Glue maker sticks on forex shortages

ESTABLISHED in 2009, Bulawayo-based Adhesive Products Manufacturers (Pvt) Ltd — the sole suppliers of industrial products such as general adhesive, light contact adhesive, wood glue, among other key products — wants to resume exporting to regional markets.


NewsDay business reporter (ND) Mthandazo Nyoni interviewed the company’s chief executive officer, Nathan Nhira (NN) on the company’s quest to export among other issues. Below are the excerpts from the interview.

ND: In the interview I had with you in 2014, you revealed plans to grow exports to 50% of total volumes in the next five years, driven by high demand of your products in the foreign markets. Did you manage to achieve your target?

NN: After we discussed in 2014, the initial thing which we actually did was to expand our product range, because at that stage we were relying mostly on Z68, which is available contact adhesive in two sizes, the 30ml tube and the 100ml tubes along with the tin sizes, 5 litres, 20 litres, going up.

But, what we wanted to do before going into exports was to expand the range, so we ventured into wood glue.

We did the PVC cement which takes the high pressure; we even also had Z68 super glue coming into the market and the pipe jointing compound and exhaust sealer for vehicles.

So we had actually gone that way, including the epoxy putty. After we had organised our operations and our production so that at least we can cover a wider range of adhesives, we then ventured into the export market.

We already had some relationships with the Malawian market because we used to be the sole suppliers to it. We also had a market in Zambia. We went to Mozambique, especially the Tete area and Botswana.

We had opened up the markets and were geared up to supply those markets, but unfortunately because of the shortage in foreign currency, it really began to haunt us so much in our business as about 90% of our raw materials are imported.

Our tubes are imported, our solvents are imported, our solids are imported and those three actually make up about 90% of our product specification. Yet, despite the fact that we have got the money in the account, Reserve Bank of Zimbabwe could not give us the funds to make outside payments because of the foreign currency shortage. They insisted, through our bank, that we need to bring cash, but then all our customers do transfers, they don’t pay cash. So we have got money in the account, but then unfortunately we cannot access the foreign currency.

ND: So what impact did this have on your business?

NN: That brought the big hitch in terms of our operations and obviously affected our supply ability. We made a strategic decision at that time that as much as we would have wanted to export, in any case where you are exporting you always want the home market to be your strength, your baseline. So, we decided that we would rather supply the home market, the Zimbabwean market, and then whenever we have got excess, that’s when we can export. So we have been running and supplying the home market.

Just to give an example, for the past three months the factory was not operational. The reason being that we were still awaiting for our tubes to come in and now we have got our tubes, the tubes which we got are probably going to take us for nine months or so, which is quite good. Once we do that we would be able to take a portion of that production and also export.

But, the reason really why we did not go full scale, though we had opened those opportunities in the export market, was a supply issue basically hinging on the foreign currency shortage, but we have been supplying the home market.

ND: Do you still have zeal to do the export business?

NN: Yes, we still have that thirst to go out and supply outside markets and bring in foreign currency, but we can only do so if we have got enough currency to bring in raw materials.

But, at this stage, we are saying we are better off supplying the local market.

ND: How much foreign currency per month do you require to meet your needs?

NN: Per month, we require about $20 000. It would be enough for us to satisfy both local and export markets.

ND: What is your current operating capacity?

NN: Currently, we are running at full capacity. We have got enough dunkers; we have got enough solvents and the tubes so the factory is running and we are running at about 85%, but the problem is that three months ago we were at about 10% or so.

We hope to be able to quickly supply the local market and then venture into the exports market.

ND: In terms of employment figures, how many employees do you have?

NN: We still have the same number of employees. We have got 10 in the factory and we have got five in administration, because it’s a small knit company, so we basically have about 20.

ND: That time when we met you spoke about purchasing new machinery; did you manage to purchase it?

NN: We had done the orders and everything, but we couldn’t pay due to foreign currency issue.

ND: Going forward, what plans do you have for the company, say in the next five years?

NN: Our biggest problem hinges on the availability of forex and we are praying. We know that with the new dispensation, the language is quite good and the welcome to business is quite positive and I believe that very soon we would be able to do those things which we have always wanted to do…

The export markets they are there and ready for us. In fact, they are now screaming after we had made our first visits and are saying ‘we have placed our orders where are you?’ So that actually destroys the market again and then they tend to go back to their South African suppliers, whereas our Z68 a product sought after.

They really want it. They will only go for alternatives if they cannot find ours and now they resort to the South African adhesives.

It’s a market that we would definitely want to feed again and once we start supplying that market, we would be able to increase even our capacity and employ more people because then we would be having an extra market for us to serve.

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