Business / Companies
Reckitt Benckiser shuts Zimbabwe plant
30 Jun 2013 at 07:42hrs | Views
Reckitt Benckiser Zimbabwe (RB), the local subsidiary of London Stock Exchange-listed (LSE) Reckitt Benckiser Plc, has closed down its Harare plant because of "cost competitiveness pressures", raising fears that the adjustment will likely affect workers at the firm as it rationalises its operations.
RB has established a foothold on the local market for the manufacture of some of the biggest consumer hygiene, health and home products such as Dettol, Cobra, Disprin, Harpic, Jik and Air Wick.
Sources told The Sunday Mail Business that the company had decided to shut down the Harare plant owing to unsustainable local cost structures that make it sensible to import rather than locally manufacture the brands.
It was also believed that the company was finding it increasingly difficult to pay its employees.
"The company has closed shop in Zimbabwe. Employees haven't been paid for months," claimed the source.
Though Reckitt Benckiser Zimbabwe managing director Mr Agrippa Mandiwona confirmed that the local plant had been closed, he insisted that its workers continue to be paid timely.
"Harare plant closure is a result of cost competitiveness pressures versus intra-group alternative sourcing options in order to keep Reckitt Benckiser brands competitive in the local market as well as guarantee the best product quality for the Zimbabwean consumers.
"Reckitt Benckiser has and continues to pay its employees timely," explained Mr Mandiwona.
The fate of some of the 70 employees, especially those employed to work in the plant, could not be ascertained by the time of going to press.
Operational costs related to labour, utilities such as power and water, and raw materials are regarded to be higher in Zimbabwe relative to other countries in the region.
As a result, locally produced products have not been able to compete with products manufactured in the region, especially South Africa.
Similarly, RB is expected to source its products from its "sibling" in South Africa.
RB, whose parent is domiciled in the United Kingdom, however, notes that it is still engaged in discussions with local authorities in order to come up with an acceptable indigenisation and empowerment model.
Added Mr Mandiwona: "Reckitt Benckiser continues to work closely with the authorities to ensure its local operations comply with the local operating legislations and regulations including those on indigenisation and economic empowerment."
Local regulations stipulate that foreign-owned manufacturing companies are expected to cede 26 percent of their shareholding by the end of November this year.
By 2015, locals are supposed to hold more than 51 percent of the stake. Reckitt Benckiser, the multinational, was formed in 1999 after the merger of UK-based Reckitt & Colman Plc and Benckiser NV, based in the Netherlands. Some of its renowned brands include Strepsils, regarded as the world's largest selling sore throat medicine; Air Wick, the world's second largest selling air freshener and Dettol, the world's largest selling antiseptic.
It had a market capitalisation of approximately £32 billion in mid-February this year.
RB has established a foothold on the local market for the manufacture of some of the biggest consumer hygiene, health and home products such as Dettol, Cobra, Disprin, Harpic, Jik and Air Wick.
Sources told The Sunday Mail Business that the company had decided to shut down the Harare plant owing to unsustainable local cost structures that make it sensible to import rather than locally manufacture the brands.
It was also believed that the company was finding it increasingly difficult to pay its employees.
"The company has closed shop in Zimbabwe. Employees haven't been paid for months," claimed the source.
Though Reckitt Benckiser Zimbabwe managing director Mr Agrippa Mandiwona confirmed that the local plant had been closed, he insisted that its workers continue to be paid timely.
"Harare plant closure is a result of cost competitiveness pressures versus intra-group alternative sourcing options in order to keep Reckitt Benckiser brands competitive in the local market as well as guarantee the best product quality for the Zimbabwean consumers.
"Reckitt Benckiser has and continues to pay its employees timely," explained Mr Mandiwona.
Operational costs related to labour, utilities such as power and water, and raw materials are regarded to be higher in Zimbabwe relative to other countries in the region.
As a result, locally produced products have not been able to compete with products manufactured in the region, especially South Africa.
Similarly, RB is expected to source its products from its "sibling" in South Africa.
RB, whose parent is domiciled in the United Kingdom, however, notes that it is still engaged in discussions with local authorities in order to come up with an acceptable indigenisation and empowerment model.
Added Mr Mandiwona: "Reckitt Benckiser continues to work closely with the authorities to ensure its local operations comply with the local operating legislations and regulations including those on indigenisation and economic empowerment."
Local regulations stipulate that foreign-owned manufacturing companies are expected to cede 26 percent of their shareholding by the end of November this year.
By 2015, locals are supposed to hold more than 51 percent of the stake. Reckitt Benckiser, the multinational, was formed in 1999 after the merger of UK-based Reckitt & Colman Plc and Benckiser NV, based in the Netherlands. Some of its renowned brands include Strepsils, regarded as the world's largest selling sore throat medicine; Air Wick, the world's second largest selling air freshener and Dettol, the world's largest selling antiseptic.
It had a market capitalisation of approximately £32 billion in mid-February this year.
Source - sunday mail
