P&G lays off more workers but firm says not exiting Nigeria

Procter and Gamble Nigeria, the local subsidiary of the American consumer goods maker, has laid off another batch of workers, and has significantly scaled down its operations in the country, indicating its troubled Nigeria operation and uncertain future there, but the firm says it does not plan to leave.

The firm has struggled in recent years to have a hold in the fast-moving consumer goods market it previously dominated for decades, and has faced stiff competition amidst an inclement business environment that has pushed operational cost constantly skyward.

P&G, which operates in some 180 countries of the world, produces a range of products for the Nigerian market, including Always sanitary pad, Pampers, Ariel detergent, Oral B toothpaste, Gillette shaving stick. Our sources said the firm has now paid off what they described as the “final set of workers” in its largest Nigerian plant in Agbara, indicating an “uncertain” future in Nigeria.

“Only the P&G plant in Ibadan is currently being run by the company, and it only produces Ariel detergent. All the other P&IG products in Nigeria are either being imported or produced by another company licensed by P&IG,” one of our sources at the firm said asking not to be named for fear of victimisation.

In a statement Friday, P&G said it “is committed to the long term in Nigeria and does not plan to exit Nigeria. We continue to be committed to serving consumers in Nigeria leveraging Nigerian talent, Nigerian capability, and Nigerian partners.”
In 2018, PREMIUM TIMES reported how the firm dismissed about 120 staff and shut its largest plant in Nigeria at Agbara Industrial Estate, Ogun State, just about a year after its commissioning by Vice President Yemi Osinbajo.

The $300 million plant was the single biggest non-oil investment of the United States in Africa’s largest economy and is almost of the same size as P&G’s Baltimore plant, reported to be one of the firm’s biggest factories globally.

P&G’s venture into the Nigerian market has been a sail across choppy waters, marked by steep cost of doing business as well other structural bottlenecks standing in the way of maintaining a profitable and efficient firm, according to company personnel who spoke on condition of anonymity.

Officials of the firm told PREMIUM TIMES that P&G had been incapable of measuring up to competition because it had resolved not to compromise its values even when it was convinced rivals were cutting corners to stay afloat in the market.

The company denied the 2018 closure of the plant back then on the ground that it was struggling behind competition, saying it was rather part of the restructuring of its Nigerian operations, a questionable move that would seem, coming just one year after splurging $300 million on the facility.

“P&G is restructuring its Nigeria manufacturing operations to deliver a more effective business operation for now and sustainably for the future. This will entail an exit from production in its Agbara plant,” a consultant to the company, Christine Ine, told Business Insider in 2018.

“We will strengthen our manufacturing operations in the Ibadan plant, scale up our contract manufacturing operations as well as continue to invest in our local talents,” she added.

New Details

Company sources said P&G has had to outsource the production of its global bar soap brand, Safeguard, to a private Nigerian company due to its inability to bear the cost of producing the soap. Also, popular medicated lozenge, Vicks Lemon Plus, is no longer produced by the company.

Amidst the impact of the coronavirus pandemic, the firm ran its operations in 2020 almost entirely on generators, PREMIUM TIMES learned from credible sources.

The Ibadan plant, currently the only functional plant, has been operating for about three days a week and manufactures only the detergent Ariel, a source said, adding that P&G might end its operations in the country soon.

Three plants so far have been closed while the Agbara plant, which manufactured the diaper Pampers and washing-up liquid Fairy, has been running since 2018 as a warehouse with supplies from countries including Egypt, he went further to say. Another source said the plant had now been sold.

Another employee said the last set of staff at the Agbara plant had been told to leave and were given handsome severance, while a few senior personnel were redeployed abroad.

The firm, however, in its statement to PREMIUM TIMES, said its “brands continue to be manufactured in Nigeria”.

‘Consistent with normal business operations, we continue to reinvent how we operate to better serve Nigerian consumers and all our stakeholders,” the statement said. “All activities on the Agbara site is simply an execution of the changes already announced regarding the Agbara site since 2018 and is in no way a reflection of the company’s commitment to building and developing the Nigerian business.”

Challenging Environment

Hundreds of manufacturing plants have been shut down across the country since 2016 due to the challenging operating environment, according to the Manufacturers Association of Nigeria. More companies were affected by the coronavirus pandemic in 2020.

Interestingly for P&G in the U.S., the reverse was the case last year. The company raised its full-year sales forecast for a second time last week as it benefited from sustained coronavirus-triggered demand for cleaning products.

Procter & Gamble, listed on the New York Stock Exchange, reported strong sales and increasing profits in the U.S. in 2020, with organic sales were up 12 per cent.

The firm also listed several challenges in its regional operations, like retail closures and supply chain disruptions, likely the type it has faced in Nigeria.

Nigeria has improved in its ranking on the World Bank’s 2020 Doing Business Index, standing at 131st in 2019, up 39 places since 2016. However, this has not impacted much on the operation realities for companies with basic amenities like power still largely dysfunctional in the country.