Bailing Philips out not viable: expert

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By Letuka Chafotsa

MASERU — Companies like Philips Lighting Maseru (PLM) that heavily rely on technology are hard to bail out, an analyst has said.

Arthur Majara, a local economic analyst spoke to Lesotho Times in the aftermath of the Ha Tikoe-based company’s announcement last week that it was winding down operations.

PLM produced energy-saving fluorescent lamps mainly for the southern Africa market.
On Tuesday, the General Manager, Darius Cimochowski said the closure of PLM was a market-driven business decision due to the rapid evolution of current lighting technologies within the industry.

Cimochowski added that PLM production last year amounted to M9 million and their projections for 2014 forecast a slump in production to about M3 million which prompted the decision to close the company.
Nick Kelso, the Senior Communications Manager at PLM, also added that: “The industry is transforming to new, efficient incandescent lights which are thought to be twice as efficient as the fluorescent lights that the company is producing.”

According to Kelso the new developments give advantage to the PLM competitors specifically from China, where PLM imports its raw materials.

He added that the evolving technology provides for lighting devices which are advantageous due to “lower power consumption, digitally controllable, new mercury content and low maintenance”, among other factors.

Speaking to Lesotho Times yesterday, Majara said PLM was techno-driven making it hard for the government to bail the company out as there is no stability within the sector due to ever-changing technology.

“Massive mobility of technological resources within companies that are mostly using technological devices renders it difficult for governments to bail these out as the technology would be rapidly changing,” Majara said.

He added that PLM and similar companies with operations largely dependent on innovative technologies are harder to support becausethere is no guarantee that they will be returns after the bailout.
Majara added that government’s bailing-out in 2009 of textile firm CJM should serve as a yardstick in approaching such matters.

Even in the case of CJM, which was not too dependent on technology, questions were raised on the benefits of the intervention because up to now CJM is still struggling.

He added that enterprises like banks can be easily bailed-out because their operations do not use fast-changing technology and, for that reason, they are considered more stable than technonogy-based companies.

He, however, said the PLM closure came at a very critical time when the government was engaged in devising a strategic policy to strengthen the private sector for job creation.

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