Yhaenu Plc, the parent company of South Star International Hotel, has built the plant in Tatek Industry Zone, at Ashewa Meda Area in Burayu town, Oromia Special Zone.
A local firm primarily engaged in the hospitality industry has ventured into the production of packaging materials by establishing a carton plant after investing close to 121 million Br. Yhaenu Packaging & Printing commences operations this month.
Yhaenu Plc, the parent company of South Star International Hotel, has built the plant in Tatek Industry Zone, at Ashewa Meda Area in Burayu town, Oromia Special Zone. The factory will produce corrugated carton boxes mainly to be used for food products as well as paper packaging, boxes, containers and wrapping.
Resting on 6,200Sqm of land, the plant is expected to produce 31.7tn of carton packaging a day by operating around the clock in three shifts.
“We plan to operate with 60pc of our capacity at least for half a year since the employees are new to the industry,” said Bonsa Mamo, general manager at Yhaenu Plc, which was established in 2003 by four people with one million Birr in paid-up capital. “After that, we’ll start production at full capacity.”
Yhaenu Plc has been engaged in the export of oilseeds and pulses like sesame seeds, niger seeds, beans and coffee for 16 years. It also imports construction machinery including dump, pickup and cargo trucks, as well as tyre reinforcement bars. Additionally, the multi-sectoral firm offers dry transport services to and from ports with a fleet of 17 trucks. The company, which raised its capital to 37 million Br this year, also owns the five-star South Star International Hotel found in Hawassa. The 114-room Hotel was established seven years ago for 246 million Br.
The plant hired 300 people, of which 88 of them are set to be the professional staff. The rest will be blue-collar labourers who operate the corrugation, slitting, printing, slotting, folding and packing processes.
The construction of the factory started over two years ago by the company itself, and Yhaenu has already imported and installed the machinery from China at a cost of a little over 700,000 dollars. The imported hardware includes plates, a sticking machine, cutters, a corrugation machine, as well as packaging machinery.
The significant rise in local demand for packaging materials due to large investments and projects in the manufacturing sector encouraged the company to invest in the area, according to Bonsa.
The factory will import raw materials such as kraft liner, test liner, and fluting from European countries, South Africa, the United States and Brazil. Kraft liner is the flat, outermost layer of the carton packaging, while the test liner is the innermost layer of the corrugated board. The third input, fluting, is used to make the middle section of the corrugated carton.
Additional raw materials such as adhesives and printing ink will be purchased from the domestic market.
Yhaenu is joining 198 packaging material manufacturing factories in the country, 20 of which produce carton packaging. Three years ago, the country spent a total of 39 million dollars to import packaging machinery.
The carton box production sector has quality problems, according to Michael Tomas, a business analyst at Precise Consult, a management consulting firm that serves businesses, governments, and nonprofit firms in the country since 2007.
He explained that even if the price of locally produced carton boxes is comparatively low, its quality does not meet industry standards, and some firms have been obliged to import from manufacturers abroad.
The business analyst argues that the sector is booming due to fast growth in the manufacturing sector, which in turn needs packaging materials. Michael said that there is a high demand for the boxes in the local market.
Michael recommended that the factory work on business-to-business marketing in which it introduces its products to manufacturers so that they can make purchases on contractual terms.