Leather Products
reliable supply of good-quality finished leather, and it went bankrupt in the late 1980s. With a high fixed overhead cost, production levels were far below the break-even point. Economies of scale could not be realized because the absence of a stable and cheap source of raw materials meant that production was at 10–15 percent of capacity even in the best years. Most of the design problems can be attributed to the fact that the public sector was making the decisions for the private sector. The projected scale of production was wrong. With a capacity of 4 million pairs of shoes, Morogoro was many times the size of typical plants, where annual output averaged 0.5 million–1.5 million pairs. Machinery was poorly maintained. Little attention was paid to the availability of spare parts, and breakdowns and power outages were frequent. There were separate production lines for exports, with special machines for selected processes to ensure export quality, but, in practice, these production lines relied on poor, inadequate machines. Much of the machinery and equipment were imported, and there was no local technical expertise in running and maintaining the machines. Italmacchine, the Italian consulting company, offered to sell at least 85 percent of the total production outside Tanzania at the best prevailing price through its subsidiaries. This never materialized. If Morogoro had been owned by a private entity, these problems might still have arisen, but, in that case, they would have occurred on a much smaller scale and would not have cost the country so much. Workers received no training in maintaining the machines. The effluent treatment plants were inadequate; so, tannery runoff flowed into Lake Victoria, with adverse environmental impacts. While the project had a $40 million line of credit, local capital was scarce, and the investment needed to upgrade technology to meet higher quality requirements was frequently not available. Morogoro’s demise was predictable within only a few years of the onset of operations. The industrial park set up by the government did not have factory shells or its own utility supply. Within a year of the commissioning of the factory, structural cracks appeared in the walls and floors, and water seeped in, damaging the machine platforms. The roof also leaked, and there were problems with drainage and sewage disposal. Morogoro never had a profitable year. The lack of profits meant that the firm lacked the foreign exchange to expand business and pay for
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