South African heavy equipment manufacturer, Bell Equipment has announced voluntary retrenchments will be effected across the group in an effort to safeguard the long-term prospects of the company, its product offering and support to its customers.

Bell Equipment Chief Executive Gary Bell said the voluntary retrenchments are “unfortunate but unavoidable” following the company’s after tax loss for the four months ended 30 April 2009.

Bell said over 1 000 employees took part in a ground breaking, voluntary salary sacrifice initiative in May in an effort to avoid retrenchments. “This unprecedented show of solidarity and support by our employees is indicative of the Bell team spirit and loyalty in the face of adversity. It is this tenacity and enduring spirit that has seen us through tough times in the past and we are confident that it will see us through this current economic crisis.”

“The global recession and resultant downturn in demand has lasted longer than we expected. We have tried to hold out on retrenchments as far as possible but we now have no option but to follow in the footsteps of our competitors and other manufacturing companies if we are to reach our goal of reaching break-even by the year-end.”

He added that the company aims to reduce annualized salary and wage related expenses by over 40% relative to 2008. In addition Bell Equipment will look for a general expense reduction of 37% to meet the target break-even on a month-to-month basis by year-end. To achieve these goals the company would also consider forced retrenchments should it become necessary.

However Bell said there were signs of a silver lining on the horizon: “We are hopeful that the worst is over and that we can enter a recovery phase once we have reached our break-even point. Economists are optimistic about an upturn in the economy and we have already seen signs of growth in mining, particularly in the gold, copper and platinum sectors. The growth rate is slow and no where near the levels we saw in 2008 but we are glad for the increase in activity.”

Bell said although the construction industry had shown more resilience, the financing of equipment had been a stumbling block due to economic pressures, but this situation has too started to ease in recent weeks.

“It is also encouraging to note that although the market has fallen by 46% year-to-date, Bell Equipment’s market share has grown by 30% across the market segments in which we compete. At the same time we have improved our margins – a sign that we are moving in the right direction,” said Bell.