Kenyan Automotive Company, CMC Motors Group to Lay Off 169 Employees After Ford, Suzuki, and Mazda Terminate Distribution Contracts.

CMC Motors Group, a Kenyan automotive company, has announced that it will be laying off 169 employees after three major vehicle brands – Ford, Suzuki, and Mazda – terminated their distribution contracts with the firm. The termination was a result of a slowdown in the passenger vehicle segment, prompting the distributors to wind up their operations with CMC Group.

In a letter addressed to the Amalgamated Union of Kenya Metal Workers, the company’s Managing Director, Sakib Eltaff, stated that the layoffs would be done in three phases between the second and fourth quarters of the year. He added that the company intends to re-organize its business to focus more on the agricultural sector, resulting in a reduction in the number of roles and resources required to execute the remaining functions. As a result, 169 employees will be declared redundant, including those in both management and unionized categories.

Eltaff stated that the affected employees work in Admin & Support, Finance, IT, Legal, Logistics, Senior Management, Parts, Procurement, Projects, Sales, and Service departments. Phase one of the redundancy process began on April 25, 2023.

The company assured the employees that it would comply with the requirements of Section 40 of the Employment Act, individual contracts of employment, and the Collective Bargaining Agreement (CBA) between the company and the union. Therefore, the employees will be paid their terminal dues in accordance with their contracts of employment and the existing CBA. This includes salary for days worked up to the date of termination, salary in lieu of notice based on the number of years and CBA, severance pay for each completed year of service based on the number of years and CBA, and pay in lieu of leave days accrued but not taken.

Following the termination of the distributorship contracts with the three vehicle brands, CMC Motors Group will no longer represent them in Kenya. Ford will be moving to Salvador Caetano in the third quarter of 2023, while Suzuki will be supported by CFAO from the second quarter of 2023. Mazda is yet to announce its new distributor.

The news of the layoffs is undoubtedly concerning for the affected employees, but the company’s efforts to comply with the legal requirements and pay the employees their dues are commendable. Additionally, the decision to focus on the agricultural sector may provide new opportunities for the company and its remaining employees.