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DISMISSAL: East African Portland Cement Company (EAPCC) has began the process of converting all its permanent employees to contract terms as part of a redundancy plan affecting 270 employees.

In a statement, the company said the move aims to reduce administrative costs as outlined in the turnaround strategy adopted by the board and to comply with regulations outlined by the State Corporations Advisory Committee.

Acting Managing Director, Stephen Nthei said the board has taken a position that the firm must comply with the regulatory position to operate under a 30-70 model.

This, he added, means the company should run on 30 per cent administrative staff and 70 per cent production staff. 

“As we all know, the company has also been running in the past against the directive by State Corporations Advisory Committee (SCAC) on wage bill.

To this end, the board developed a new salary structure which is to be filed with the State Corporations Advisory Committee to ensure compliance,” Nthei added.

As per the plan every staff member will be accorded one month salary for every year worked. 

However, the company does not have enough funds to pay the entire amount and has started a program to raise cash flow. 

He said due to Covid-19, the construction industry has seen lower demand for its products, leading to overcapacity.

“As a company, we are not in isolation from the consequences of Covid-19 which has affected the consumer purchasing power leading to a decline in demand for cement,” he said.

Fully recover

Nthei said the revenues coming out of the company’s cement sales are not able to fully cover all the required costs and some of them are fixed costs in nature. 

The company is anchoring its potential bounce back on the sale of a 14,000 acres piece of land valued at Sh27.2 billion.

In an attempt to avert total collapse, the company early this year, in an unprecedednted move offered voluntary early retirement for its 800 employees. 

The  move by EAPCC to get rid of its workforce came after the company withdrew a notice declaring all positions redundant in August last year.