To compound these operational challenges further, access roads into Molteno are riddled with potholes and frequently snowed under in winter. There had previously been no proper grading facilities available, resulting in major disruptions to the factory production line during annual snowfalls, sometimes causing weeklong delays.

To avoid disrupting production over the several months it would take to repair, the company needed to erect a new building adjacent to the old one, at a cost of approximately R46 million. The disadvantages of running the factory from Molteno soon began to outweigh the advantages.

Social obligation wins through

Justin Williamson, CEO of Foodcorp, says, "Moving the factory to Randfontein would have made more financial sense for the business, but we knew it would have a devastating impact on the local community. We felt a strong social obligation to remain in Molteno. We have always been highly cognisant of the vital role that the factory plays in creating employment in the region but we could no longer carry on alone. We needed to get local government on board in order to continue operating from the town."

After lengthy negotiations spanning several months, an extraordinary partnership between the Eastern Cape government and Foodcorp has subsequently been born. Years of work were achieved in mere months, as government set to work convincing the necessary stakeholders to invest in a water purification plant in the area.

Government eventually agreed to negotiate with Eskom to supply electricity directly to the factory, the connection costs of which will be covered by the local municipality. A tender has been put out by the Amatola Water Board for the construction of a water purification plant in the area, worth R2 million and the Department of Public Roads has agreed to station a grader at the Molteno municipality, during the harsh winter months to deal with heavy snowfalls.

Building add to employment

The result of the PPP is the investment into the construction of an 8000 m2 factory adjacent to the existing site, projected to increase daily production capacity from 16 to 23 tonnes. By 2013, when the new factory opens, capacity will have increased by 43%.

The project is expected to last ten months, with fulltime production in the new factory tipped to start from March 2013, after a phased crossover from old to new. In addition to saving the existing jobs, building contractors have employed an additional 15 local labourers on-site during the construction period.

The old factory will be used as a warehouse to store raw materials and finished products. A few of the many benefits associated with the new factory will include better working conditions for employees thanks to better insulation, natural airflow and light. The new production facility will also enable the factory to achieve HACCP in ISO standard, in line with the company's policy, ensuring good quality.

New hope for town

Mthandazo Nicholas Qamngwana, mayor of Inkwanca municipality (comprising Molteno and Sterkstroom), is pleased at the company's decision to continue its operations in the area. "There is no way that government alone can employ people. We need the private sector to come and create employment opportunities. Government must also make conditions conducive for the private sector to be able to employ people, so cooperation between the private sector and government is a good idea because they are now able to assist each other to deal with unemployment, poverty and inequality. This project is a beautiful case study of the local community and government working together with the private sector to achieve a positive outcome."

A new chapter seems to be on the horizon for Molteno, with further investment tipped for the region. Local government is now exploring the agriculturally rich district, which provides mutton stock for the broader province, as a possible destination for wind and solar energy generation.

A new guesthouse is being built (no small feat for a town with only three guesthouses) and there is a palpable feeling of excitement across the small local community. Proud local residents are eagerly anticipating the completion of the new factory, which many believe will "put the town back on the map." Led by company's renewed confidence and investment in Molteno, the Eastern Cape's sleepy town of dreams may yet awaken to its full potential.