A short Q&A interview with A G Yakub, chairman & MD of Penlac Co. Ltd | 03 February 2021
What are local manufacturing companies doing to cope with Covid-19?
As we all know, the Covid-19 pandemic has been disrupting businesses and households everywhere. Among those involved in the local manufacturing and productive sector, there is a strong desire by them to try and see how they can keep their operations running while facing the challenges of keeping their employees safe on the job. Seychelles NATION conducted a brief interview with A G Yakub, the chief executive of one leading local manufacturer, Penlac, to find out how his company is coping:
Q: Given the disruptive business situation, what are you doing to deal with the current challenges?
A: Well, like many others, we have made adjustments to our daily work programmes and our workforce. We have been implementing the public health requirements to cope with the current challenges. Our employees sanitise, they maintain social distancing, and wear protective gear like gloves, masks and factory footwear where applicable in the sales and production departments. And periodic body temperature checks are conducted during the course of the working day.
Q: When did you first decide to make adjustments to your work programmes and your workforce?
A: Since the beginning of this new year between January 4 and 8, when we started hearing public announcements about the SPTC bus services being reduced, I chose to meet with all my managers and my staff to discuss and weigh our options.
We chose to restrict our physical working hours or opening hours from 8am to 1pm daily, Monday-Friday until further notice or at least until the public transport services and business activities improve. Furthermore, we decided to tackle the social distancing issue by halving our 40-strong workforce to 50% per day, even though we all know what the likely adverse implications are for both production and earnings. But we decided that workforce safety comes first.
Q: Why haven’t you introduced working from home for your office-based workers?
A: I understand many office-based workers in the public and private sectors are being asked to work from home. That may be fine for them. But not everyone in manufacturing can do that. A paint manufacturing company like Penlac does not see itself as a candidate for remote work. The nature of our work is such that you cannot work from home. Our factory needs our people on-site because they conduct such tasks as daily formulations, weighing and standardisation of raw materials and other inputs. They have to oversee the production processes, the daily product testing and lab work, packaging, daily maintenance of the computerised inventory control records, in addition to the daily financial and administrative duties.
Q: How has the new opening hours or reduced working hours and other measures helped your company cope with Covid-19?
A: Ever since we first introduced the new opening hours and half-day production and sales operations at the start of January after completing the year-end stock-taking exercise, I have noticed zero absenteeism or less frequent sick leave so far, since mid-January 2021. That’s an improvement from last year. There seems to be a steady output despite reduced working hours and that’s good for labour productivity. So far, staff seem to be coping well with the pandemic, observing the protocols and procedures for health and safety.
Half of my workforce have already been vaccinated with the first dose of the vaccine. Efforts are being made for more to be vaccinated. But that doesn’t mean everything is rosy. There are still real, daily risks of any one of us (including my workers) of coming in contact with the virus through our daily social or family contacts after working hours.
Our Penlac customers are also asked to wear their masks properly, sanitise upon entry and maintain one-metre distances in the queue. We have introduced a green bench or sitting area for older persons or for anyone wishing to sit while waiting for their turn in line at the Sales Depot or at the Cashier’s Desk because, let’s face it, they do get quite busy sometimes. Customers seem to be happy that the company has been ‘pro-active’ in installing seats to help them cope with the ‘new normal’.
Q: Can you tell us what kind of impact the Covid-19 pandemic is having on your manufacturing business?
A: The Covid-19 pandemic is presenting us with a host of challenges, especially those of us that depend on workers whose jobs cannot be carried out remotely. As with other businesses, the pandemic is having a marked financial impact on our business because of a current reduction in overall business activity, namely from the construction and development project activities.
Many of us in the manufacturing sector are experiencing disruptions in demand and bottlenecks in supply chains. Our pre-planned, 2 to 3 months stocking-up policy is being affected by the irregular shipments and delivery disruptions of raw materials. And all this is happening while our costs are escalating and profits are being squeezed by the depreciating exchange rate. The current increase in oil prices is also not helping. Furthermore, we all know there is a slowdown in spending and the credit markets are tight because banks are generally risk averse.
Q: Have you laid off anyone? Are you thinking of laying off any workers?
A: Luckily, so far in Seychelles, a medium-sized local manufacturer like Penlac has not closed its facilities, nor laid off any of its workers to help curb the spread of the virus or for economic reasons. Clearly, the manufacturing sector is poised to be hit hard during this outbreak, primarily for two reasons: First, many manufacturing jobs are on-site and cannot be carried out remotely. Second, the slowed economic activity may well reduce demand for their products in Seychelles. But the impact of reduced economic activity applies to all other business sectors.
Needless to say, the safeguarding of the health of consumers and the workforce is Priority No. 1 among households, businesses and the government. Plant closures (full or partial) may become necessary for manufacturers who are hit hard for a prolonged period. There is always the risk and danger of any of our manufacturing concerns being vulnerable to a viral outbreak as has sadly been reported recently at the IOT tuna processing factory.
Q: How do you innovate in order to save on costs and reduce physical contacts at work?
A: I know semi-automation is a pro-active way forward but we have to be realistic. In the case of Seychelles, we need to innovate in order to save on costs and decrease the density of workers per area. But I think the deployment of automation technologies (such as the use of robotics, autonomous materials movement, automated processing and packaging) is not necessarily the most viable option, given the relatively small size of the population and the volume of production that would be required to sustain that level of technology.
Q: Do you have any idea how a recovery could take place for the manufacturing sector?
A: Uncertainty surrounding the duration (or even a deepening) of these pandemic conditions clouds any insights into how a recovery could unfold for the manufacturing industry. It would of course be good if there was fiscal stimulus support for any struggling companies in import-substitution and manufacturing. But such timing could not be worse. Why do I say that? Because the country is currently in dire straits and government revenues as well as public debt obligations are taking their toll on the country’s finances.
Most companies already have business continuity plans, but those may not fully address the fast-moving and unpredictable variables of an outbreak such as Covid-19. Typical contingency plans ensure operational effectiveness following events like natural disasters, and power outages, among others. They don’t generally take into account the widespread quarantines, daily work disruptions, extended school closures and added travel restrictions that may occur in the case of a health emergency.
Q: Any final thoughts or remarks that you’d like to share with our readers?
A: So far, Penlac is lucky because the demand for its high-quality products remains strong and steady. As long as we can continue to procure the raw materials from abroad needed to manufacture paints and varnishes locally, and create jobs while adding value, then it can have a bright future.
If I am not mistaken, there are close to 742 local manufacturing concerns out of at least 2,865 licensed businesses in Seychelles, based on statistical data from 2018 & 2019 from different sources. That represents at least 25% of the total businesses in operation. [These figures need to be independently verified of course.]
I think most companies in the manufacturing sector will need to take concrete steps to succeed in this challenging climate. Some will be austere, but austerity measures should be tempered to preserve long-term objectives. The best approach is likely to include making surgical cuts, while balancing short and long-term needs.