Yemen’s third-largest city of Taiz, once the country’s industrial engine, is now struggling to keep factory doors open amid years of siege, impediments to the import of raw goods, and competition from a flood of cheap Gulf and Chinese imports.

An offensive by the Houthi rebels reached Taiz in the south in early 2015. In March of that year, neighboring Saudi Arabia launched a military intervention intended to roll back rebel gains and restore the government to power. The Houthis never managed to take over Taiz, but they control a key industrial district on its outskirts, and enforce a cordon around the city.

One of the affected companies was United Company for Sponge & Plastic Industries, in operation in the city since 1984. When fighting blocked the roads linking Taiz with the western port of Hodeida and the southern port of Aden, two lifeline supply routes for raw materials, United was forced to deplete its warehouse stores to stay alive.

“We had no option other than consuming the company’s stored material to keep production going on. During the war, we neither could bring in raw materials nor export our products,” Osam Fadi, a sales representative for United, told Asia Times.

Backed by air support and military logistics from the Saudi-led coalition, government forces managed to keep the Houthi rebels at bay, but the rebels enforced a tight ring around the city. Government forces partially broke the Houthi blockade in 2016 after a year of intense fighting, seizing control of the western gate of the city.

Factory owners and workers initially expected a reprieve for the industrial sector, but that hope was short-lived. The new road to Aden, the de facto seat of the government, was rough and went through dangerous mountains.

The Houthis until now maintain an effective blockade around Taiz, which has not only stunted the flow of humanitarian aid and food, but also industrial inputs.

“Raw materials that come through the road are meager,” Fadi said, adding that the company has largely halted exports, selling its meagre production of sponge products locally, in densely populated Taiz.

The United factory is located in the city’s Beir Basha district, which has seen some of the heaviest fighting between warring factions in the area. As production dropped, the company was forced to reduce working days and salaries by 50%, asking half of its workers do 15 days of work, and then hand over their duties to the other half.

This way, “they can keep their jobs and find another job during their days off,” Fadi said. By this procedure, the company kept its skilled workers and secured operations at a minimum capacity. 

Factory to battlefield

Before the outbreak of the conflict, Taiz was home to almost 40 factories, producing everything from plastics to soft drinks to cooking oil, according to local officials. Due to the relatively large number of factories, the city earned a reputation as Yemen’s industrial hub.

Factories were located inside the city limits as well as in the Hawban district on the eastern outskirts, now under Houthi control.

Ahmed Abdul Kareem al-Mujahed, who heads the local Ministry of Industry office, told Asia Times there are 17 factories located inside the besieged city. Another 22 are located in Hawban. 

“The war has affected all factories in Taiz in one way or another. The war disrupted the flow of raw materials and exports,” Al Mujahed said. 

Of the 17 factories inside the city limits, three are completely shut down, three have moved location (one to Hawban, another to Hodeida, and a third to an unnamed location), and the remainder forced to reduce production.

One factory, which produces diamond saw blades used for masonry and construction, is working at 10% of its pre-war capacity, according to ministry statistics.

Local officials say hundreds of workers have been laid off, prompting them to head to the battlefield in order to feed their families.

A Yemeni protester holds up a sign showing the crossed-out faces of Saudi Crown Prince Mohamed bin Salman (R) and his Emirati counterpart Mohamed bin Zayed (L) with a caption in Arabic reading “Kill them, cross them, cast them into hell” at a protest against the rising cost of living in the city of Taiz on October 4, 2018. Photo: Ahmad al-Basha / AFP

‘We can’t compete’

The 22 factories in Houthi-held Hawban have been largely shielded from the fighting since early 2015, but local industrialists complain that despite living in peace, they need to take long trips in order to bring in materials from government-held Aden or to ship their products to local markets. They are also subject to taxes by the rebels. 

Lorries carrying exports from Taiz must make an arduous journey, first northwards through the mountainous province of Ibb, then swinging back south to finally reach their destination of Aden on the southern coast.

“The long trips have added more cost to the production process,” a marketing official at Hayel Saeed Anam & Co told Asia Times on condition of anonymity as he was not authorized to speak on behalf of the international conglomerate. Founded in 1938 just south of Taiz, Hayel Saeed has branches throughout the Middle East and beyond, but today is struggling with operations in the country of its founder.  

Similar, less expensive goods have poured into Yemen since the start of the war from neighboring Saudi Arabia, Oman, and the United Arab Emirates, as well as from China, forcing troubled factories to either reduce their prices and suffer losses, or lose their longtime customers.

“The country’s borders are not controlled and there are no active laws that can protect us… We are unable to compete,” the same official said.

Wiring money overseas is also a major challenge, with global financial institutions prefer not to deal with Yemeni banks and accounts, he added. To navigate this constraint, Hayel Saeed’s management has been asking customers abroad to pay its suppliers of raw goods directly. 

“We just write a letter to one of our customers abroad to send a certain amount of money to another company that sends materials to us,” the official said. 

Millions of Yemenis have pinned their hopes on UN-led diplomatic efforts to end the war, and manufacturers in Taiz say they are lobbying for the warring parties to halt hostilities.

“We hope things will improve as we seek to resume operations at full capacity,” Fadi, the United representative, said. “We are fed up with the status quo.”