Global spars and rigging manufacturer Southern Spars is closing its South African operation, the company confirmed this week.

The company will retrench the majority of its staff at its Cape Town facility by mid-December, but will continue operating in a limited capacity until completing its current workload, according to Southern Spars South Africa general manager Peter Shaw.

“There are a number of aspects that were looked at in terms of the viability of the business, and based on some of those criteria it was decided not to continue the operation in Cape Town,” Shaw told IBI. “We then embarked on a consultation process with staff which involved unions and the Commission for Conciliation, Mediation and Arbitration. We just finished that consultation process at the end of last week,” he said.

All staff would be out of the Cape Town branch by mid-2018 and core assets retained within the group, he added.

Southern Spars is a market leader in the design and construction of quality carbonfibre spars for both cruising and racing. It has played a key role in establishing South Africa's reputation as a significant player in the luxury boatbuilding market.

However, the local maritime sector has faced stiff economic headwinds – in particular currency volatility, limited demand, and labour market uncertainty. Two major commercial boatbuilders have recently retrenched staff due to market conditions.

“[Southern Spars] is probably one of the biggest groups in the marine trade. But the marketplace has shrunk – that is no surprise,” Shaw said. “We've been fortunate that we've had a lot of work on the go, but of a lot of that work is just not viable. It's a tough place.

“We made it very clear from the beginning [of the retrenchment process] that we will look after our staff, our customers and landlord, and not drop any creditors. We want to conduct this in a fair manner – a proper clean closure,” Shaw said.

Southern Spars, founded in 1988 in New Zealand, today operates in several countries and employs around 500 people. The company has won 15 World Superyacht awards and has over 1,000 projects annually worldwide.