NAIROBI, KenyaSameer Africa Ltd. is considering phasing out tire production at its plant in Nairobi and contracting out production of its Yana-brand tires to a third party in China or India, according to the firm's top executives.
Sameer Africa, which took control of the former Firestone East Africa plant in 2013 from Bridgestone Corp., broached the possiblity in its recently released annual report.
Company executives reportedly stated at a more recent financial results press conference in Nairobi that the option to cease manufacturing is nearly 100-percent certain, according to multiple news reports.
The company's decision comes after two straight years of corporate net losses totaling nearly $1 million, on sales of about $82 million.
Management also cites several other reasons for its decision, including the collapse of efforts to secure a strategic technical and equity investor; the continued adverse impact of imported, subsidized tires from the Far East; and a lack of government support for domestic manufacturers.
Company chairman Erastus Kabutu Mwon-gera said in the recently released report that negotiations with a potential technical partner and equity investorpreviously described as being at an advanced stagecollapsed in 2015 after the parties could not agree on the valuation of the tire business.
To counteract what it called the negative effects of subsidized tire imports, Sameer initiated in 2014 a second brandSummitthat it sources from an unnamed Chinese tire maker.
The company reported sales of the Summit brand have been encouraging and that it expects significant growth in 2016.
Sameer continues to sell Bridgestone-brand tires in Kenya as its premium line. Yana is the second-tier brand and Summit is the entry-level product.
The company also operates 27 Yana Tyre retail centers in four African nations and has announced plans to open more.