Looking for a manufacturing idea? Think glass
Glass manufacturing, like many other industries, has faced difficult times in Kenya. However, Joe Mureithi, the managing director of Consol Glass Industries, one of East Africa’s three glass manufacturers, says the industry has a promising future.
Globally, there’s a shift back to glass, with plastic facing a huge backlash, especially single-use plastic bottles. Kenya hasn’t been left behind, and after the banning of plastic bags, there are plans to stop the use of plastic bottles. This will lead to an increase in the use of glass.
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Of course. Glass is inert compared to other forms of packaging. Unlike plastic, which reacts with contents, and tetrapaks, which require so many layers to prevent reactions, glass retains contents as they are. Glass is also recyclable and that’s what we do here. In fact, 45 per cent to 80 per cent of the glass we produce here is recycled.
First of all, 99 per cent of Consol’s raw materials are locally sourced, including silica sand, limestone, soda ash, feldspar and dolomite. Recycling glass also offers job opportunities for those who collect and sell it to us through consolidators. What the glass industry needs in Kenya is a level playing field. We hope that the Government will learn from Egypt, which has subsidised its manufacturing industry, making it the biggest seller of glass to Kenyan companies.
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Not really. In our case, the local market makes up 90 per cent of our sales. But we know it can be better and take us back to the days when we supplied markets as far as Eastern DRC. Outside Kenya, we supply the Réunion Islands, Madagascar, Seychelles and Uganda. We can improve on this with a more favourable business atmosphere. There’s still a huge market given there are only three glass manufacturers in Eastern Africa.
The cost of production is the biggest hindrance, and this is driven by the high cost of petroleum products and electricity. Electricity is five times more expensive in Kenya than it is in Egypt. This has led to increased imports, as well as illicit imports. Some foreign exporters are sneaking used glass into the country at lower prices than locally produced glass. This problem is biggest in the mainstream spirits sector. There are also some unscrupulous traders bringing in glass containers but evading tax. This is mainly done through the generation of fake invoices of lower value than what’s actually entering the country.
We’re glad the Kenya Revenue Authority is working closely with the Kenya Association of Manufacturers to stop the influx of illicit imports. Once this is stopped, local customers will automatically buy from local manufacturers.
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In the past two years, we’ve put in Sh300 million to bring in top-of-the-range equipment. We’ve also invested in innovations, such producing lighter bottles and more complicated glass designs. Our best chance of outcompeting imports is through superior quality. This is where our focus lies.
The past three years have been very tough. For instance, last year we had stocks running over eight months. With the glass furnaces, once they start running, they continue to until the end of their life. Typically, a glass furnace lasts 12 years; ours is only in its third year. So when we didn’t have sales, we had to keep the machines running and producing and employees remunerated as well as suppliers paid.
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Nigeria is the best lesson because it banned the importation of glass. For you to import glass, you need to get approval from the president. Egypt is another example whereby the government has heavily subsidized manufacturing and ensured low power prices and Egyptian industries have become huge forex earners for their countries. Glass in Kenya has the same potential.
Egypt, Oman, the United Arab Emirates and India, which are seeking the African market after the European one slumped.
We’re opening a manufacturing plant in Ethiopia this year. Our next market for capacity expansion is Kenya, subject to a favourable operating environment as glass plants are capital intensive.