Product details

West African Portland Cement (WAPCO) is at the point of making a decision regarding the replacement of the old kiln at its Ewekoro plant with a new dry process kiln. The aging plant, which was 40 years old, made the running of the plant uneconomical. The unstable economic environment prevailing in Nigeria had led to the closure of six out of the eight cement manufacturers. WAPCO maintained a 60% share of local production, which in turn represented about 20% of the demand of cement in the country. The demand gap induced importation of cement into the country at a price that was lower than the cost of WAPCO''s local production. Management had opted for financing the installation of the new kiln, and was expecting that its improved efficiency would yield a return of 20%. The risk however was compensated by the opportunity to capture the huge market of Nigeria and West Africa at large. This case is suitable for discussion in executive programmes. Issues to be discussed are: (1) impact of economic policies; (2) global competition; (3) investment decisions; (4) technology; and (5) managing uncertainty.