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Kenya

Finlays closes tea extracts factory

NAIROBI, Kenya, Oct 2- Local tea extracts manufacturing firm, James Finlay Kenya has announced the commencement of a phased closure of its four decade old Mara Mara Tea Extracts Factory in Kericho.

Kericho-based Finlays General Manager in charge of Tea Extracts Isaiah Cheruiyot, said their sales volumes had in recent times been hit badly by the economic downturn and increased competition from lower cost production centres. 

"We have tried to keep the operation going for as long as we can by reducing capacity to one line in the hope that sales volumes might pick up but this hasn\’t happened," he explained.

The decision to close Mara Mara was made after full consideration of all available options, he added.

The company plans to transfer some of its production equipment from the closed factory to the modern Saosa Tea Extracts Factory and invest in a new line there as part of consolidation into one more cost efficient factory. The Saosa complex will also be expanded as part of a strategy to maintain market competitiveness in the global tea extracts market.

"We now have no choice but to consolidate at Saosa if we want to remain globally competitive. Otherwise our tea extracts business will not be viable and we risk losing more jobs if we don\’t act now," the manager said.

The consolidation is expected to result in the layoff of approximately 430 people, out of a total workforce of 720 Tea Extract employees in Kericho.

Mr Cheruiyot assured this would be phased over one year to ensure a smooth transition of manufacturing operations to Saosa and make it easier for staff to be redeployed to other parts of the company. 

It is anticipated that through a combination of redeployment and Voluntary Early Retirement (VER) any redundancies will be minimised, the manager assured.

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"Every effort will be made to avoid forced redundancies and priority will be given to staff who lose their jobs when other vacancies arise in other parts of Finlays in Kericho", Mr Cheruiyot said adding that the company would provide generous severance terms to the  affected staff.
 
The closure comes at a time when productivity in the tea sector has declined due to the ongoing drought.

Earlier this week, the Tea Board of Kenya reported a drop of 11.6 percent in production to 182 million kilograms for the half year ended August 2009 owing to adverse weather conditions.

Finlays has been growing tea for over 90 years in Kericho and is one of Kenya\’s largest tea growers. It recently expanded its horticultural business in Kenya with the acquisition in 2007 of Flamingo which has extensive flower farms and fresh produce farms around Lake Naivasha and Mt Kenya.

The firm now employs over 22,700 people in Kenya making it one of the largest employers and investors in Kenya\’s agri-business sector.

Finlays is the world\’s largest supplier of quality tea extracts, dealing with all of the world\’s top beverage companies.

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