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Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity - Autos - Nairaland

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Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by redcap: 5:51pm On Aug 31, 2016
* Nigerian factories starved of imports

* Vehicle plant halted for lack of engines

* Africa’s largest economy in first recession since 1991

* GDP contracts by 2.06 percent in second quarter

By Ulf Laessing

NNEWI, Nigeria, Aug 31 (Reuters) – At a factory in southeast Nigeria, dozens of new white buses stand at the end of the production line, apparently ready to take on some of Africa’s toughest roads.

Unfortunately for Nigeria’s main domestic vehicle assembly firm they are going nowhere for now.

In an economy starved of dollars because of the slump in oil prices, Innoson Vehicle Manufacturing (IVM) cannot buy imported components, leaving the buses without engines – a metaphor for the problems afflicting Africa’s most populous nation.

GDP figures on Wednesday confirmed that the continent’s biggest economy slid into its first recession in 25 years in the second quarter, shrinking by 2.06 percent after a 0.36 percent contraction in the first three months of the year.

The poor state of the manufacturing sector in particular is a blow to President Muhammadu Buhari, who has been pushing hard to wean Nigeria off its dependence on crude oil sales, which make up 70 percent of government revenues.

At IVM, whose products are intended to show Nigeria can export more than oil, workers have already been sent home because of a lack of parts from Japan, China and Germany, which account for much of the content of the vehicles they produce.

Production had stopped “as we are waiting for the imported items for which there is a forex issue,” chairman Innocent Chukwuma said at the firm’s plant at Nnewi, in southern Nigeria.

Launched in 2010, IVM last year raised its annual production target for 2016 from 4,000 to 6,000 vehicles due to a “Made in Nigeria” campaign that generated strong sales to the police, state agencies and churches.

Those ambitions are now looking shaky if promises of government assistance fail to materialise, Chukwuma said.

“I believe they are doing something but if they can’t do anything we’ll lay off some workers,” Chukwuma said.

“JAPAN OF AFRICA”

Nigeria’s foreign currency reserves were more than $31 billion a year ago but dropped to below $26 billion this month as the central bank stepped up its dollar sales to try to address the widespread foreign exchange shortage.

A 40 percent devaluation of the naira in June was meant to resolve that shortage by encouraging delayed inward investment and opening up the currency market.

But trade on the official market remains thin, with many of the available dollars finding their way to the black market, where they are sold at a premium of 40 percent.

For a country that imports everything from machines to milk the impact is huge.

In the southeastern city of Aba – known as the “Japan of Africa” until the 1970s – more than 2,000 shoemakers have shut because they cannot pay for imported glue or synthetic leather, whose prices has surged due to the black market dollar rate.

“We are just managing,” said Uche Okeke, who used to make 1,000 pairs of women’s shoes a month before the price of glue quadrupled, forcing him to nearly halve production and lay off half his staff.

With the inflated input costs, consumers in neighbouring Cameroon, who used to buy most of Aba’s shoes, are now opting for cheaper Chinese footwear.

Until recently, three trucks laden with shoes and bags left the city for Cameroon every week. Now it is one every fortnight, traders at the city’s almost deserted motor park said.

POTHOLES


Government officials point to a sizeable investment this year by U.S. drinks giant Coca Cola in local juice and dairy firm Chi Ltd as evidence of a turnaround in Nigeria's fortunes, but business people say promises of government support fail to materialise.

Finance Minister Kemi Adeosun said earlier this month that exporters should get tax breaks, another item in a list of proposals that have yet to make it into law.

A government source said last week that Buhari wanted parliament to grant him extra powers to speed up plans such as easing visa restrictions for potential investors.

The government under Buhari has spent 400 billion naira ($1.2 billion) on building roads or improving the power supply but that has had little impact in a country of 190 million that has suffered decades of mismanagement.

The main roads around Aba - whose shoes are said to have rivalled even Italian footwear in the decade after independence - are littered with pot-holes and in some parts are little more than dirt tracks.

"We are tired of hearing about support from the federal government. We read about it in the newspapers, hear it on television and radio. But it's just talk," said Goodluck Nmeri, head of the 6,000-strong shoemakers' association in Aba.


http://in.mobile.reuters.com/article/idINL8N1B31PR?irpc=932

2 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by redcap: 5:52pm On Aug 31, 2016
.......A government source said last week that Buhari wanted parliament to grant him extra powers to speed up plans such as easing visa restrictions for potential investors.

The government under Buhari has spent 400 billion naira ($1.2 billion) on building roads or improving the power supply but that has had little impact in a country of 190 million that has suffered decades of mismanagement.

The main roads around Aba – whose shoes are said to have rivalled even Italian footwear in the decade after independence – are littered with pot-holes and in some parts are little more than dirt tracks.

“We are tired of hearing about support from the federal government. We read about it in the newspapers, hear it on television and radio. But it’s just talk,” said Goodluck Nmeri, head of the 6,000-strong shoemakers’ association in Aba. ($1 = 330.0000 naira) (Editing by Ed Cropley and Giles Elgood)

22 Likes 2 Shares

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by LabiaMajoraDest(m): 5:54pm On Aug 31, 2016
Blame it on the gworo chewing dullard...
FTC by the way...
I dedicate this spot to all the ladies that I have destroyed their L***a..get a tightening cream..its what I do...

75 Likes 2 Shares

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Fedayeen02: 6:00pm On Aug 31, 2016
IVM is a 5%er who doesn't deserve forex while Dangote is fed dollars to do business because his refinery will change Nigeria.


How do we look inward to grow when there is forex restrictions to source for materials.


Innocent, chukwu ga eme ife o jiri bu eze okaka

155 Likes 12 Shares

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by redcap: 6:07pm On Aug 31, 2016
Things are really getting tougher the center can no longer hold.Soon,pretty soon, Something has got to give.
cc. Lalasticlala.

14 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by EazyMoh(m): 6:40pm On Aug 31, 2016
God help us!

13 Likes 2 Shares

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by veekid(m): 8:21pm On Aug 31, 2016
It's [size=18pt] recession [/size] time; private companies can't even afford to pay salaries anymore

19 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by celestialAgent(m): 8:21pm On Aug 31, 2016
I'm not supprised.

Innoson has never occured to me as a car manufacturing company but a car part compilation company. Hence the reason for reliance on forex to import the parts to be coupled...

let's not embrace dependency, we need real productions!

Before you quote me, bear in mind that i'm not tribalistic, this is channelled at all Nigerians..

45 Likes 3 Shares

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by divide9ja: 8:21pm On Aug 31, 2016
[size=13pt] By the time Buhari don finis with Nigeria, nothing go remain [/size]

37 Likes 1 Share

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Princelegacylemoha(m): 8:21pm On Aug 31, 2016
Bad Heconomy

11 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Nobody: 8:21pm On Aug 31, 2016
Wailers and our brothers from the other side. Hot food is ready!!!

6 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by falconey(m): 8:21pm On Aug 31, 2016
this regime only remedy is fighting for survival. normal profit, economic profit for firms , stable income, increase in income for individuals aren't achievable.

1 Like

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by GogetterMD(m): 8:21pm On Aug 31, 2016
I thought the vehicles were exclusively made in Nigeria undecided

9 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Doublyu(m): 8:22pm On Aug 31, 2016
realy?Innoson.. y u wan sack people wey dey hustle? if dollar scarce, make dem use pounds na.
BTW, i thought innoson ws an indegenious company aimed at developing the economy tru car production?
but seems d economy is now developing innoson..lol

Baba God, pls do and come.. Lemme go and enjoy my riches in heaven. Ayaf taya for ds country called Nigeria!!

3 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by timilehin007(m): 8:22pm On Aug 31, 2016
Punish them o God

2 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Firefire(m): 8:22pm On Aug 31, 2016
All these Ugandas and propaganda.


Sai Baba Carry-GO.

7 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by YoungHustler: 8:22pm On Aug 31, 2016
E
Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by hotspec(m): 8:22pm On Aug 31, 2016
Sheriki Daura

12 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by strangest(m): 8:22pm On Aug 31, 2016
Eeeeeyah.... Nose diving
Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by chiedu7: 8:22pm On Aug 31, 2016

18 Likes 1 Share

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by tiamiyukunle69(m): 8:22pm On Aug 31, 2016
This is getting really frustrating angry

6 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Dyt(f): 8:22pm On Aug 31, 2016
It is well
Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by victorazy(m): 8:22pm On Aug 31, 2016
...But it would have been plus to them since na Nigerian product, cost of labour is cheap, export to US grin u don hama.
Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Nobody: 8:22pm On Aug 31, 2016
Keep in mind that thanks to the fall in oil prices....we no longer have enough dollars to do anything.

And while Innoson was a good manufacturer.....his Achilles heeel was the failure to develop a LOCAL source for his cars.

8 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by iamDaisy(f): 8:23pm On Aug 31, 2016
2steps forward 10steps back that's the Nigerian way! cry cry

7 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by edlion57(m): 8:23pm On Aug 31, 2016
It has gotten to a time we have to protest.
..

15 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by denedene(m): 8:23pm On Aug 31, 2016
Chei. This is serious o cry obama epp us, senate epp us, somebody, anybody epp Nigeria o!

2 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by datola: 8:23pm On Aug 31, 2016
The FG should not allow this to happen.

I saw a beautiful sedan driving beside me today in Lagos and I head turned to find out it's Innoson car. I was like wow!

The same way FG sources dollar for Dangote should apply to Innoson worthy cause.

Where are those egg heads that locally fabricated tools, weapons, armoury for Biafra during the civil war when you need them.

I so much believe in made in Nigeria.

26 Likes 1 Share

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by Nobody: 8:23pm On Aug 31, 2016
GogetterMD:
I thought the vehicles were exclusively made in Nigeria undecided

No, the parts were made abroad...and then assembled in Nigeria.

It is what companies like PAN, Volkswagen of Nigeria, Steyr, Leyland, and company used to do in Nigeria in the 1970's...they would import CKD (Completely knocked down ) parts into Nigeria and assemble them here into cars.

Solong as oil prices were high back then, and we could spend the dollars back then, we could do that with ease.

But back in 1973....construction work began on Ajaokuta Steel Complex...the idea being that all those car assembly plants would eventually make their cars in Nigeria...and end the imports of CKD parts. That unfortunately did not happen.

When oil crashed in 1982...the parts became too expensive to import , and eventually a new car became expensive in Nigeria...which is when the tokunbo industry began to grow....from the late 1980's on wards.(In 1975...you could get a new car for less than N6000. By 1990..that new car set you back N1million. By 1993....it was basically the government and the very rich that were buying new cars.)

[s]What Innoson was doing was importing CKD parts from China and assembling them under the INNOSON marque[/s]. So long as the dollars were flowing in thanks to high oil prices....he could do that easily. But...once oil prices crashed, and the FG was forced to bring in restrictions on forex...that became difficult.

(Slight correction:Innoson's cars: 70% of the car parts are produced locally while the rest is being imported from Japan, China and Germany.So..largely local content.Problem is...engine is still produced out of the country....hence the problem . Thanks to those who pointed it out...but my point on local content vis a vis engine...and the fact that large volume production= increased forex...still stands)

You see why GEJ's automotive miracle was a false mirage? We were just doing what we did in the 1970's....live on a false lie. You cannot have a good domestic car manufacturing industry without sufficient local content.

Innoson is a great man....where his problem was....his Achilles heel if you will ...was in the area of local content.

24 Likes 5 Shares

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by NigerDeltan(m): 8:24pm On Aug 31, 2016
Expected

Click like if you think this is wailing

22 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by teacherbim(f): 8:24pm On Aug 31, 2016
Good night joor,bad news since morning but I know that God will intervene to this economy meltdown

3 Likes

Re: Innoson Motors Stops Production, Sack Of Workers Imminent Over Dollars Scarcity by JohnFrankling(m): 8:24pm On Aug 31, 2016
What happened to #buy_Naija_to_grow_naira, sorry wrong thread

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