By Bamidele Obafemi
First Aluminum Nigeria (FAN) Plc has made known its intention to downsize its workforce as a ploy to remain in business and consequently return to profitability.
The hitherto troubled company whose core business is to supply aluminum coils to local roll-formers for use in the production of roofing sheets has suspended the production of coils locally having signed a long term contract with a foreign manufacturer to take off it the high cost of production.
“FAN is today happy to announce that it has signed an exclusive supply agreement with a world-class producer of aluminum coil for the supply of unpainted coil to FAN. FAN will now focus on the painting and coating of these coils, using its current facility in Port Harcourt. The painting process that has been used by FAN has always ensured that the roofing sheet stays colour-fast for many years, without fading”, the company informed the Nigerian Stock Exchange (NSE) through a circular.
“As a consequence of this agreement, FAN will streamline its manufacturing operations in Port Harcourt and utilize an outsourcing strategy to reduce operating cost in order to return to profitability as rapidly as possible”, FAN revealed.
The company however made it clear that the initial retrenchment will affect staff in its Port Harcourt plant saying it was a necessary step to give way to future growth. However, the company is optimistic that it will sometime in the future resume local rolling of Aluminum sheets as soon as market conditions allow that to take place.
FAN believes that, by reducing its cost of operations and because of the increased brand awareness by customers which it has embarked upon, it will grow even faster, surpassing suppliers of lower quality products.
It would be recalled that the Company has, for a long time, been under intense pressure from both its customers and shareholders to compete more effectively with the flood of cheap, often substandard, imported coils. The challenge for FAN has been to achieve this without lowering its on-going commitment to quality.
The agreement it recently entered into with the foreign manufacturers ensures that all materials supplied to FAN will be produced to the same strict tolerances and quality specifications of existing supplied coils. “People purchasing roofing sheets with the FAN logo also in the future can do so with the full confidence that they own a
product of the highest quality, with the correct gauge and with the best paint quality available in the market”, the company assures its customers”.