Packaging manufacturer Mpact is set to retrench close to 400 workers after deciding to halt local cartonboard production, citing an inability to compete with cheaper imported alternatives and the impact of a stronger rand. The JSE-listed group has issued retrenchment notices in its cartonboard division after concluding that imported product has become structurally cheaper than domestic output.
Mpact said the Springs Mill, operated by its subsidiary Mpact Operations and employing 377 people, will be discontinued in March. The facility is South Africa’s only producer of cartonboard. The company attributed the decision to sustained global overcapacity in cartonboard markets, which has depressed international prices and enabled foreign suppliers to undercut local manufacturers. Mpact estimates that imported cartonboard is now priced at about 20% below its own production costs.
The company said weakening demand accelerated when its largest customer informed it in January that it would shift procurement to imports rather than continue sourcing locally. Despite attempts to narrow the cost gap and secure alternative buyers, Mpact concluded that sufficient volumes could not be achieved at prices that would keep the operation viable. Market data from World Packaging Organisation statistics show that global cartonboard capacity has expanded faster than demand since 2022, intensifying price competition and eroding margins for higher-cost producers.
Mpact’s exit highlights mounting pressure on South Africa’s manufacturing base, where imported goods have become increasingly competitive amid currency appreciation and subdued domestic demand. The move follows a similar decision by British American Tobacco to shut its last South African cigarette factory and rely on imports, reflecting broader challenges facing local industrial operations. As reported by Statistics South Africa, manufacturing output has struggled to recover to pre-pandemic levels, while input costs and logistics constraints have continued to squeeze profitability.
The closure of Springs Mill will further reduce domestic capacity in paper-based packaging, increasing reliance on imported cartonboard for food, beverage and consumer goods packaging. Analysts warn that the loss of local production weakens supply chain resilience and limits downstream industrial activity, even as import dependence grows. Mpact said it would continue to focus on its remaining plastics and paper packaging businesses, but acknowledged that the decision marks a significant contraction of its manufacturing footprint.