Hundreds to lose jobs as Sameer Africa seeks cheap Chinese labour

The firm has suffered losses due to cheap tyre imports

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Sameer Africa
A worker at Sameer Africa examines a tyre at the firm's Mombasa Road plant. The firm is shutting down local production. PHOTO: BUSINESS DAILY

Sameer Africa Limited, the only tyre manufacturer in the country, will close its manufacturing plant in the country from September 30 after receiving the green light from the Capital Markets Authority.

In a statement released on Thursday, September 1, the company said the decision was arrived at because of stiff competition from cheap and subsidised tyre imports entering its markets and will therefore commence offshore production through manufacturers in China and India, the Star reports.

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“As a result, the company will incur a one-off charge in respect of plant and inventory impairment and employee severance costs estimated at approximately Sh725 million,” the paper quoted Managing Director Allan Walmsley.

“The earnings for the current financial year are therefore expected to be lower by more than 25 per cent of the earnings reported for the same period in 2015,” the MD added.

Since 2006, Sameer has seen a systematic reduction in its market share all thanks to cheap and subsidised tyre imports.

This has seen the high price market segment where the company’s locally manufactured Yana tyres compete, declining from a high of 62 per cent in 2005, to the current 25 per cent.

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Walmsley noted that other factors like reduction in custom duties for tyre importation, high cost of electricity and underutilisation of factory capacity have also had adverse effects in the business, leading to loss of jobs in the factory.

He however assured that they will continue to supply tyres in the country.

He said: “We will also continue to expand our Summit Tyre offering for all markets and we will continue to distribute Bridgestone tyres in Kenya, Tanzania and Uganda.”

Sameer Africa Limited, under the name Firestone East Africa (1969) Limited, was established in Kenya in 1969 by Firestone Tyre, the Rubber Company of the USA and the government of Kenya to produce tyres for the East African market.

Sameer Investments Limited, a Kenyan company, later purchased a significant part of the shareholding from Firestone Tyre and Rubber Company, with the Yana brand officially launching in November 2005.

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The company distributes tyres in all the East African countries – Kenya, Uganda, Tanzania, Rwanda and Burundi.

Bridgestone Japan still retains a substantial equity shareholding in Sameer Africa Limited of approximately 15 per cent.

Via the Star