Monrovia - Firestone Liberia on Tuesday said it has now laid off a total of 432 staff as part of a targeted 500 redundancies in response to the sharp fall in the price of rubber on the world market.
“Firestone Liberia will continue to implement a number of other measures to cut costs in its operation, including streamlining of the company’s business functions to reduce expenses, improving operational efficiencies, and discontinuing company employee-tapping operations in certain very old and low-producing areas of the concession”-Firestone Liberia statement
“To date, we have made redundant 432 employees, 189 in August, and 243 in September,” Firestone Liberia, an indirect subsidiary of Bridgestone Americas Inc., said in a statement on Thursday.
“Continued low natural rubber prices, high overhead costs associated with the company’s concession agreement with the Government of Liberia, low production as a result of the inability to plant during the country’s 14-year civil wars, and the country’s uncertain business climate are the primary reasons for the continuing financial losses”, the company has indicated.
“Firestone Liberia will continue to implement a number of other measures to cut costs in its operation, including streamlining of the company’s business functions to reduce expenses, improving operational efficiencies, and discontinuing company employee-tapping operations in certain very old and low-producing areas of the concession,” it added.
Firestone will have to pay all laid off staff a severance package in conformity with the Labor Laws of Liberia and a collective bargaining agreement between the company and the Firestone Agriculture Workers Union of Liberia (FAWUL).
“Our employees are very important to us and making any change to our operations and employees is an incredibly difficult decision for our leadership team,” said Ed Garcia, president and managing director of Firestone Liberia in July. “We remain committed to the country and people of Liberia, and our main priority is to ensure the long-term sustainability of our operation.”
Since 2004, Firestone Liberia has injected more than US$1 billion into the Liberian economy through government taxes, salaries and pensions, local purchases and rubber purchases from local farmers, and has spent over US$75 million in providing free education, healthcare, housing and security, Firestone said in July.
The plummeting of rubber on the world market has had a negative implication on the Liberian economy being one of Liberia’s export commodities with alongside iron ore. President Ellen Johnson Sirleaf in this year’s State of Nation Address in January announced the formulation of an economic stimulus package covering a range of fiscal incentives and interventions including deferrals in the concession sector.
The President recommended a number of measures under the package, including defer payment of Social Development Funds for concessions within mining sector under an agreement that ensures additional incentives for a strategy that prevents closure, protects employment and encourages value addition, and the guaranteeing of US$15 million to commercial banks for loans to finance operations in the rubber sector under a restructuring plan that ensures debt settlement and value addition for farms of not less than 100 acres.
However, these measures have not sufficed, and both the mining and rubber sectors have seen the redundancies of more than a thousand workers across the mining and rubber sectors—450 from ArcelorMittal, 432 from Firestone (and still counting) and an undisclosed number at China Union, which the company denies.
The International Monetary Fund (IMF) forecasts that the Liberian economy will grow by three percent in 2016. Liberia’s economy was forecast to grow by 7.1 in 2014 percent but plummeted due to the Ebola epidemic.