MONROVIA – The George Weah-led administration would be dealt a major blow amid the current economic turmoil as the biggest employer in the country’s private sector, Firestone Natural Rubber Company, announces the laying off of 800 employees.
“After a thorough and strategic review of its current operations in Liberia, West Africa, Firestone Natural Rubber Company, an indirect subsidiary of Bridgestone Americas, Inc., has announced the difficult decision to reduce its workforce by 13% (approximately 800 employees) by early second quarter of 2019 at the company’s Firestone Liberia operation. Headcount reductions will take place throughout the company’s operations, and include retirements, the discontinuation of certain work contracts, and redundancies,” the company said in a statement.
Global rubber prices have fallen by more than 40 percent since January 2017 and are now only slightly above historic lows. Firestone most recently laid off over 400 workers in 2016, again crediting the decision to falling rubber prices.
The pronouncement comes at a time when the International Monetary Fund (IMF) has announced a steep slump in Liberia’s economic growth – dropping from 4.7 to 0.4 per cent for 2019. Inflation is also reported to be skyrocketing.
“With accommodative monetary policy meeting fiscal needs, the exchange rate depreciated by 26 percent over the year, and inflation accelerated to 28 percent at end-December. This is detrimental to the living standards of the most vulnerable Liberians, who earn and spend primarily in Liberian dollars and threatens the success of the pro-poor agenda. Growth for 2018 is now estimated at 1.2 percent, while the forecast for 2019 on current policies has been revised down to 0.4 percent from 4.7 percent,” stated the IMF 2018 Report on Liberia.
According to Firestone, their decision to drop 800 employees “is necessary due to continued and unsustainable losses resulting from high overhead costs associated with the company’s Concession Agreement with the Government of Liberia, low natural rubber production because of the country’s prolonged Civil Wars and continued low global natural rubber prices.”
The company stated that it has been working closely with the Ministry of Labor and the Agricultural Agro-Processing and the Industrial Workers Union of Liberia (AAIWUL) to ensure that employees made redundant as part of this action will be done in accordance with all applicable Liberian labor laws, company policies, and the company’s collective bargaining agreement with AAIWUL.
However, according to the statement, these measures alone will not be enough to restore Firestone Liberia to profitability. As a result, the company will continue to evaluate all aspects of its business to ensure long-term competitiveness and determine the best allocation of company resources to optimize our portfolio, processes and culture.
The lay-off at Firestone, being one of the country’s largest exporter, poses a significant risk to the growth prospects of an already dwindling economy.
FrontPageAfrica has also been reliably informed that Sime Darby, a major concession company in Western Liberia is also contemplating paying off about 200 employees in April this year.
Sime Darby is the biggest employer in Western Liberia. The region is known to be among the poorest region in the entire country.
In January, the company put up its oil palm plantation in Liberia for sale after failing to acquire all 220,000 hectors of land the Liberian government promised as stated in the concession agreement signed about a decade ago.
The move to sell out its investment in Liberia has created pessimism about the Malaysian trading conglomerate profitability in the country.
President George Weah in his Annual Message this year promised to beef up the private sector by creating an enabling environment that will encourage more foreign investments in the sector.
Pres. Weah: “As I said before, and continue to say, Liberia is open for business. Under this administration the private sector will be prioritized. With the passage of the new Special Economic Zone Law, we will create one-stop shop business zones for the private sector.
“We have for long spoken about adding value to various raw materials to create more jobs, income and livelihood for our citizens. It is time we take practical action to make it happen.
“As part of our strategies to begin value addition, especially for light manufacturing and processing, survey of the Buchanan port has already begun on land that is allocated for the establishment of a Special Economic Zone, and in this fiscal year, we will work with our international partners to complete the feasibility studies.
“While we try to roll out these new business opportunities, we will get directly involved in improving the business climate in Liberia.
“I would like to take this time to thank all the foreign businesses operating in the country. In spite of various constraints, they continue to positively contribute to the economy in terms of revenue generations and job creations.
“As part of this exercise, Government will continue to address constraints and challenges faced by our business community and the private sector.”
An IMF team led by Mika Saito, which visited Monrovia from February 25-March 8 to conduct discussions for the 2019 Article IV Consultation with Liberia, stated that there’s the need for creation and implementation of polices that address the current economic situation and promote strong noninflationary growth over the medium term and noted that the commencement of sales of central bank bills, supplemented by the introduction of the standing deposit and credit facilities in the interbank market, represent major milestones in modernizing the monetary policy framework. “With the appropriate preconditions firmly in place, a timely reduction of the rate of inflation to single digits appears possible. Of the necessary preconditions, the most critical is that the Government refrain from borrowing from the Central Bank,” the team noted.