5 major shocks suffered by manufacturers in 2016

It is no more news that 2016 was one of the toughest years in the history of Nigeria’s manufacturing sector. Among the many problems faced by manufacturers in the outgone year, there are five challenges that shocked them.
The first one is the scarcity of dollars. Apart from inability to import needed raw materials, machinery, spare parts and packaging materials, dollar crunch compelled manufacturers to resort to rationing product supply to customers, something that has never happened in the last 30 years.
A manufacturer told this writer that he could not meet the demands of some of his customers because he had to cut production due to lack of essential inputs.
It was a year a manufacturer Eric Umeofia, CEO of Erisco Foods Limited, said he was quitting Nigeria because he couldn’t get dollars from the Central Bank of Nigeria to import tin plates.
Secondly, scarcity of gas unsettled many firms in 2016.  Due to gas scarcity, Fidson Healthcare Plc could not kick-start its newly constructed ultramodern factory at Otta, Ogun State. Companies had to resort to the expensive Low-Pour Fuel Oil to stay afloat. Dangote Cement had to start building a coal-fired plant to remain in business.
“It is shocking that we are looking for gas, when the country is abundantly blessed with it,” said one manufacturer in July 2016.
Micheal Ola Adebayo, chairman of the Manufacturers Association of Nigeria (MAN) Gas Users Group, told this writer that lack of natural gas was harming manufacturers.
Another big shock in the industry was the number of closures recorded last year. Frank Udemba Jacobs, president of the Manufacturers Association of Nigeria (MAN), told this writer that 54 manufacturing companies closed shop between the last lap of 2015 and August 2016. This could be compared with the era of de-industrialisation in Nigeria ( mainly late 1980s and 1990s) when poor import policies led to factory closures.
Next is the number of jobs lost in the industry—12,000. Factory workers lose their jobs all over the world, but what made retrenchment in the Nigerian manufacturing sector in 2016 a shock was the manner in which staff were relieved of their jobs. Sacks were not usually based on misconduct or indiscipline. Workers were asked to go because their firms were barely surviving.
In some cases, staff members had to leave their jobs in sympathy, because their firms were struggling to pay them for months.
The last but not least shock suffered by manufacturers last year was the firms’ inability to increase prices in response to the economy. Last year shows that some economic laws do not work in Nigeria. For example, one of the economic laws says that an increase in price of a commodity whose demand is inelastic may not necessarily lead to decrease in the quantity demanded.
Consumers must buy them even though the prices go up. However, when prices of essential commodities such as drugs, gas and foods rose in 2016, Nigerians sought alternatives. Companies started using LPFO or coal when gas was scarce. Patients went to pharmacy stores seeking alternative cheap medicines, while some had to give up habits when companies raised prices of alcohol and cigarettes.