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    BusinessHorizon Addis halts manufacturing of Tyres

    Horizon Addis halts manufacturing of Tyres

    Date:

    Horizon Addis Tyre, formerly known as Addis Tyre, announced it stopped production of tyres due to lack of foreign currency to import raw materials from overseas. It further said that it has almost been ten days since it ran-out of raw materials.

    Importing 90 percent of raw materials from abroad, Horizon has the capacity to manufacture 800,000 Tyres a year; however, shortage of foreign currency has limited its production capacity to 30 – 40 percent of its potential over the past three months.

    Dawit Demilie, Commercial Manager of Horizon, told The Reporter that it stopped its machines and forced its employees take annual leave.  

    “We use about 102 raw materials for Tyre production. Some of the basic components are natural rubber, carbon black, nylon Tyre cord, synthetic rubber, zinc oxide, bead wire, and other oils. Out of the materials needed, the company only gets six of them locally. The rest are imported from various countries with a huge outlay of foreign currency,” said Dawit.

    Dawit remarked that the company used to import its freight of raw materials using planes so as not to stop the production line; however, that could not be sustained due to the huge expenses involved.  

    “Horizon’s annual forex requirement is more than USD 15 million and it only took about USD one million from the Commercial Bank of Ethiopia a year ago. It also used to get some forex from other private Banks to narrow the gap. Moreover, Horizon used to work with the Diaspora community to gain foreign currency,” said Dawit.

    He underscored “Horizon is a firm that makes 75 types of Tyres for the local and regional market. Yet, it cannot sustain its production capacity while suppliers import and sale Tyres from China and India. Therefore, the National Bank has to give priority to Horizon than the importers, since it is the only local Tyre manufacturer in the country.”

    Explaining the huge supply gap in the tyre market in Ethiopia, Dawit pointed out that Horizon had been supplying Tyres to giant companies like Ethiopian Airlines, Sugar Corporation, and local vehicle assemblers at a moderate price, saving foreign exchange costs.

    Dawit stated that a number of organizations, including the Office of the Prime Minister, are asking for tyres but cannot get them currently. “There is an acute shortage of tyres in the market and that creates conducive environment for importers while it pushes manufacturers out,” explained Dawit. 

    Horizon has put in a request to the Ministry of industry, and the Chemical and Construction Inputs Industry Development Institute to address the company’s concerns and urge the National Bank for an expedited response in the matter, said Dawit. 

    Addis Tyre, the first state-owned tyre manufacturer in Ethiopia that launched operation in 1972, became Matador Addis in 2004 after a Slovak company called Matador acquired 61 percent of its share. In January 2011, there was yet another ownership transfer as Horizon Plantation PLC acquired 100 percent of the company and changed its name to Horizon Addis Tyre.

    By Elias Tegegn

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