Manufacturers to cut workforce as orders drop

Port workers from Gifcon and Jibril Company in Mombasa held demonstrations over poor pay and ...
Port workers from Gifcon and Jibril Company in Mombasa held demonstrations over poor pay and mistreatment

The prolonged electioneering period has seen the country’s manufacturers mull staff cuts as well as a drop in production to meet stalling demand for goods.

According to the Kenya Association of Manufacturers (KAM) third quarter Manufacturing Barometer, 47 per cent of industrial manufacturers plan to reduce employees on their workforces in the next 6 months.

This predominantly pessimistic view of the economy is also reflected at a company level with 50 percent of industrial manufacturers maintaining a negative outlook for the next 3 months.

The third quarter barometer indicates that manufacturers expect new orders to take a dive with 56 of those surveyed forecasting a decline in the 3rd quarter.

Kenya has been on a heightened political mood for most of 2017 with the country set to conduct a fresh presidential election on October 26.

Besides politics, other factors seen influencing manufacturers decisions include a trend of decreased profitability, high price of raw materials as well as access to credit which are all seen impacting performance going forward.

Britania Foods Limited chief executive officer Robert Kagundah said the confectionaries industry as a whole has felt the impact of the slowing down economy primarily driven by a significant reduction in consumer spending on non-essential goods and services, the availability of cheap imports and the higher prices of raw materials used for manufacturing.

“As Britania Foods however, we remain bullish about the prospects of the economy and have adopted a longer-term broader view on consumer demand as we strive to be more innovative in pricing and packaging options,” he said.

Mr Kagundah added that operations have been scaled down across the manufacturing sector to reduce overheads while meeting declining consumer demand.

Despite the uncertainty however, manufacturers have ruled out arbitrary price hikes to cushion their profits.

“Average prices will remain for the next three months according to 42 percent of industrial manufacturers surveyed,” the report indicates.

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