Dunlop Nigeria scales back tyre production

LAGOS, Nigeria (Sept. 2, 2008) - Dunlop Nigeria PLC, faced with rising costs and an inequitable import tariff situation, is scaling back tyre production at its Lagos plant and will begin redirecting its resources into the rubber plantation business and other activities.

Dunlop Nigeria, established in 1961 as a subsidiary of what was then known as Dunlop Holdings, said it has “embarked on a strategic business redirection in order to restore shareholder value.”

The company's decision comes despite its having invested $60 million in 2006 and 2007 in capacity for steel radial truck tyres and its posting of improved earnings in the first half of fiscal 2007.

The company cited an “evident decay” in the local manufacturing infrastructure, particularly an “epileptic” power and gas supply situation, which imposes costs that put locally produced tyres at a pricing disadvantage of up to 40 percent vs. imported tyres.

Dunlop Nigeria is Nigeria's only domestic tyre maker. Group Michelin closed its factory in Port Harcourt in January 2007.

In particular, Dunlop Nigeria publicly has criticised the Nigerian government for rolling back tariffs on truck tyres to 10 percent from 40 percent, saying this has created “unfair and inequitable advantages for importers” of tyres.

“Our rubber plantation business is continuing and performing satisfactorily while being further expanded,” the firm said. “We are equally harnessing available opportunities for growth in other sectors of the economy.”

From Tire Business (A Crain publication)