Battery maker Eveready shuts down Nakuru plant

Battery maker Eveready East Africa will start selling off its factory equipment after getting approval from shareholders. PHOTO | SULEIMAN MBATIAH |

East Africa’s largest battery manufacturer, Eveready, has shut down its manufacturing plant in Nakuru, blaming pressure from cheap imports.

The battery maker said on Monday that the dry-cell business has come under intense competition from cheap imports, rendering its Nakuru-based manufacturing unit unsustainable.

About 100 employees at the plant are set to be sent home at a cost of Sh110 million and the 20-acre piece of land converted into rental property.

A spot check by the Nation established that the workers who arrived at the factory in the morning held a crisis meeting before they were sent home.

'NO ALTERNATIVE'

“We have no alternative but to shut down the factory and we have sent our workers home waiting for their terminal benefits,” said a senior employee outside the gates.

More than10 counsellors were at the factory compound to talk to the workers, but a majority of the suspended staff left without being counselled.

“We had hoped to talk to the workers, but unfortunately they have left in a huff and we hope to talk to them (Tuesday), when they will be coming to pick (up) their termination letters,” said a counsellor, who requested anonymity.

More than 10 G4S guards were strategically stationed at five gates around the factory, located along the Nakuru–Eldoret highway.

DIVERSIFY ITS PRODUCTS

The closure is part of a five-year strategy that would see the firm change its business model from manufacturing to a more commercial-oriented outfit.

“It is our strategy to position the business on a growth plan over the next five years through diversification and a change of our business model,” managing director Jackson Mutua said at a media briefing in Nairobi.

He said that Eveready will start outsourcing its flagship D-sized dry-cell battery manufacturing to an Egyptian firm and concentrate on sales and distribution in the region through partnerships.

The company has diversified into car batteries and light bulbs and will soon be launching undisclosed household and personal care products, whose production is set to be outsourced but will retail under the brand name of Eveready.

SALES DECLINE

“Our subsidiary, Flamingo (K) limited shall spearhead our real estate development plan but the houses shall be strictly for letting and not for sale,” Mr Mutua said.

The battery firm has seen a consistent decline in sales volumes and profitability in the last five years, owing to a shift towards electricity-powered gadgets as more Kenyans get connected to the national power grid.

Cut-throat competition from cheap imports, mostly from the East, and new entrants have also hurt Eveready.

Its annual revenues dropped from Sh2.3 billion in 2005 to Sh1.37 billion last year, and the firm has never paid a dividend since it was listed at the NSE in 2006.