About a year after commissioning its largest Nigerian plant, Procter & Gamble (P&G) is set to shut the plant. The leading FMCG (Fast-moving Consumer goods) is set to shut the production plant situated in Agbara Industrial Estate, Ogun State, PREMIUM TIMES can report.
The company expanded its footprint in Nigeria in June 2017 with the commissioning of the state of the art production line which reportedly cost the firm about $300 million to complete. The plant is for its ‘Always’ and Pampers brand of sanitary pads and diapers. 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.
“About 30 staff will be left who may either be outsourced or deployed to our only remaining plant in Nigeria,” a company source told PREMIUM TIMES.The company, a multinational FCMG with 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 shutdown is coming barely a year after the production line was commissioned by Vice President Yemi Osinbajo and Governor Ibikunle Amosun of Ogun State.
A ‘delightful investment’
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. Similarly, Mr Amosun, the governor of Ogun State, commended P&G for locating the factory in Agbara, Ogun State.
“Ogun State is fast becoming a global destination for investment. We look forward to embracing innovations, initiatives and more companies willing to support the vision of the federal government through local production,” the governor had said. But barely a year after the launch of the plant, the company has found it difficult to break even due to a myriad of factors. Insiders familiar with the development told PREMIUM TIMES that 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.
Another Plant Sold
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.That Vicks plant has been sold.
“We had to sell the lemon plus plant in Ibadan. It was not sustainable to continue to run it at a loss,” the source said.A resident of Oluyole Estate told PREMIUM TIMES that one of the Ibadan plants, located along Seven-Up Road within Oluyole Estate, is still functioning while the other plant, which has now been confirmed to have been sold, has been moribund for a while.
The P&G source suggested that even the single remaining plant in Ibadan used to produce Ariel detergent is being reviewed.
“We are keeping it open for a while to see if we can sustain it,” the source said.
No Official Statement Yet
When The Sun Newspapers reached out to the corporate communications desk of the company Tuesday morning, a staff of the desk who declined to make her name known quickly disconnected the telephone line immediately the questions about the shutdown were put to her.
But in a follow-up call by PREMIUM TIMES Tuesday afternoon, a customer care attendant of the company told our reporter that no such development had been communicated to the communications team. The staff, who simply identified herself as Peace, said she was not aware of the situation.
“The information about the plant being shut down has not come to our notice. We don’t have the information at hand,” she said. “So it means the plant is still running. But once we have the information that the plant is shutting down then we can disseminate. But for now we don’t have such information,” she said.
Another Sad Tale
The P&G plant was expected to contribute to Nigeria’s economic and social development through localization of its products. Such plants were expected to make Nigeria a key export hub for Africa and create several jobs. They also contribute significantly to Nigeria’s non-oil revenue.
The shut down will not, however be the first of such in Nigeria. About 272 manufacturing plants were shut down across the country in 2016, according to the Manufacturers Association of Nigeria. Nigeria slipped into recession in 2016, largely due to the ripple effects of dwindling oil revenue. The nation however exited recession in the second quarter of 2017 after oil prices improved, recording slow but consistent growth ever since. As a means of consolidating on its recovery, the government has said that it would focus on the non-oil sector to improve its revenue base and create jobs in the economy. The shut down of the P&G plant could mean the government needs to review its policies to ensure more manufacturers do not exit the country.