One of the most challenging moments in business is how to survive when the environment changes drastically.
According to Kinyua Njagi, managing director of Kamburi Timber Industry, it calls for austerity measures and innovation, failure to which the business gets stretched and finally snaps.
When Mr Njagi took over running of the family business in 2007, it was a small scale saw miller supplying products to a couple of individuals in Meru town.
He however revamped it, pumping in Sh2.5 million which he borrowed from a bank and upgraded it to medium size, expanding to markets as far afield as Nairobi.
“In 2015 we once again upgraded machines and bought modern saws with a higher recovery rate since they minimise on wastage by reducing the amount of saw dust from logs,” he said. The old saws were noisy and tiring and could not handle huge volumes, he used to mill only two tonnes of logs per day.
After modernising, Mr Njagi said, he would mill an average of seven tonnes per day making up to Sh100,000 daily, or Sh3 million each month.
“However, over the past five years we have been struggling with increased cost of electricity which has really affected us since we cannot increase timber prices despite the cost,” he said at his business premises at Makutano, Meru town.
But if those in the timber business thought they were going through a hard time with high electricity bills, they were not prepared for what hit them in February this year when the government imposed a ban on logging in an attempt to protect depleted forests.
The ban affected community and public forests and despite being lifted for private forest plantation operators and timber products importers in April, there has been little improvement, according to industry players.
In May, the government extended the 90-day ban by a further six months.
“Business was better before the ban but after that things have gone haywire. We scaled down production by over 50 per cent and cannot meet running costs any more, we have been forced to improvise to remain afloat,” said Mr Njagi, adding that he was also forced to lay off 50 workers and now has only 23.
One of the innovations he came up with was to add value to his timber products. Instead of just splitting up wood and selling beams to customers, he now makes windows and other products using the few logs he gets. He also makes panels, doors and does interior finishing.
“Getting fewer logs than before means that one has to utilise virtually everything, minimising waste and ensuring that costs are minimised. But that is not easy because we are constrained in terms of profits,” he said.
Mr Njagi faulted the ban, saying it was not well planned and they are forced to buy logs from small scale farmers who harvest immature trees.
“Such a move would ordinarily have been preceded by sensitisation on tree planting and a fall back plan. Farmers are selling immature trees which is further compromising conservation efforts,” he said. In order to assist the Kenya Forest Service (KFS) in ensuring that there are enough seedlings for planning, Mr Njagi has also set up a tree nursery with over 100,000 seedlings that he sells to corporates and KFS.
“As much as business is on the downward trend we cannot sit and watch. I have a wide range of trees in my nursery including several indigenous species and I sell them at about Sh15 each, I also donate some during tree planting campaigns,” he said
Two months ago he also invested Sh500,000 in a salon and barber shop.
“The salon has quicker returns and although I don’t know much about the beauty industry I have employed people who are helping me to run the business.
“Cutting production by more than 50 per cent is not a joke and we have to employ every trick in the books to remain afloat,” he said.