Kimberly-Clark, manufacturer of the popular Huggies diapers, is reportedly finalising plans to close its $100 million production facility in Ikorodu, Lagos.
According to an anonymous source cited by Nairametics, the plant has been grappling with severe production shortages from late 2023 into 2024.
The insider blamed the unfortunately development on high costs of energy and raw materials, coupled with a decline in product demand.
In his words:
“Our first two years were fantastic in terms of sales growth and market shares within the diaper industry. Fast forward into late 2022 and 2023 was really bad years for the coy due to economic situation.
“Running cost is extremely on the high side. Our fixed spent on a monthly basis is above N500 million and we spent about N100 million on just gas consumption for powering the gas engine aside maintenance.
“The company has two assets and for last year, these assets didn’t run for like 90 days in 365 days. 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 cost since it is not making a profit.”
The Ikorodu facility was intended to mark a fresh start after a similar shutdown in 2019, but persistent economic difficulties have led to another premature closure.
Kimberly-Clark also produces Kotex, sanitary pads, and other hygiene and personal care products.
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Multinationals’ Exit
In the last few months, major multinationals have shut down their businesses in Nigeria due to the same harsh economic climate.
Notably, Procter and Gamble also ceased production in Nigeria last year after a significant investment in Ibadan, and PZ Cussons is reconsidering its commitment to the Nigerian market.
These closures represent a blow to the Nigerian government’s efforts to attract foreign direct investments and stimulate local production.
This trend suggests potential hike in the cost of living for Nigerian households.
As these companies shift towards import-based models, the depreciation of the Naira could further inflate the prices of essential products like diapers and sanitary pads.
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