How we’ve controlled blanket market for 35 years – Chellco

But in Kaduna, one blanket manufacturer has proven to be the ruggged exception. With astute management and market savvy, Chellco Industries Limited has been surviving the inclement business environment.
Chellco, which boasts a workforce of about 400 people, was established in November 1978 by some Nigerian manufacturers in partnership with Chellerams PLC, a conglomerate owned by Indians and has been operating in Nigeria since 1923. Business capabilities of Chellarams, which flaunts itself on its website as “a leading Nigerian conglomerate” span diverse areas that include manufacturing, retail, distribution, marketing and power generation.
“We use our in-depth market knowledge and extensive local connections to effectively facilitate efficient, result-driven operations across the country,” the company says.
Owners of Chellco must have been benefiting from that market knowledge to sustain it. At inception, Chellco was producing only blankets. But as business got tough, it diversified by installing an acrylic spinning plant for the manufacturing of knitting yarn and woven baby shawls. The company currently produces blankets for government departments such as the prisons and military, and supplies educational institutions and relief operations. It products include plain coloured, dobby coloured and jacquard colored blankets; baby shawls, supreme, Arafat shawls (unisex), ladies shawls and knitting yarn. The company had to stop the production of praying mats due to intense, unrewarding market competition with foreign mats.
Chellco’s Senior Human Resource Manager, Timothy Majidadi, who joined the company in 1982 as Marketing Officer before his present position said the company has been able to remain operational despite the turbulence in local textile production due to its shrewd marketing policy. Majidadi narrated, “I was a staff of the Northern Nigeria Development Company (NNDC) Properties Limited posted to Chellco because my company owned shares in Chellco.  But by 1982 when NNDC Properties Limited was dissolved, all its staffers were posted to different firms where it owned shares according to their specialisation.”
Working on that marketing policy, Chellco, for one, produced blankets only on demand. And as a production seasonal strategy, most production workers were sent on leave between February and July when demand for blankets had long been discovered to be low . “We had about 150 people working in the company in those days and we produced only on demand. The workforce was always reduced when demand went low, especially during hot weather. Later the company introduced spinning and dying and started producing shawls, yarn and other allied products and retains production throughout the year, thereby increasing the number of worker to about 400.”
Initially, the company was producing about 1,500 to 2,000 blankets per day but now produces between 2,500 and 3,500, depending on the demand.  Some agencies such as the National Emergency Management Agency (NEMA) buy products from the company during crisis or natural disasters such as flood to distribute to victims.
The cost of production gradually began to increase because the raw materials used by the company are not readily available in the local markets. “We don’t use cotton here. The major thing we use is virgin fibre and grey yarn, which are all imported. Occasionally, we buy the fibre from Alkem, a Lagos-based company,” Majidadi asserted.
Chellco was the largest manufacturer of blankets in Nigeria between 1980 and 1990 and was exporting unfinished products to Ghana. But the influx of foreign sub-standard blankets into the country had adversely affected the company. “One of the major problems threatening textile industries in Nigeria is the importation of cheap counterfeit products and that is why you see that all the industries in Kaduna have collapsed, apart from a few. You cannot go to bank to borrow money and produce goods if the market is not encouraging, otherwise you will run at a loss. This explains why we only produce products on demand and some products such as blankets are made seasonally.
“The major threat now is the dominance of Chinese products in Nigerian markets which are cheaper but sub-standard. If you compare the Chinese blankets and ours, you will find out that ours are more durable. But since the Chinese blankets are cheaper, people mostly buy them. The reason we cannot scale down our prices is that we import the fibre since it is not available in local markets. We also have the problem of irregular power supply, which also increases production cost. Electricity charges are also higher here. On some occasions, we pay N6 million and above on electricity alone. So, the infrastructural cost gives the foreign companies comparative advantage over us,” Majidadi said.
The company produces blankets for low, middle and high income classes, with the low and middle income categories enjoying more patronage than the high. “The reason is because they are cheaper due to low production cost. For high income blankets, the cost of production is high. The major impediment to the high income blankets is also the importation of Korean blankets of similar quality but cheaper price. The market is highly competitive and Nigerians always want to patronise foreign goods even if they are similar to locally made goods in terms of high quality.”
Majindadi pleaded with the federal government to initiate robust measures and policies to save the remaining local textile production factories still functioning from collapse. Such measures advocated for include the reduction of import tariff on raw materials and regulation of, or ban on the importation of finished products.
Chellco managers pride the company as still being the leading producer of blankets in Nigeria 35 years after it was established. The threat from imported brands remains potent, though. “If we continue the way we are, there is no hope for local manufacturers because Chinese products are more in Nigerian markets,” Majindad warned.