Chief Dr Innocent Chukwuma, Chairman/CEO of IVM Innoson Group has said he brought down the price of brand new motorcycles in Nigeria by importing knockdown parts and through local manufacturing of parts.
The entrepreneur stated this in a paper he presented at the 4th Chinua Achebe International Conference held at the University of Nigeria, Nsukka.
He said that the inability of the Nigerian government to support production in the country has hampered industrialization.
Read his presentation
PAPER PRESENTED BY CHIEF DR INNOCENT CHUKWUMA OFR, NPOM AT THE 4TH CHINUA ACHEBE INTERNATIONAL CONFERENCE IN COLLABORATION WITH CENTRE FOR BLACK AND AFRICAN ARTS AND CIVILIZATION (CBAAC) ORGANIZED BY THE INSTITUTE OF AFRICAN STUDIES, UNIVERSITY OF NIGERIA NSUKKA.
TOPIC: AFRICAN INDIGENOUS TECHNOLOGY AND THE CHALLENGES OF THE 21ST CENTURY INDUSTRIAL REVOLUTION
The Innoson Group As Case Study.
Innoson Group is a multi-dimensional business organization that has various business interests in automobile manufacturing and assembling, plastic productions, Oil and Gas, ICT, Wood Processing and Hospitality.
I started from trading in motorcycle parts and accessories. I made huge success of the business that by the turn of the 90s, my products had become a well-known brand and in high demand, both in Nigeria and the sub-region of West Africa.
Also Read: NDDC to Train Niger Delta Youths at Innoson Motors
At that period there were only five (5) known motorcycle brands in Nigeria, which were;
a. Leventis: Known for the Honda brand
b. Boulos: known for the Suzuki brand
c. Yamaco: known for Yamaha brand
d. CFAO- known for the Kawasaki and Mobylette brand
e. Innoson: known for Jianshe and Innoson brand.
Of all these major brands, I controlled the largest market share because I succeeded in bringing down the price of a brand new motorcycle from N150, 000 to N60, 000.
I was able to do this by being the first indigenous company to start the local assembling of motorcycles.
Why I Ventured Into Motorcycle Assembling
Based on my experience as a major motorcycle and spare parts dealer, I studied the major reasons why motorcycles were expensive and discovered that a 40ft container with a complete knockdown (CKD) of motorcycle parts will contain more motorcycles than a container with completely assembled motorcycles.
For example, a 40ft container with a completely assembled motorcycle can only contain between 36-40 units, while the same 40ft container with the complete knockdown (CKD) can contain between 220-230 units of motorcycles.
Based on this analysis, I started importing the complete knockdown (CKD) of motorcycles in the container and started assembling them in Nnewi, thereby gradually reducing the prices of motorcycles from N150, 000 to N80, 000.
Hence I became the first indigenous company to fully assemble a motorcycle in Nigeria and subsequently, I set up a plastic manufacturing company in Enugu to produce the plastic components of our motorcycle brands.
Why I Ventured Into Producing Some Motorcycle Components?
During the period of my motorcycle assembling, I found out that most of the motorcycle parts and components are plastic, I, therefore, set up Innoson Technical and Industrial Company Limited located at Emene Enugu to start producing all the plastic components and parts of our motorcycle brands.
I also established General Tyres which also were producing tyres for our brands of the motorcycle using Nigeria rubber. By this singular effort of producing the components, I further reduced the price of the motorcycle from N80, 000- N60, 000. I did not just stop at producing only motorcycle components, I also ventured into the production of some motor components.
It was based on my experience in the production of some of the motor components that I ventured into vehicle manufacturing now known today as Innoson Vehicle Manufacturing (IVM) Company Ltd located in Nnewi, Anambra State.
What we do today at IVM is to manufacture the full body of a vehicle, and then we buy an engine, gear-box and the electrical components to put in these vehicles.
The plastic components of our vehicles are produced at our Plastic factory. That is why we can comfortably call our vehicles Innoson. By the Grace of God, we are the only vehicle manufacturing company in Nigeria today. We have a full production plant that can produce different ranges of vehicles.
The above is the success story of The Innoson Group, a major industrial conglomerate, not just in Nigeria but in Africa.
Innoson Group is among the few industrial companies that are succeeding in Nigeria despite the difficult terrain we operate from.
The western nations have been able to experience an industrial boom because of the massive support the government gives to its manufacturing company.
For example, When President Obama took office, the American economy was deep in recession and financial crisis, the American automobile industry was on the brink of collapse and liquidation that threatened to eliminate more than one million jobs.
The President, as part of a larger effort to combat an historic economic crisis, made a difficult decision to provide support to General Motors (GM) and Chrysler. The President’s decision to save GM and Chrysler was about more than those two companies. It was about standing behind the countless workers, communities, and businesses – large and small – that depend on the automotive industry.
Within two years later, the American auto industry mounted a comeback. General Motors expanded its production and added more jobs, while Chrysler repaid its outstanding loans to the U.S. Treasury – six years ahead of schedule. Since GM and Chrysler emerged from bankruptcy, the auto industry has created more than 640,000 auto industry jobs, its strongest period of job growth since the late 1990s. GM, Ford and Chrysler have all returned to profitability and much more boosted the American economy.
Imagine the impact Innoson Vehicles will bring to Nigeria if the Government will invest and support it just the way Former President Obama did to the major vehicle manufacturing companies in America at the beginning of his administration.
The Nigerian Government should learn to invest and support its indigenous companies as that will encourage more entrepreneurs to venture into manufacturing leading to an industrial revolution.
Imagine the impact Innoson Vehicles will bring to the economy if adequately supported by the government: For example; the auto industry is known as the industry of industries because it has the capacity to birth tens to hundreds of other industries known as supplier industries. No auto industry has the capacity to produce 100% of all its auto parts. In fact the majority of the auto parts are produced by other smaller industries.
Nigeria is still an emerging auto industry and the majority of the auto parts are still imported into the country. With a massive support and patronage of Innoson Vehicles by the government, there will definitely be an outbreak of clusters of supplier industries such as:
● Auto Parts manufacturing Companies:
● Gasoline and engine parts manufacturing Companies:
● Electrical and electronic equipment manufacturing Companies:
● Steering and suspension components manufacturing Companies:
● Brake system manufacturing Companies:
● Transmission and power train parts manufacturing Companies:
● Seating and interior trim Manufacturing Companies:
● Metal stamping Companies
With the establishment of these manufacturing companies, Nigeria will be the major hub of auto manufacturing companies in Africa with the attendant benefits of thousands of jobs generated, auto and spare parts exports, generation of foreign exchange etc.
There is a scramble for Africa from other continents such as; North and South America, Europe and Asia. There is now a massively increased interest and investment in Africa from these continents, therefore it is time we Africans think and live in Africa. It is only Africans that can truly develop Africa.
Therefore, the African Governments should focus more on building necessary infrastructure that will open up the continent for industrialization.
For example, one of the major panaceas to Africa’s industrialization is Maritime Transportation. Poor transportation infrastructure in Africa specifically Maritime Transportation has reduced African countries participating in the globalization process.
Ports are the gateways through which countries access the global trade. Generally, 70-80% of global trade passes through the Maritime Transportation system, therefore for an increased export within and among African countries to be effective; there is an urgent need for shipping transportation among African countries.
For instance; Africans share contributions in global export trade is less than 5% compared to 33% share contribution by Asian countries. Therefore an efficient maritime transportation system will play a significant role in bilateral trade among African countries.
More importantly, Africa’s landlocked countries’ are at a perpetual disadvantage to bilateral trade among African countries. Out of Africa’s 55 countries, 16 of them are landlocked, In other words, about a third of the continent is made up of countries that have no access to the ocean or sea.
A country’s level of access to water can have an enormous effect on its economy. Being landlocked is more problematic for importing and exporting goods because it is much cheaper to transport products over water than over land. Land transport also takes longer.
The more Africa integrates through regional and continental trade and development communities, the more landlocked countries’ isolation will be broken down.
Case Study: As an industrialist, I discovered that there is a particular raw material needed for production for my plastic plant in Enugu that can be imported from Chad, a nearby country to Nigeria. This raw material is half the price of what I buy from Europe and Asia but unfortunately, I can’t buy it from my closest neighbour because of logistics problems. The cost of transportation from the country down to my factory is so high that it is now cheaper to buy it from Asia and bring it down to my factory.
In conclusion, in order to mitigate these challenges, a major investment in railway infrastructure that will lead to improved railway transportation becomes necessary. For the landlocked countries without seaports; the railway track should be constructed from the nearest sea straight down to the landlocked country as this will go a long way to encourage African entrepreneurs to invest in industries with the attendant benefits of improvement in importation and exportation of goods among African countries.
