ANALYSIS OF CAUSES FOR UNDER-CAPACITY PRODUCTION OF THE ETHIOPIAN RE-BAR MANUFACTURING INDUSTRY

The problem that this study addresses is the under-capacity utilization of Ethiopian re-bar manufacturers. Reinforcement bar producers in Ethiopia are characterized with their under-capacity utilization. They are using below 50% of their installed capacity. The subtlety of the under-capacity utilization problem of the industry is that there are multitudes of potential causes among which one cannot easily put into their order of significance. Hence, the responsible stakeholders among the government, the industry, and the support institutes, wouldn’t easily determine their specific role to resolve the problem before knowing which cause is affecting capacity utilization at most, and how that may affect the productivity of the industries. Therefore, the purpose and motive of this research is to analyze causes of the under-capacity utilization problem; and thus, to put the major causes in their level of significance in terms of their impact upon productivity. The research method is a mix of qualitative and quantitative approaches in which focus group discussion and interviews were made with different actors that participated directly or indirectly in the re-bar manufacturing industry. The participants were directors, engineering department managers; marketing/commercial department managers of Ethiopian re-bar manufacturers, the Metal Industry Development Institute (MIDI), and the Ethiopian Association of Basic Metal and engineering Industries. The analysis is done using the Likert model to discover the likely causes and the potential remedies of the problem. Accordingly, 72.22% respondents confirm that lack of foreign currency is a major cause for the under-capacity production problem. Similarly, 69.44% respondents replied ‘lack of market (effective demand)’ as a major cause for the under-capacity production of the industries. Moreover, 63.89% respondents indicate the influence of imported re-bar products as one of major causes. In addition, 63.89% respondents pointed v out that ‘irregularities of rules and regulation of the Public Procurement and Property Disposal Service (PPPDS)’ are major causes for the under-capacity production problem. Beyond identifying the likely causes of under-capacity production, the reach found the share of responsibilities that the major stakeholders, the government, the industry, the support institutes, and the sector association, are supposed to shoulder in resolving the challenge