About a year after commissioning its largest Nigerian plant, Procter & Gamble (P&G), leading FMCG (Fast-moving Consumer goods) is set to shut
About a year after commissioning its largest Nigerian plant, Procter & Gamble (P&G), leading FMCG (Fast-moving Consumer goods) is set to shut the production plant situated in Agbara Industrial Estate, Ogun State according to Premium Times.
P&G which has stakes in about 180 countries of the world, is the producer of Always sanitary pad, Pampers, Ariel detergent, Oral B toothpaste, Gillete shaving stick, among other products in the Nigerian market. The company expanded its footprint in Nigeria in June 2017 with the commissioning of the state of the art production line for its ‘Always’ and Pampers brand of sanitary pads and diapers, which reportedly cost the firm about $300 million.
Sources at the firm said about 120 workers are being laid off as part of the shut down with some of them already receiving their disengagement letters which is to commence next month. The shutdown is coming barely a year after the production line was commissioned by Vice President Yemi Osinbajo and Governor Ibikunle Amosun of Ogun State.
While speaking at the launch of the plant in June 2017, Mr Osinbajo had said that the Federal Government of Nigeria was delighted about the investment. According to him, this investment is in tandem with the drive of the current administration for manufacturing companies to produce locally and invest in human capital development. The vice president also encouraged other FMCGs to emulate P&G by investing in all the areas of the country as it will aid the growth of the economy. Unfortunately, barely a year after the launch of the plant, the company has found it difficult to break even due to a myriad of factors. Sources say the company is battling with the challenge posed by government policies that regulate importation of raw materials for its production. A source explained that the cost of importing raw materials was becoming unbearable for the company, which has refused to involve in shady deals in order to cheat the system and ease importation.
“It is so expensive to import these raw materials which are not produced in Nigeria. Other companies take the short cut by maneuvering the system, but we cannot,” a top official of the troubled firm disclosed.
Similarly, another factor said to be responsible for the shutdown was the unhealthy competition being faced by the company.
“Our competitors invested much less in their factory, can maneuver their way in the system, and thus produce and sell for much less. We cannot do that. Our investment in Agbara is arguably the largest single investment by a non-oil firm in Nigeria. But we just have to shut it. The loss is much,” the source said.
Even before deciding to shut its plant in Agbara, P&G had also divested from another plant in Oluyole Estate, Ibadan, Oyo State. The company has two production plants in the area, one of which was used to produce Vicks lemon plus and the other Ariel detergent. The Vicks plant was sold as it was not sustainable to continue to run it at a loss,” the source said.
