How we’re turning around the
MINT – Ehi Okoyomon, MD/CEO, NSPM
By EMEKA OKOROANYANWU
Monday, March 3, 2008
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Okoyomon
Photo: Sun News Publishing |
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The Nigerian Security Printing and Minting Company plc (MINT)
has had a chequered history since its inception 43 years ago.As
the nation’s currency printer, it had suffered poor
and epileptic management in the past years typical of most
federal parastatals.
Undoubtedly, its history of under-performance aided by a load
of unhealthy and wasteful corporate governance practices made
the Obasanjo administration to almost succumb to the temptation
of total privatization of the organization with its attendant
political and economic consequences.
Eventually, pragmatic reason prevailed, and the government
opted for commercializing its operations by installing a new
private sector-driven management in 2005 to turn around the
fortunes of the ailing company.
The new management team was sourced from accomplished multinational
companies through a credible recruitment process carried out
by Accenture, the internationally renowned consultant and
led by Mr. Ehi Okoyomon. The management met a comatose company
ready for the undertaker. In this interview, Mr. Okoyomon
speaks on his experience in the company, the challenges and
the turn- around strategy being employed to take the MINT
to the next level.
Mr. Ehi Okoyomon is a senior manufacturing executive with
extensive international experience and proven leadership capacities
demonstrated by utilizing a wide range of skills to address
organizational challenges thereby helping to improve profitability,
reduce costs and seeking improved market share.
A versatile team builder and team player who is never afraid
to push the boundaries by proactively identifying and exploiting
opportunities, which ultimately transform to effective solutions,
he is also a visionary and dynamic person.
More recently, he has been engaged in the turn around of some
manufacturing companies by adopting result-oriented strategies
that have resulted in increased profitability, lower cost
and raised capacity.
Okoyomon has also managed a security printing and minting
company as managing director and chief executive with the
sole purpose of achieving a turn around of the company’s
fortunes. That achieved an increase in capacity of 35 per
cent and profitability increase of 28 per cent. He has facilitated
the investment decisions and successfully managed the installation
of a $100 million bank notes manufacturing line in time and
on budget and led a multidisciplinary team that successfully
managed several turnkey projects in different countries. One
of the projects included the selection, installation and commissioning
of a USD 15 million, new packaging line and associated facilities
including warehousing. The project was executed on time, within
budget and met all specifications. He has managed a $50 million
manufacturing and beer packaging operation with accountability
for operations, maintenance, costs and performance and achieved
performance targets and saved on operating costs.
The Mint managing director has equally promoted the introduction
and use of world class (lean) manufacturing techniques in
four Guinness locations in Europe, Africa, Caribbean and the
Pacific region, leading to huge improvements in profitability
by up to 20 per cent.
He has organized several successful plant overhauls in order
to arrest declining performance and guarantee continuous supply
of products to the market and initiated action to investigate
and identify performance improvement opportunities in two
Guinness manufacturing operations. Mr. Okoyomon had identified
lost opportunities that eventually led to an increase of 10
per cent product supply capacity.
He also planned and executed two major performance improvement
and risk management audits with recommendations that led to
15 per cent cost reduction and launch of productivity improvement
initiatives.
He conceptualized a frontline management selection, installation,
training and use of a new maintenance and purchasing management
software that helped improved maintenance availability and
reduced spare parts inventory. Inventory reduced by 25 per
cent and maintenance availability improved by 10 per cent.
Okoyomon also managed a complete transformation and change
management programme leading to 10 per cent head count reduction
as well as new work culture and practices.
He has coached, trained and mentored four young graduate managers
and analyzed regional business performance on a regular basis,
using agreed key performance indicators. The feedback from
such analysis served as a basis for capacity planning and
strategic initiatives in market companies.
He had also supported the development of a new benchmarking
tool used for rating current performance and setting strategic
goals for improvement.
NSPM before we took over
When we took over NSPM, we saw excessive and under-utilized
manpower, chaotic and decentralized procurement system, poor
maintenance and manufacturing practices, inability to meet
the CBN’s yearly orders in a decade, with no investment
plan to replace ageing machinery. There was also the issue
of late delivery of products to customers, a huge debt profile
and a demoralized workforce.
A major issue that faced the new management was power supply
for its massive production infrastructure in Abuja and Lagos
factories. The previous management committed over N2 billion
to the purchase of high-tension generators to power the factories.
Unfortunately, due to the manufactioning of the huge power
generating plants, the MINT lost billions of naira it could
have earned from the CBN in terms of meeting its targets and
loss of printing lucrative security documents from the corporate
sector.
Rather than chasing shadows and incriminatingly probing the
past MINT administration, we opted for practical and effective
solutions to the nagging problems.
Unknown to many Nigerians, malfunctioning materials and machinery
for currency printing are required to be under very low temperatures
for them to be processed and operated respectively.
Out of the three high tension (HT) generators in Abuja factories
installed in 2003, two were completely dead and unserviceable
two years earlier with the third one nearly dead when the
new management assumed duty in June 2005. When the manufacturers
of the generators, Messrs MAN B&W Limited of UK were invited
to appraise them, the technical audit revealed that the problems
that led to the successive death of the generators were poor
maintenance, substandard spares and lubricants. The rebuilding
of the , according to the manufacturers, will take over 18
months.
The PHCN power supply line
The PHCN dedicated power supply line arranged by the previous
management at close to N100 million could not function expectedly
as power outages were the order of the day with attendant
damages to sensitive production equipment. In order not to
ground the factories with attendant loss of billions of naira,
about a billion naira revenue is generated by the company
monthly, if the factories are shut down, we decided in a business-like
wisdom to outsource power supply in the interim before new
generators are procured, installed and train manpower for
their maintenance.
Note also that generators and accessories for industrial applications
are not off-the-shelf terms. It takes upward of over six months
to procure let alone install and commission them.
A lot of misconceptions have attended the actual cost of running
these generators not for offices as reported by some print
media but for the factories that print the banknotes and other
security documents.
Some press reports emanating from the House Committee on Banking
and Currency when the MINT management team was invited for
debriefing gave false account on the true picture of the issue.
The logic behind the power outsourcing when faced with the
challenge was taking a decision of a ‘ SHUT DOWN’
of the factories as a result of lack of power and sending
all employees away or temporary outsourcing power and fully
address the problems permanently. This went through a serious
business thought process on a new power strategy that had
to get the endorsement of the NSPM Plc board. The management
opted to outsource power at a cost less than 2 per cent of
its monthly revenue. Every business executive should consider
the opportunity cost and economics of taking one of the decision
options. Hell could have been let loose if the MINT failed
to meet its commercial obligations supplying CBN and the nation
banknotes, especially the new launched designs if it elected
to shut down the factories.
The figures for the outsourcing of power and not generator
rentals is N8 million and N11 million per month for the Abuja
and Lagos factories which require a combined power of 4.5ME
and 5.5MW of electricity respectively.
I think the MINT management should be given kudos for a sound
business decision. By spending less than N20 million a month,
the MINT generates over N1 billion naira revenue per month.
Would any reasonable business operator do otherwise?
Rather than condemn the company for outsourcing power, Nigerians
should be concerned on why power is not readily available
from PHCN. In fact, many other business-minded manufacturing
firms in Nigeria have resorted to outsourcing of power in
the face of continuous poor supply from PHCN in order to remain
in business. Such companies can now face their area of core
competence and business focus production. Obviously, the MINT
is the nation’s currency and security documents printer
and not a power generation or distribution company. All decisions
by the management must be based on sound business consideration
because it is profit-driven and not run as a government ministry.
The MINT does not receive a kobo as government subvention,
subsidy or even tax waivers in spite of its nationally strategic
activity.
As a permanent solution, we now have new generators and accessories
on site and are being installed. Thereafter, the temporary
outsourcing of power will end. The MINT is solvent and buoyant
because of the company’s rational and logical business
sense.
As soon as the installation works are completed, it is poised
to make even greater revenue.
Looking ahead
The company is now forging ahead. The N8.44 billion debts
we inherited were cleared within one year of assumption of
duty at the MINT. Staff productivity has soared, sales have
shot up tremendously. The MINT is on a steady climb in its
output to meet the CBN requirements- the first time in decades.
Last year we achieved an output never achieved in its history.
Abuja factory alone achieved a production volume which Lagos
and Lagos factories combined have never produced in single
year for the last 10 years. All the infrastructural problems
that threatened its survival are being addressed. A tour of
both the Abuja and Lagos currency printing works of the MINT
will convince the most critical skeptics and detractors that
the CBN governor, Professor Chukwuma Soludo, has, indeed,
found a solution to the erstwhile moribund NSPM plc.
The challenges are no doubt exerting and enervating but exciting
for the new focused young turn around managers. Rather than
disparage the indefatigable Board of Directors and management
of NSPM plc, the least expectation is awe in the last 30 months.
And the future? The best is yet to come.
Departure from the old order
Since the Federal Government replaced the old Board of the
Nigerian Security Printing and Minting Company in 2005, in
line with the reform agenda, the company has continued to
grow in leaps. The sweeping change seems to have cut off the
Red Tape.
The Nigerian Security Printing and Minting Plc, is the only
body responsible for the printing of the nation’s currencies.
It is also saddled with the vast range of security documents
for the Federal Government and corporate organizations alike.
The company used to run like normal civil service set-up with
the philosophy of “business as usual” firmly entrenched.
So when the Central Bank of Nigeria took over the company
in February 2005 by acquiring more shares to achieve majority
shareholding of 77 per cent, the old Board of Directors was
dissolved. The old board was sacked alongside its management
team a new board was reconstituted. With private sector background
and the orientation, the new management team designed a turn
around road map that was promptly approved by a new board.
Components of the new agenda set by the new management team
include: Targets to attain self sufficiency in the production
of currency through optimization of plant and people; injection
of new capital aimed at improving output; taking full advantage
of the new durable substrata and to make company less dependent
on suppliers, who, incidentally, are also competitors. Other
components of the reform agenda are targeted at reducing the
overall cost of currency for the CBN and to uplift the company
to a centre of excellence for security printing in the entire
West Africa. Above all, our management was saddled with the
task of preparing the company for privatisation and return
value for shareholders’ investments.
Challenges
On assumption of duty, we were confronted by the familiar
hydra-headed problems associated with civil service establishments.
One was the over bloated workforce, another chaotic procurement
system, poor manufacturing and planning regime, late delivery
of products to customers and inability to meet production
targets and orders in the past 10 years. Poor maintenance
culture, huge debt profile, high cost of doing business, excessive
overdrafts, lack of accountability and extremely paternalistic
management practices were also firmly entrenched in the old
order. Consequently, these threw up a myriad of problems such
as undefined goal alignment and role profiles, unhealthy industrial
rations atmosphere, high degree of nepotism and favoritism,
weak performance management system, poor communication and
exploitation of available IT infrastructure. We, therefore,
declared that there was no way the company could move ahead
if it continued with its pre June 2005 profile. We weighed
the situation carefully and it became obvious that there was
no way the company could make progress without some urgent
surgical operations. So, we tabled the matter before the Board
and we sought approval of the Board to carry out some drastic
measures in order to secure the future of the company. The
board gave us the nod and we set the reform machinery in motion
immediately.
The reforms
As part of the new measure, procurement of goods is now centralized
to block leakages and to allow effective monitoring. Hitherto,
procurement system was decentralized with little room for
monitoring and supervision. Also in place are factory and
central tender committees with a new schedule of limits and
authorities designed and approved by the board. Responsibilities
are now being given through the management structure with
emphasis on accountability. Business processes are also well
defined and new rules set on management of information and
reporting system.
Result of the reforms
After the reforms, production increased by 30 per cent within
the first three months of take-over by our management and
for the first time in 10 years, the company was able to meet
the CBN’s requirement of output of about 1.3 billion
bank notes in 2005. The figure moved up to 1.6 billion banknotes
in 2007. Our output is being sustained despite the 45 per
cent staff reduction, thereby saving the company over N600
million personnel costs. Turnover also increased from N5.23
billion in June 2005 to N12.45 billion by December 2005, representing
an upward movement of N7.22 billion or 126 per cent. Profit
before tax increased from N45.56 million in June 2005 to N1.38
billion in December of the same year signifying an increase
of over N1.1 billion. Gross contribution increased from N2.15
billion in June 2005 to about N45.56 million of the same year,
representing an increase of N2.79 billion. The company’s
asset base has equally increased from N16.68 billion to N37.2
billion, owing to huge investment in the state of the art
machinery. The company also boasts of a new currency production
line that will boost capacity, while all series of bank notes,
except the N1000 denomination, are currently being produced
in our Lagos and Abuja plants. By June 2008, the company will
be well positioned to produce the N1000 note locally. At inception,
we were able to pay up a debt of N8.44 billion owed local
and foreign contractors and suppliers by the company’s
previous management. Similarly, all outstanding staff allowances
we inherited have been paid, thereby lifting staff morale
and giving them a sense of belonging. We are tackling infrastructural
challenges, occasioned by epileptic power supply, just as
improved service delivery is being ensured in the company’s
security documents unit. The company is currently pursuing
massive improvement in its IT infrastructure in addition to
addressing problems like water, power and effluent in the
Lagos and Abuja plants.
Other projects
Other projects we are embarking upon include the refurbishment
of our security document lines in Lagos and revamping of basic
structure and facilities at the site. Also, the purchase and
installation of a new currency line and revamping of minting
facilities in Lagos are on the cards, while the upgrading
of currency printing facilities and major maintenance of currency
lines for maximum output are ongoing at the Abuja factory.
We have been able to instill confidence and as such have been
able to win back lost customers in Security Document business.
Acquisition of scratch card production and personalization
equipment was part of the gains recorded as a result of our
company regaining the confidence of hitherto skeptical customers.
In line with our new private sector orientation, we have set
ambitious targets for the company, which can be attained in
the nearest future. The company has also mapped out strategies
to ensure that all currency notes are printed locally, even
as plans are being made towards aggressive sales and marketing
effort within the ECOWAS region. We also plan to increase
our year on year sales of Security Documents for the next
three years, while striving to shoot Nigeria to a leadership
position in technical requirements for the production of the
ECO in the entire ECOWAS region. We are also craning our neck
to reposition for printing capacity for export by aiming to
form strategic partnership with the African banknote printers
association.
We are hoping that with commitment and dedication, the targets
are attainable within the next few years. We are not being
over ambitious and I can assure you that we are not setting
unrealistic goals for ourselves. All we need is conducive
environment and less distraction from extraneous forces that
are yet to come to terms with the reality of the new reform
agenda and, indeed, 21st century world class manufacturing
practices.
Pension Fund liability
However, a pension fund liability of N3.5 billion has become
a very sour grape for the company. The liability was caused
by forced seizure and sale of the company’s pension
fund properties by the immediate past administration of the
Federal Capital Authorities. But we are not folding our arms
in despair. In fact, we have forwarded petitions to the relevant
authorities to seek redress. The total value of our properties
seized and sold stand in excess of N11 billion and I don’t
see how we can let go off such assets without serious financial
strain on our pension funds.
The Future
We want to bring home the printing of all currency notes to
Nigeria and ensure active sales and marketing efforts within
the Ecowas region. We also plan massive investment to improve
people capability, increase year on year sales of security
documents for the next three years. In this regard, we will
form a strategic partnership with the African banknotes printers
association to be in a position to provide print capacity
for export and leverage on the strength of Nigeria in the
Ecowas region to provide leadership in the technical requirements
for the production of the ‘ECO’.
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