Peace-Hats off to Lanka's biz community
There is a perceived lack of interest in the peace process by civil society at large - through no fault of theirs' because little is known of the process outside an occasional statement made by the government or the Tamil rebels.

Most people agree there is a public vacuum unlike on previous occasions when peace talks were on and this could be a possible drawback in the current process.
"We need to create a civil movement towards peace," notes Rev. Baddegama Samitha, a moderate Buddhist monk and opposition parliamentarian from the south. He said that because the peace process is shrouded in secrecy people were unaware of what was happening and showed little interest. "There is a public vacuum and that's not a good thing. People's participation is essential if the peace process is to succeed," he told this columnist.

In fact, if not for the participation of the business community, the public lack of interest would have been felt even more. Since last July's rebel attack on the Colombo airport, there has been a marked transformation in the business sector.
The private sector has not supported the pursuit of peace with such fervour until today. Chambers of commerce and organizations like SriLankaFirst have been the driving force behind the peace process ... pushing, cajoling and urging the government and the rebels to end a conflict that has stood in the way of Sri Lanka becoming a key economic player in Asia.

The lack of a civil society commitment in the current peace process has been amply filled by the business community whose repeated forays into Jaffna, seeking to re-establish trade and business links and invest new capital, has surprised even veteran political observers.

Understandably, the private sector has come in for sharp criticism for their previous lack of interest in peace. Thousands of people have died in the war - some 64,000 since 1983 according to the latest count -but the private sector didn't raise a finger apart from a few individuals. "The business community has no role in politics. We should leave that to the politicians," was the often-made comment. Businessmen who became arms dealers in fact thrived on the war as the demand for modern weapons grew and commissions on military deals were in billions of rupees.
July 2001 and the September 11 terrorist attacks in the US, changed all that and saw the formation of SriLankaFirst, a peace group co-ordinated by chambers of commerce and allied business groups, which organised the business community's first-ever street demonstration for peace.

A whole new phase in the peace process was taking shape. "July was a wake up call for us," noted one of the peace promoters and he was instantly criticised for making the comment as it implied that the private sector waited until their business was affected to care for what is happening around them. "Where were you when thousands of people were dying?" asked angry journalists and the public. Instead of reacting in a hostile manner to the criticism, the businessmen-turned-peace promoters were courageous enough to apologise for not taking up the cause of peace earlier.

The business community should now work towards getting wider public participation in the peace process. SriLankaFirst is well placed to do this given its effective media campaign in promoting a just solution to the ethnic conflict.

A civil society cum business community initiative for peace must run parallel to peace talks due to begin next month in Thailand. If the peace phase is to succeed, public participation is essential. Sri Lankans need to look beyond politics and petty differences; politicians from opposition parties need to set aside their differences with the ruling party and work in unison to achieve a peaceful solution that would satisfy not only the north but also the south.

Nobody wants the war to continue - least of all the poor, humble rural folk. Many of them are thankful for the tranquillity in the villages, as there are no sons and daughters coming home in body bags. There is relief all around.

Since the cease-fire began last December, it is estimated that some 1,500 lives of young soldiers would have been saved during this period at an estimated average of 10 deaths a day during wartime. What about the relief on the LTTE side in terms of lives lost? Affluent urban residents in Colombo are pessimistic about the peace process and grumble about its shortcomings but grudgingly admit that the calm in the capital and the re-opening of roads has provided a lot of relief.

The peace process is certainly not without its problems. Both sides have complained of cease-fire violations and failure to adhere to clauses in the truce agreement. That's not unusual. When trying to settle a conflict that has raged for decades, such problems and issues are bound to arise.

By coming out of its shell, the business community has shown courage and a human face, and that its role in society is not all about rupees and cents. It deserves the commendation of all. It is also essential that the business community's commitment towards peace is a sustainable one, is not related to politics or wouldn't waver even if peace talks end in failure.

Ties out; casual wear in at Unilever

Executives at Unilever Ceylon, the local subsidiary of the consumer products multinational, don't wear neckties anymore. Under a more liberal dress code the company has adopted, executives are free to wear more casual attire to work, even company t-shirts, unlike the rest of the Sri Lankan corporate sector, where ties are de rigueur.

The company's chairman, Ehsan Malik, jokingly refers to neckties as a "symbolic way of limiting growth". Its entire corporate culture has changed with management giving more autonomy to subordinates and workers and encouraging a more flexible and aggressive bottom-up approach to decision making. Executives, says Malik, now spend "less time on making themselves look good and more time on making the business grow".

And business growth has been spectacular in recent months despite the severe difficulties the economy has gone through, given last year's shocks to the system, and the consequent squeeze on consumer spending power.

In the first quarter of this financial year Unilever Ceylon was the multinational's highest growing home and personal care business in Asia - the region stretching from Pakistan to Japan, Australia and New Zealand - achieving a growth of 41 percent, Malik said in an interview.

Charting growth
For a company to perform this well in a country that was wracked by a vicious insurgency until a few months ago is no mean achievement. Malik attributes the growth to the changes in the way the management runs the company and new work practices.

"Our growth rate in the recent past has been very good," he said. "Consumers always had buying power but we were not reaching them - so by us empowering our people we were able to exploit opportunities that were always there but we had not been focusing on."

Any business that has been there for 65 years develops "a sense of complacency and a bit of arrogance," Malik believes. "So we get people to break out of that mould," he added. "We need to be more competitive. Last year, because of the political developments, we found we were not going anywhere - we lost volumes, some market share. The only way out was to change the culture of the business - create excitement."

Production at Unilever Ceylon is now done by autonomous work groups with the workers deciding how to organise their work schedules. Each brand has an accounting team, again with more autonomy.

"The people treat the business as their own," said Malik. "We've created the spirit of a small business within a large business." Unilever Ceylon is today the country's largest consumer goods company, although it has down-sized in recent years, both in terms of production and staff. The company's products are among the oldest recognisable brands in the island. Its soap products, Sunlight and Lux, were first sold in the local market 100 years ago. Local production of Sunlight started in 1940 and the production of margarine the following year. The company appointed a local agent and established a regular import and distribution channel in 1927. The first Unilever Company was incorporated in the island in 1938 as Lever Brothers Ceylon Limited.

Top tea exporter
Unilever Ceylon is among the top five exporters of Ceylon tea. Its association with the beverage goes back over 150 years through its acquisition of Brooke Bond and Lipton which trace their roots to the inception of the tea industry in the island. The three Unilever owned companies operating independently of each other were amalgamated and formed into one firm in 1991.

More recently, however, the company has sold off its Wall's ice cream plant and closed down its Mabole tea bagging plant, largely owing to labour problems, prompting speculation that it was pulling out of the island. Malik denies the rumours and prefers to call the restructuring of Unilever Ceylon "rightsizing not downsizing". The company's workforce has been slashed to 1,900 today from about 2,800 five years ago.

More than 500 workers stand to lose their jobs with the closure of the Mabole tea bagging plant which Unilever said was owing to falling orders that resulted from its inability to offer multi-origin blends because of the ban on imports of orthodox teas for blending and re-export. Unilever has offered a compensation package but the workers are demanding more generous terms and stage a daily picket in front of the company headquarters. They allege the company has out-sourced the work to sub-contractors in order to make more profits, a charge denied by the company. The matter is now before the Labour Commissioner.

Malik said that despite recent government moves to liberalise the import of orthodox teas, it was too late to revive the company's tea bagging operation since bagging plants have been set up closer to their markets in Poland and France.

Unilever says low productivity, rigid labour laws and archaic work practices that have not kept pace with changes in technology which have led to more automation of production lines make it difficult to do business in the country. "We can only justify production in Sri Lanka if we're world class in terms of quality and cost," Malik said. "If we can't give that, the customer buys imported products which is now becoming easier with import tariffs going down."

High labour costs
Poor economies of scale and high labour costs posed "serious problems in being world class," Malik said. "On average, Sri Lankan labour costs two and a half times Indian labour." The company also requires the flexibility to hire and fire in keeping with the demand for its products, which can rise and fall.

"We have told our unions that if we can't get flexibility of labour and eliminate archaic work practices we'll be forced to import," Malik said. "It is the consumers who ultimately decide."

Sri Lankan consumers, unlike in India, Pakistan or Bangladesh, are very "aspiration-oriented", Malik said, referring to the exposure to high-value products that workers in the Middle East get.

The company's per capita turnover is over three times that of India, he said. Its "share of wallet" - a measurement of Unilever turnover and what Sri Lankans spend on private consumption - is 0.7 percent of a dollar, compared with 0.4 in India and 0.3 in Australia.

"We're fortunate that we're in a country at a stage of business where we can contribute more than a mature business environment like Europe," Malik said.
The rapid growth in turnover is the result of more aggressive marketing tactics and the flexibility given to the staff. Under a policy of "getting closer to the customer" managers and other members of brand teams, including those in production and accounts, are required to go out and meet customers on a regular basis to obtain direct feedback on Unilever products.

"We have identified areas we were not reaching adequately and organised our distribution channels better," Malik said. The exercise has had unexpected results. One idea that emerged from its dialogue with consumers was that of a breath-freshener chewing gum - something the company is pursuing.

Other Unilever subsidiaries in the region such as in India, Pakistan and Bangladesh, want to emulate the Sri Lankan unit's new work norms.

Ring the bell
Malik calls a staff meeting each month at which he briefs them on how the business is doing. "In another new initiative, each Monday we ring a bell if we reach a certain sales target," he said. The bell has been ringing more often these days.

The company achieved a billion rupee turnover in March and has set an annual turnover target for 2002 of Rs. 10 billion. Last year, turnover was Rs. 7.8 billion.
Despite the management's enthusiasm about the new, more open corporate culture, Unilever still has its secrets. Turnover may be discussed weekly but neither the staff nor the public are told about the bottom line, nor how much profit is repatriated to the parent company.

"Our profits before exceptional payments was very healthy last year," Malik said. "But, after the restructuring costs for the Wall's closure as well as the Mabole value added tea factory closure this was greatly reduced."

Profits and repatriation of dividends is "information (that) is normally not divulged as we are not a public quoted company," he added. How does the reluctant to divulge profits stand with the company's policy of being transparent and getting the employees involved?

Says Malik: "Individuals who handle different sections of the business are aware how much they have contributed towards the bottom line. For example, a Brand Manager will know his or her brand's profitability. Thus, individuals who impact the business will have access to this information."

He would only reveal that the firm's profitability according to an in-house
measurement called economic value added (EAV) is 50 percent up on last year.

Expansion?
Unilever Ceylon has no immediate plans to expand its business given the new investment climate created by the indefinite truce between the Tamil Tigers and the government and the move towards peace talks.

"There's no need to add plant capacity," Malik said. "Given our increasing efficiencies we can produce 30-40 percent more with existing capacity if labour is more productive." However, he says, there could be indirect benefits of increased production. "Our suppliers may benefit and the Sri Lankan economy may benefit."

Back to Top

Back to Business

Copyright © 2001 Wijeya Newspapers Ltd. All rights reserved.
Webmaster