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Dunlop Boss Explains Plans To Resume Tyre Production

Published by Guardian on Sun, 04 Mar 2012

Mr Yinusa Mohammed Jimoh, is the Group Managing Director, DN Tyre & Rubber Plc, (formerly Dunlop Nigeria Plc. In this interview with GODFREY OKPUGIE, he shares what the firm is doing to return to the local manufacturing of tyres.Brief background information on DunlopDunlop came into Nigeria in 1961 as full subsidiary of Dunlop UK. By that time, it was purely into trading and in 1963, its factory at Ikeja, Lagos, was opened as a manufacturing entity. Next year (2013), the company will clock 50 years in the country. During this period, we had two major expansions. The first one was in 1990/91, when we expanded the car tyre segment to incorporate what we called the tubeless radial tyre. Again in 2005, the second expansion took place and this was to bring in the radial truck tyre into the system.Everything went quite well until, unfortunately, in 2006, when the government, for reasons best known to it, decided to review the tariff on imported tyres downward from 40 to 10 per cent. Of course this naturally made it a lot more economically sensible to import rather than to manufacture. Both Michelin and we made several presentations to the government.We tried to advise against the decision because it would not encourage more companies to come and set up factories in the country and by such policy, obviously we are creating more joblessness amongst our people. But all efforts to get the decision reversed in 2006 fell on deaf ears.So, by the end of 2006, Michelin closed down their Port Harcourt factory. We decided to continue, hoping that if we continued to make representations to the government it might reverse the policy but when at the end of 2008, we saw that nothing was forth-coming from the government, we decided to give up and closed down. The only difference between Michelin and us was that Michelin moved out its machines and equipment to another location outside Nigeria but we kept ours in the country hoping that someday we will return to local manufacturing.The closure of Michelin and Dunlop made a lot of people to be thrown out of job. Both of us had huge investment in natural rubber plantations. Natural rubber is a major raw material used in making tyres. The multiplier effects of all activities in tyre making business go back to agriculture.All these years we shut down our factory, especially since 2009, we have been having discussions with the government about the possibility of returning to tyre manufacturing. This discussion has been on but very slowly. Even and up till this very moment we have not given up because we have the assurance that at the end of the day, something good will come out of it. Last December, the Minister of State for Trade and Industry visited our factory we were assured that our case would be looked into. Right now we are into some trading, importing tyres from our associate companies in South Africa and Japan but we believe that in not too distant future, we should be able to re-open our factory and get the machines and equipment back to work.How soon will this be'It is difficult to predict, because when you are talking with the government, not until it happens you can't say it will happen tomorrow or next.Experience in sourcing funds to do business and high interest ratesIf you talk about availability of funds, of course the banks have enough investible funds but because a lot of these are short-term they are not available for long-term investment. So, when an investor, who needs long-term funds, approaches the banks, the short-term fund is given to him for long-term investment and on short-term conditions and at a very high interest rate. That is a major problem. The people, who are involved in long-term activities like agriculture or manufacturing will not find it easy to get cheap loans or low interest rate loans to establish long-term ventures. So, the interest rate in the economy is a reflection of the fact that the entire economy itself is short-term. People are just interested in things they can do within 90 days or six months maximum and get their money back. Those things do not create multiplier effects. It is only long-term investments that bring about jobs and that is the reason in the society we have a lot of growth but not much development.Since you contemplate going back to manufacturing in the near future, what have you been doing to keep your rubber plantations in good shape'We have been keeping and maintaining them. We also have been doing what we hate to do and that is to export the natural rubber in a raw form without adding value. We would have preferred to add value in the form of making tyres or making something else and through that get people employed. So, our rubber plantations in Cross-River, Delta and Edo States are all running. We didn't abandon them.Why is it that in the US and other developed countries governments make efforts to intervene and save big companies from collapsing but in Nigeria, the government rarely does so'My basic understanding is that our leaders are not yet at the point where they understand that the fundamental responsibility of being in government is to provide for the welfare of the people. If they had that understanding, their attitude to any organisation that employs people would be different because at the end of the day, it is only when people have jobs that you can talk about providing further welfare. It is only when people have jobs that you can talk about some reasonable level of security in the society.So, every time you hear us talk about insecurity and all these robberies, bomb blasts, etc, somehow we are not linking it to the fact that a lot of people are jobless. An average human being is a good person, it is only when people are pushed to the wall that you begin to have all these kinds of dysfunctional behaviour. So, those countries you have mentioned, their leaders understand that their primary responsibility is to provide job for their people so that every person will be in a position to fend for himself or herself.
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