Liberia: Coca-Cola Factory Shuts Down Bottling Plant

Echoes of Firestone redundancy and lack of protection for local industries

The Liberia Coca-Cola Bottling Company (LCCBC) has announced that a number of its employees have been made redundant as part of a number of changes taking place at the entity. According to a statement from the company, the changes were effected as part of a strategic program designed to ensure the long term sustainability of its business, "so that we can better serve the people of Liberia, ensuring their access to our complete beverage portfolio."

"The realities of the Liberian market have evolved and become more complex in the last few years," the release continues. "After a recent evaluation of our current business model in the country, we recognized that it needed to be reorganized so that it can respond quickly to the evolving needs of our customers more efficiently and sustainably."

The company adds: "Despite various other changes applied to date, the current business model remains unsustainable, so the company has decided to take steps to transform the facility into a distribution center to ensure the service to our customers. Our primary concern throughout this process is the well-being of all the employees."

An LCCBC official told the Daily Observer on Wednesday, July 10, that the company would essentially be suspending its bottling plant operations "for now", but said the company would elaborate on the issue later.

Local industries hurting

As unprecedented as the LCCBC action might be, this is not the first "soft drink" bottling operation in recent time in Liberia to cease operations. In 2018, a smaller bottling company, the Atlantic Foods Company (AFC), headed by Liberian hotel entrepreneur Amin Modad, was forced to shut down his juice production operations due to a number of factors. AFC is also the producer of the popular Pur water brand, which was an instant success on the Liberian market and is poised to enter markets elsewhere in Africa and Europe.

Modad had a robust and ambitious plan for his juice production, he told the Daily Observer in an interview in 2018. Working with local farmers, he had a two-year plan to wean his production off of imported fruit concentrate and increase his supply from the farmers in order to make his juice a 100% Liberian-made product. The resulting supply chain could motivate large scale farmers to match AFC's production targets at scale.

However, AFC's juice product, produced in variations of ginger and orange flavors at the time, was quickly being undercut by foreign alternatives that were imported in massive quantities and sold far cheaper than AFC's juices. Modad said he had appealed to the Ministries of Commerce and Finance and Development Planning to see reason to protect Liberian industries by increasing taxes on imported alternatives of goods that could be produced locally. However, when there was no affirmative action from the government of Liberia, he had no choice but to suspend the juice production.

Sources suggest that the LCCBC bottling plant might be experiencing a similar fate. As the economy spirals out of control and US Dollar exchange rate soars above L$200, major importers are flooding the market with steeply cheaper alternatives. In October 2018, a case of 24 canned drinks produced by LCCBC sold for about US$12 in the supermarkets. Now, it is being sold anywhere between US$14 and US$16.

And with the cost of production much cheaper elsewhere in the West African sub-region, LCCBC might be seeing it more economically feasible to tap on fellow Coca-Cola bottling plants in Nigeria or Ghana to import what it had been struggling to produce locally. Such a strategy could only mean one thing: loss of Liberian jobs.

Workforce implications

The LCCBC statement also did not say how many jobs are affected by its redundancy action. However, the company says it is going beyond the call of duty to ensure the redundancy exercise fulfills all legal requirements.

"We have taken steps to ensure that we go beyond the care and compensation required by the law at every stage of the process, offering training and assistance to them as they enter the next phase in their career.

Echoes of Firestone

The move by LCCBC comes just three months after another Liberia's biggest private sector employer, Firestone Natural Rubber Company, announced a major slash of its workforce in Liberia, a decision that affected 800 employees, representing 13 percent of the company's workforce.

In a brief statement, Firestone, an indirect subsidiary of Bridgestone Americas, Inc., said the decision was reached after a thorough and strategic review of its current operations coupled with unsustainable losses resulting from high overhead costs associated with the company's Concession Agreement with the Liberian government, low natural rubber production, because of the country's prolonged civil wars and continued low global natural rubber prices.

The Firestone headcount reduction began in April of 2019, and has taken place throughout the company's operations to include retirement, discontinuation of certain work contracts and redundancies.

Both Firestone and LCCBC are born of global brands firmly rooted in the United States of America. The company now known as LCCBC was formerly the United States Trading Company (USTC), established as a subsidiary of Firestone. Through USTC, Firestone could enter into other businesses such as a proposed tyre production plant that never took off, as well as a banking operation (Bank of Monrovia). Later USTC became inextricably linked with the Coca-Cola brand in Liberia.

Legacy in survival mode

Meanwhile, the Atlantic Foods Company has found a new bottling opportunity in Liberian palm oil, a product whose raw materials are locally bountiful, has a longer shelf life than juice and, so far, is not threatened by imported alternatives.

And while Firestone is in the middle of negotiations with the Liberian government to allow the rubber farmer to produce other tree crops such as cocoa and coffee, as well as rubber wood products, LCCBC says it is also keeping its options open.

"The steps we have taken are a further demonstration of our long term commitment to serving and investing in Liberia and its people. They demonstrate our optimism about its future, and, just like any other business, we remain open to future investment, should market conditions present the opportunity," the release said.

"LCCBC has been present in Liberia for more than 70 years, fulfilling its corporate social responsibility, showing dedication to our customers, as well as to the communities we serve. We remain committed to doing our part in improving the livelihoods of Liberians, especially by contributing to the economic empowerment of Liberia's women and its young people, improving education and taking care of our shared environment.

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