EAPCC sends all staff home in latest bizarre restructuring bid

Undated photo of East Africa Portland Cement worker. [Photo: Courtesy]

East African Portland Cement Company (EAPCC) has laid off its entire workforce in a new restructuring programme that highlights the worsening liquidity crisis at the country’s third-largest cement maker.

In a memo to employees yesterday, EAPCC asked them to reapply, with the company set to hire a lean workforce as it looks to balance its running cost 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,” said Acting Managing Director Stephen Nthei.

“Subsequently, all jobs will be reconfigured in terms of job consolidation and enrichment in line with the restructured and leaner organisation structure,” he said.

Mr Nthei said the company has been making Sh8 million loss daily, making its turnaround strategy untenable.

“In the last three years, the company’s market share has drastically reduced, impacting negatively on sales and subsequent profitability,” he said in the memo.

“This may be attributed to many reasons, key among them being increased competition and inadequate working capital.”

The company had 448 permanent and 488 contract employees on its payroll as of last year, with the former being offered a severance package of one month’s pay for every year worked as well as a gratuity payment.

In May, the company’s board fired erstwhile chief executive Peter Nkeri less than three years into his tenure as part of a failed turnaround strategy.

Court settlement

EAPCC last year more than doubled its operating loss to Sh3.5 billion down from Sh1.3 billion recorded in 2017.

Over the period, the company further reported Sh5.1 billion in revenues against Sh5.2 billion in operating costs and another Sh3.2 billion in administrative costs.

The company’s current liabilities now exceed its current assets by Sh6 billion, with staff costs taking up close to half of the revenues.

In the last financial year, the company was also saddled with another Sh1.5 billion payments as part of a court settlement to unionisable employees affected by a similar redundancy exercise.

EAPCC has in the past been embroiled in controversy over allegations of corruption and mismanagement, with former CEO Nkeri commissioning consulting group EY to conduct an audit.

Mr Nkeri said the report implicated several employees in mismanagement and revenue leakages and promised to forward the same to the Ethics and Anti-Corruption Commission for appropriate action.