Associated Printing
Presentation by: Associated Printing (Pty) Ltd
Ian Shepherd: Managing Director

Whilst we understand the underlying purpose behind the new Tobacco bill, we strongly feel other negative factors far more serious will heavily outweigh the intended purpose of the proposed legislation. Whether the intended legislation will have the desired effect is debatable. There are far better ways of restricting smoking which would be beneficial to the state as well. In this respect, we mean higher excise duties, stricter control over access to persons under 18, to mention just a couple of ways. What is not debatable is the harsh and serious effects the bill will have on certain people, some of whom do not even smoke. I refer to those people within the community who rely on the tobacco industry for their very existence.

At this stage we would like to point out that far more people die or become incapacitated from aids, alcohol abuse (which includes alcoholics, drunken drivers and children affected with foetal alcohol syndrome), and bad eating habits, causing heart attacks. In respect of alcohol abuse, the way to remedy this could also be higher excise duties, increased education on the effects of alcohol and increasing the legal age for alcohol to 21 in line with overseas trends - 18 1s currently the legal age in South Africa to drink and drive. We will now supply you with factual data that enforces the negative impact that this proposed legislation will have on various people within our organisation, including non smokers.

The following are sales figures for our company which are Cigarette related:

For the year ended 28.2.96 - R2 928 000
For the year ended 28.2.97 - R1 659 000
For the year ended 28.2.98 - R2 634 000
For the period 1.3.98-30.9.98 - R1 033 000

In respect of the above figures, we would point out that for the year ended 28.2.98, the increase of almost R1 000 000 related to various projects sponsored by Peter Stuyvesant in respect of musical shows, Rothmans International sponsoring the Rothmans July and Rothmans soccer, and Winfield with regard to Winfield rugby. These projects sponsored by Rembrandt highlight as well the amount of money being spent on various sports events throughout South Africa and are beneficial for all South Africans, especially the previously is advantaged groups who benefit not only from the teams being sponsored, but by money and time being ploughed into the development of young sportsmen and women.

As can be seen from our yearly figures above, their turnover is a substantial part of our business. To give a brief history, 14 years ago Rembrandt comprised about 70-80% of our turnover. Our whole company was geared up for this business especially regarding high quality demands and service. Sometime ago, a decision was taken by management to broaden our base and our dependence has now changed to a percentage of 10% of our turnover. However our infrastructure has continued to be one of high quality and service, and accordingly we have above average personnel and also extras to comply with the huge demand placed on us regarding this quality and service (we have recently received Sappi gold, silver and bronze awards in this respect).

In view of these high quality demands and service, this portion of our business is also the most profitable and accounts for 25% if our profits. To lose this we would accordingly have to find almost double the turnover in order to just maintain our profitability, failing which we would have to retrench staff at all levels of our business.

Whether it would be feasible to increase our business to this degree is another point altogether as we have invested heavily in machinery, on which we still owe a substantial amount of money, and which we would not be able to sell in todays economic climate. The potential inability to service this debt, coupled with the tremendous strain of increasing our turnover to cover this loss in profitability, would place the company in dire financial straits and could result in the loss of the company in its entirety. We currently employ 180 staff members which equates to 720 people being supported by our company alone if families and dependents are taken into account. With the present unemployment statistics at 22.9%, and in light of the 500 000 jobs lost in the past four years (Business Times, Cape Times October 19, 1998), we feel that to jeopardise these peoples livelihoods, would be extremely negligent and contrary to our company's basic philosophies.

The financial strain placed on us immediately should this bill be legislated, would reverberate throughout our factory. To enumerate a few:

1. We have one director who services mainly the Rembrandt group - what would he, aged 48, do now?
2. We have internal sales girls who assist mainly on the group accounts.
3. We have day and night shifts on our printing machines -with the loss in turnover, we would have to reduce this to one shift.
4. Our quality control is geared to service the Rembrandt group and therefore this division would have to be reduced, resulting in an overall drop in quality standards which could further put strain on future business.
5. Our finishing department night shift would no longer be required.
6. Our estimating department would have to be reduced.
7. Other service departments would also have to be seriously looked at i.e. photolitho, despatch and stores.

As a rough and conservative estimate, we envisage that we would have to retrench at least 22 people immediately, who in turn support in excess of 80 children and elderly family members. These people equate to 15% of our total staff complement. We would like to point out that 21 of these 22 people belong to the previously disadvantaged group. This would have most serious consequences for the employee as well as for their families, and would release them as unemployed onto the streets without much hope of finding alternative employment in view of the depressed state of the printing industry and economy as a whole. This is certainly not the spirit in which the new South Africa was born. In fact, it was exactly the opposite with promises of housing and upliftment for all. The new Labour Relations Act, the Basic Conditions of Employment Act and the Employment Equity Bill, endeavour to do exactly the opposite viz. increase employment by limiting overtime in order to employ more people. Our people accept this even though they will lose out as they can see that it is for the benefit of the whole.

Our company has always adopted a policy of promotion from within regardless of colour. Until a few years ago, we had a coloured shareholder and director who worked himself up from floor level. Unfortunately, due to our company policy of the company being for the workers and not the shareholders families, he decided to start on his own because he wanted a family business. The majority of our line managers are of the previously disadvantaged groups and for us to now go to them and enforce retrenchments etc. Would be a sad day for both us and our loyal staff, and would negate our long held philosophy of improvement, upliftment and opportunity for all. We would like to feel that this is also the governments overall philosophy and policy.

We would further like to point out some important facts:
1. It has been repeatedly shown that a ban on cigarette advertising does not cut down on the number of people smoking.
2. Banning smoking in the workplace for example, results in tremendous downtime as people then leave their posts to smoke outside. This only serves to further reduce our levels of productivity in South Africa, which are currently the lowest in the world (Financial Mail October 1998, world competitiveness report - page 46).
3. Cigarette smoking as a cause of death or ill health must be compared with the high toll of deaths resulting from aids, alcohol abuse, bad eating habits and drugs. It is surely a personal right of choice. Advertising cigarettes is a brand building exercise and does not encourage people to smoke - in fact with the newly legislated warnings which have to appear on all cigarette advertising, the reverse is true. We truly feel that this present legislation is sufficient for South Africa at present with all its third world problems and related issues i.e. high crime rate, unemployment, housing shortages, lack of medical facilities, education etc.

4. If we were to analyse all those people having cancer, how many were as a direct result of cigarettes? - we have personally known of a number of people who have died from cancer and never smoked a cigarette in their lives.

We respectfully ask you to please take all the above factors into consideration and to realise the severe and negative impact the proposed legislation will have on both the company and its staff, effecting not only them directly, but their families and dependants as well.

We thank you for the opportunity to put our case to you.

Personally and are sure you will act in the best interests of all concerned.