1,000 jobs on the line as Portland Cement plans major downsize

East African Portland Cement Company (EAPCC) has announced plans to shed off over 1,000 jobs as part of radical plans to improve operational efficiency.

With a workforce closing in on 2,000 employees, the cement maker’s board has said the company is ‘severely over staffed’ to be able to compete with industry rivals.

The announcement comes just days after an audit report painted a grim image of the company which is staring at a Ksh 2.8 billion hole in its balance sheet.

Portland Cement board Chairman Bill Lay said on Thursday high staff costs have contributed to the firm’s financial woes.

Mr Lay said by industry comparison Portland Cement was unfavorably positioned to compete effectively.

“When you in the cement business and you’re competing against five well run private sector companies, none of which have an over staffing problem, it becomes a unique problem for Portland,” Mr Lay said.

Mr Lay said the management team had been tasked with developing a voluntary early retirement program that will get its staffing to an optimal level.

“We have close to 2,000 people and by recent studies bench marking against international cement companies, we need about 500 of those people that puts on a path for increased competitiveness over the medium term,” he stressed.

Portland Cement is majority owned by the government with the National Treasury owning a 25 percent stake while the National Social Security Fund (NSSF) holds another 27 percent.

Swiss based Larfarge Holcim holds the remaining 41.7 percent of the cement maker.

By virtue of its ownership, Portland Cement is run as a parastatal which is bound to make the downsizing of staff difficult.

The company’s operations have often been marred by political interference given its strategic positioning.

In the full year to June 2016, EAPCC’s full year profit dipped by 41 percent to Sh4.2 billion.

On Tuesday EAPCC Managing Director Simon Peter ole Nkeri took to his Facebook page to allude to the fact that the high staff count had opened avenues for corruption that has been bleeding the firm’s revenues.

“We are alive to such malpractices and corruption cartels and networks but we shall not relent to redeem EAPCC and to seek to re position it as a key market leader in the industry,” he said.

Mr Lay said Portland plans to spend Sh2 billion in the staff downsizing.