Portland Cement withdraws retrenchment notice

Saturday, August 10th, 2019 00:00 |
Cement. Photo/Courtesy

Noel Wandera

Cement maker East African Portland Cement (EAPC) PLC plans to hire a maximum of 600 employees on contract basis.

Acting managing director Stephen Nthei said the rationale behind EAPC PLC’s restructuring and staff rationalisation process is to enhance efficiency and ensure better customer service using a lean workforce to deliver shareholder value.

Last week, the company announced plans to lay off its entire workforce of 750 due to financial hurdles the firm faces.

Nthei said at the end of the process, the current employees will apply for newly configured jobs as defined in the new structure on contract basis.

“This will reflect a performance based appraisal system as the company crystalises on a plan to operate with not more than 600 employees,” said Nthei.  

The process, Nthei said, recognises the importance of the current workforce in the continuous operations of the company. 

“We recognise the need of retaining the tacit knowledge and skills developed over time through work experience and on job training,” said Nthei.

However, those who will be considered will be employed under new contract terms with a pay cut of 40 per cent from the current basic salary for the same positions held.

“Applications will be open for all job seekers but priority will be given to those who have been working at the plant on a 60 per cent salary of the current pay,” a senior official told Business Hub.

In appreciation of the invaluable contributions of the employees to the company, Nthei said EAPC PLC will offer enhanced severance pay to make the transition as smooth as possible.

He said the process will be managed fairly, without any discrimination and in the best interest of all parties involved to ensure that no adverse negative impact will be felt.

“The company is a going concern and the purpose of the reorganisation is to enable EAPC PLC to work more efficiently and offer its customers better services,” he said adding that the programme will be implemented on a phased approach to ensure that normal operations are not disrupted.

Retrenchment phases

While issuing the statement last week, Nthei indicated the company would declare all 750 positions redundant in a move that will cost it Sh600 million for the first phase. 

The redundancy will affect both unionisable and non-unionisable workers in the company. The retrenchment will take place in two phases with the first batch set to be laid off on October 8. 

After years of corporate troubleshooting, stiff competition and banking on sale of its prime land in Athi River to survive, EAPC seems to have hit a brick wall.

The cement maker, whose flagship brand is Blue Triangle, has struggled financially over the last six years. Performance has continued to decline and is currently making losses of up to Sh8 million daily, which has impacted negatively on sales and subsequent profitability.

Nthei attributed part of the firm’s woes to old and dilapidated plant and machinery which require resources to modernise so as to provide the institution with a competitive advantage.

These factors, among others, Nthei told employees, forced the company to restructure operations, which include a staff rationalisation programme to balance its running costs and current levels of productivity. 

“As a result of the restructuring programme, all positions in the company will be declared redundant and the employees released,” Nthei said in the notice which he disclosed has also been sent to the respective unions and labour office. 

Nthei has confirmed the funds to be spent in the restructuring process is part of the Sh5.2 billion obtained by the company from selling 900 acres of its land to Kenya Railways which has since sold the land to Green Bulk Handlers to put up a dry port.

In the notice, all workers have been notified that there will be a major meeting for all employees on August 16 to shed light on the matter. The meeting is expected to be chaired by the board and the EAPCC leadership.


However, tension remained high among workers who fear that the process of retrenchment might be biased.

EAPCC’s shareholders include the National Social Security Fund with 27 per cent shares, the government at 25.3 per cent, Cementia Holdings and Associated International Cement both holding at 14.6, Bamburi Cement with 12.5 with individuals holding six per cent.

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