Manufacturer of Huggies diapers, Kimberley Clark, is in the process of shutting down its manufacturing plant in Ikorodu, Lagos State.
The imminent shutdown is coming two years after the plant was set up with an investment of about $100 million.
According to a report by Nairametrics, sources in the company attributed the development to the below capacity performance of the company from late 2023 to 2024, as a result of the harsh economic environment in the country.
In 2022, the company inaugurated the $100 facility to restart operations after a similar closure of operations in 2019, following a strategic review of its business. The firm began operations in Nigeria in 2012.
The source, who claimed anonymity, said the company, since late 2022, has battled with high energy costs, raw materials and reduced demand from customers due to the prevailing economic situation, resulting in downsizing and reduced production time from every day of the week to just Mondays to Thursdays.
The source also said the company currently spends around N100 million on power generation monthly aside from maintenance costs and that its monthly fixed spend on operations has risen over N500 million.
“Earlier this year, the coy had to downsize to 2 shifts from 4 shifts. We run 24hrs and 7days and 365 days before but currently we don’t run on Friday, Saturday and Sunday anymore because of the economic situation. There is already an embargo on external recruitment. The company is looking for ways to reduce costs since it is not making a profit.”
Furthermore, the source noted that the high production cost stems from the increased raw material cost since it is import-based.
At the initiation of operations about three years ago, the company set aside some money for operations which it estimated would last five years after which revenue from Nigeria could sustain the operations.
