The Struggles of a manufacturing firm in Nigeria

This is the first time I’m ever writing an article and will pour out the little observations on my entry-level work experience after graduating from the University of Nottingham with a bachelors degree in Electrical & Electronics Engineering. Yes guys I am an “Engineer” so put that before my name.

I am currently doing a lot of consulting for a manufacturing firm in lagos, Nigeria “Filterland Industries” — they manufacture Oil, Gas & Air filters needed for your automobiles and heavy duty equipments. Enough of the intro and back to my rant!

Basically from an Economic point of view, it’s obvious that to grow a country’s economy we need to produce our own products/services + demand for it drives the economy. Reduction of reliance on importation of products/services from neighbouring or foreign countries also helps, more over if the manufacturing firms in the country are struggling to get things in place regardless of execution then we know there is a loophole in this journey to “Buy The Naira To Grow The Naira”. We are stuck in this phase where we are not ‘even’ utilising our resources to manufacture things that will cater for the population so we import regardless of import duties.

Filterland gets no assistance from the Government. Instead is burdened by the policies set in place by our leaders which causes it to run at a loss. How is it that after accumulating the cost of production to fix our selling price we still get to be either 5% — 20% higher than the market price. These products are been imported! how are their prices so low? In England the prices of the imported products are inflated and people want quality & affordability.

Example

  1. Product: PC42 @ 30% profit margin
  • Imported Cost: N285.09 — — — — — — — Imported Selling Price: N371
  • Locally produced Cost: N369 — — — Locally produced Selling Price: N480

2. Product: Perkins 403 @ 30% profit margin

  • Imported Cost: N471.85 — — — — — — — Imported Selling Price: N613
  • Locally produced Cost: N527 — — — Locally produced Selling Price: N685
FYI: dollar needed for imported products is been sourced on the parallel rate “black market” for N500 — $1 and still beats locally produced price.

Quick Review of Problems

Scarcity of fx “dollar”: Apparently my country is low on foreign reserves. Everyone is informed of what the naira is to the dollar both at the bank rate & parallel rate. The CBN site has broken down the bank rates as of today N304 — $1 Bank rate & N500>-$1 Parallel rate so you clearly don’t expect us to source our fx from the parallel cause that would be ridiculous.

Stupid Bans without a plan: One of the first things that were banned from been imported with this new Government was ‘steel’. Steel is practically used for everything and the ones been manufactured locally can’t cater for up to 30% of the steel consumption needed in the country but it was banned!.. we sourced steel for about N2000-N2500 and after the ban sourced for N8500 upwards. It is so easy for price of commodity to go up but extremely difficult for it to go down which explains why after the ban was revoked the price of steel is still at that peak ridiculous price. What was their plan? I need answers.

Import Duty: I don’t expect there to be a ban on filters as we can barely cater for 10% of the filter consumption in Nigeria + we are the only manufactures of filters in Nigeria, but how are the imported filters still cheaper than the locally manufactured filters?

NO ELECTRICITY: You should notice I wrote that in all ‘caps’! This has a big role to play in my previous point ‘why imported filters are cheaper’. The diesel consumption adds more than 20% to our production cost.

Opinionated Solutions

  • The issue of limitation to fx requests should be heavily looked into! Manufacturing is the foundation to an enriched economy and whatever measures it takes should not be considered.
  • There should be easy access to loans at 5% interest and less
  • If a product is been manufactured locally, there should be an increased interest to make sure they grow. The growth of that industry will open doors for the raw materials to be produced locally. Everything works with demand.
  • The initiatives to empower manufacturers is not ‘Enough’.
  • I have no problems with import bans but there should be plans in place to ensure smooth transitions.
  • Power situation should be ‘PRIORITY’.

What is Filterland ?

Filterland Industries are the manufacturers of oil, gas, air & hydraulic filters needed for your automobiles and heavy equipments.

What is a filter: a filter is a device or process that removes some unwanted particles from passing through into the main engine. These unwanted particles will destroy the engine of the automobile/Heavy equipment.

Some of our products

- Perkins Air Filter

- DAF95 Oil Filter

- MAN Trucks Oil Filter

Website: www.filterlandindustries.com

Email: prince@filterlandindustries.com

Phone number: +234 8125952646