The announcement that Goodyear, one of the world’s largest tyre manufacturers, will shut down its South African plant in Kariega, Eastern Cape, marks another significant blow to the country’s struggling manufacturing sector.
The closure will result in the loss of approximately 750 direct jobs, with a ripple effect likely to impact thousands more in the surrounding economy. This decision follows a troubling trend of multinational companies scaling back operations in South Africa, raising questions about the broader economic climate and the role of policies such as Broad-Based Black Economic Empowerment (B-BBEE) in shaping corporate investment decisions.
Goodyear’s exit is part of a broader global restructuring strategy aimed at cutting costs and improving efficiency. The company has faced mounting financial pressures, including rising raw material costs, supply chain disruptions and declining demand in certain markets.
In a statement, Goodyear cited the need to optimise its manufacturing footprint, with the South African plant deemed no longer viable in the long term.
However, while global factors played a role, local challenges have also contributed to the decision. South Africa’s manufacturing sector has been under strain for years due to persistent electricity shortages, logistical bottlenecks at ports and railways and rising operational costs.
These issues have made it increasingly difficult for manufacturers to remain competitive, particularly when exporting to international markets.
The immediate impact of Goodyear’s closure will be felt most acutely by its employees and their families. The Uitenhage plant has been a major employer in the Eastern Cape since the 1930s, providing stable, skilled jobs in a region with high unemployment.
The loss of 750 direct jobs will have a cascading effect on suppliers, service providers and small businesses that rely on the plant’s operations.
For many workers, finding alternative employment will be difficult. South Africa’s official unemployment rate stands at around 32%, with youth unemployment even higher. The Eastern Cape, in particular, has struggled with economic stagnation, meaning that retrenched employees may face prolonged joblessness or be forced to relocate.
The social consequences—increased poverty, household instability, and reduced spending in the local economy—will likely be severe.
While not the sole reason for Goodyear’s departure, South Africa’s B-BBEE policies have been cited as a contributing factor in disinvestment decisions. B-BBEE regulations are designed to redress historical economic inequalities by encouraging black ownership, management representation and procurement from black-owned businesses.
While the intentions are commendable, some analysts argue the compliance burden and associated costs have made the country less attractive to multinational corporations. Companies operating in South Africa must meet strict B-BBEE scorecard requirements, which can involve significant expenditure on transformation initiatives, skills development and supplier diversification. For firms already grappling with low profitability, these additional costs can tip the scales in favour of relocating to more business-friendly environments.
This is not the first time B-BBEE has been linked to corporate exits. In 2023, Nissan South Africa announced a review of its Rosslyn plant’s future, sparking fears of a potential closure.
Though no final decision has been made, industry insiders suggest regulatory pressures, along with other economic challenges, are being weighed in the assessment.
Similarly, other multinationals, such as Murray & Roberts and Sasol, have scaled back local operations in recent years, citing difficult operating conditions.
Goodyear’s exit fits into a concerning pattern of multinational companies reassessing their South African operations. In 2022, P&G closed its Johannesburg manufacturing plant, shifting production to other African countries. These departures suggest a growing reluctance among global firms to maintain a manufacturing presence in the country.
The reasons for disinvestment are multifaceted, but common themes emerge: unreliable infrastructure, policy uncertainty, and high costs of doing business. While B-BBEE is not the primary driver, it adds another layer of complexity for companies already dealing with power cuts, port delays, and sluggish economic growth.
To stem the tide of disinvestment, South Africa needs urgent reforms to improve the business environment. Stabilising electricity supply, fixing Transnet’s rail and port inefficiencies and reducing bureaucratic red tape should be top priorities. At the same time, policymakers may need to reassess how B-BBEE is implemented to ensure it does not inadvertently deter investment.
Some experts suggest a more flexible approach, where compliance requirements are balanced against the need to retain jobs and industrial capacity. Engaging with multinational companies to understand their concerns, rather than imposing rigid regulations, could help strike a better balance between transformation and economic growth.
Goodyear’s departure from South Africa is a symptom of deeper structural problems in the economy. While global restructuring played a role, local challenges—including energy shortages, logistical failures and regulatory pressures—have made the country a less competitive manufacturing hub. The closure will devastate workers and the Kariega community, highlighting the urgent need for policy interventions that encourage investment rather than drive it away.
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f South Africa fails to address these issues, more multinational exits are likely, further eroding the country’s industrial base and worsening unemployment. The time for decisive action is now—before more factories follow Goodyear out the door.
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