Why glass production in Kenya is grinding to a halt

The blazing, churning automatic machines inside Kenya’s oldest glass manufacturing company could grind to a halt and with it hundreds of jobs lost.

This is attributed to unfavourable business environment that has exposed Kenya’s only two glass manufacturers, Milly Glass Works and Consol Glass Kenya, to stiff - at times unfair - competition from foreign firms. 

The two are among only three glass manufacturing companies in East Africa, the third being Kioo Limited in Tanzania.

Companies that use glass for packaging are bypassing the local manufacturers and sourcing from other countries, thus forcing the local firms to find market elsewhere. Most of the imports are from Egypt.

Documents in our possession show that between August and December last year, 499 40-foot containers with empty bottles entered the country through Mombasa port.

Largest bottlers

Most of it was imported by Kenya’s largest bottlers, Coca Cola Company - through Almasi, Equator and Nairobi Bottlers - and East African Breweries through UDV (Kenya) Limited.

Between July and December last year, the two companies imported 288 40-foot containers from Misr Glass Manufacturing Company, an Egyptian firm.

Close to three quarters of the total imports into Kenya were actually from Misr Glass with some containers being brought in by other spirit packers such as Patialla and Crywan.

While local manufacturers do not blame firms for bypassing their products, they say the move is driving them out of business. They argue that they have the capacity and have been supplying the companies for years.

Milly Glass Managing Director Mohamed Rashid says one of the main reasons why local bottlers are going for foreign bottles is the high cost of doing business. 

“Most of these industries are going outside the country because with rising cost of production, prices have to increase to cover overheads,” he says. 

For the past 18 months, Mr Rashid says, Coca Cola, which was a regular customer, has not bought a single bottle from the company. 

It must not be lost that the cost of production in Egypt is lower mainly because of cheaper energy costs and direct government subsidies given to the glass manufacturers.

The Oxford Business Group reports that in 2016, the Egyptian government announced a four-year, five-pillar strategy to help transition the country into a major regional industrial centre and export hub.

“The strategy sets specific targets to support this, including increasing the annual industrial growth rate to eight per cent, the industrial contribution to GDP to 21 per cent and non-oil exports by an annual rate of 10 per cent through to 2020,” says the report.

Local companies also imported bottles from Pragati Glass Gulf LLC and Al Zain both of Oman.

“We produce most glass products used in Kenya but now we do not have the market which makes it untenable and if factors do not change then we shall have to make a decision,” says Rashid.

The sentiments have been echoed by Consol Managing Director Joe Mureithi, who argues that the glass manufacturers are facing an uncertain future.

“All we ask for is for the Government to protect the manufacturing industry so that local companies that use glass can buy from local producers,” says Mr Mureithi.

Ripple effect

If glass manufacturers close down, the ripple effect will be felt far and wide, first among them being job losses.

Milly Glass employs 550 workers with suppliers of raw materials to the factory including Kenya Power, Tata Magadi Soda Company, fuel and liquified gas companies. Local firms have stock of up to 8months. Alongside this would be loss of tax revenue running into millions of shillings. 

Rashid says the solution is simple. “President Uhuru Kenyatta has named manufacturing as one of the key pillars of his Big Four Agenda; reducing the cost of doing business is one sure way of achieving this agenda.” 

He says over the past four years, the cost of electricity has risen by 45 per cent while costs of fuel and liquified gas have also risen by 45 per cent and 30 per cent respectively.