Firm cites high labour costs in Kericho and persistent strikes by workers for the move.
The announcement comes about six months after the agricultural multinational incurred losses running into millions of shillings following a workers’ strike that has brought its tea processing business to a halt and led to the destruction of its property.
Finlays will however continue to expand operations at Lemotit farm in Londiani as a business supplying flowers for export to Europe.
About 2,000 workers are staring at job loss after multinational agricultural company James Finlay (Finlays) announced closure of two of its flower farms in Kericho.
In a statement dated April 25, the firm - which is well known for tea production and export - cited high labour costs and persistent strikes by workers for the move.
The company says staff expenses have made their Kericho farms uneconomical and uncompetitive.
“James Finlay Kenya Limited today regretfully announces the start of the phased closure of its flower operations in Kericho. The closure of both Chemirei and Tarakwet will take place over a two and a half year period starting May 2018 to end of December 2020,” read a statement signed by Finlays general manager Steve Scott.
“It has been an extremely difficult decision but labour costs in Kericho are significantly higher than other locations in flower industry in Kenya.”
The announcement comes about six months after the agricultural multinational incurred losses running into millions of shillings following a workers’ strike that had brought its tea processing business to a halt and led to the destruction of its property.
The firm indicated that it will however continue to expand operations at Lemotit farm in Londiani as a business supplying flowers to the United Kingdom, Europe and the rest of the world.
“The company has deliberately chosen a phased closure of the Kericho operations in order to minimize the impact on employees and their families. James Finlay is committed to helping employee find other job opportunities where practicable,” read the statement.
Labour movement
The unprecedented move has raised concern on the impact of workers making what many firms see as unrealistic pay demands at the expense of profits amid growing empowerment of labour unions.
Mr Joel Soi, a political science lecturer at Maasai Mara University, reckons the turn of events was expected in a country where workers' lobbies have reigned supreme hence don’t attract investments.
“China attracted investors in 1990s because their labour was cheap. The Chinese goods are cheap because their labour is cheap. Kenya should re-look the cost of labour,” said Mr Soi.
He is also urging President Uhuru Kenyatta to spearhead regulation of the labour market if his Big Four development agenda, more so in the manufacturing sector, is to succeed.
Last year, multinational company workers in Kericho staged demonstrations seeking to have their pay hiked by 30 per cent.
In the last quarter of 2017, the tea firms recorded massive losses as 40,000 employees under Kenya Agricultural and Plantation Workers’ Union (KAPWU) in Kericho, Bomet and Nandi downed their tools.
The move cost members of the Kenya Tea Growers Association (KTGA) - including James Finlay, George Williamson, Kaisugu, Tea Research Institute millions in revenue as it severely paralysed operations including picking and processing of green leaf.
Central Organisation of Trade Union (Cotu) Secretary General, Francis Atwoli, at the time told the workers whose union is under Cotu to keep off the farms until they get a good deal under the Common Bargaining Agreement.
However, former Agriculture Cabinet Secretary Willy Bett sided with the companies saying implementation of the 30 per cent pay hike as ordered by the industrial court was not practical.
“If we ask too much, to the extent that the industry does not afford, they will abandon or relocate to other areas which are cheaper. The net effect therefore is massive layoffs. So I would wish that the employers and the unions to understand these basic aspects such that as we want our employees to benefit, we also want the industry to survive,” said Mr Bett.
