Speaking notes Mr. Omar Azan President, Jamaica Manufacturers’ Association 4th Annual Private Sector Meeting of Ministers of Trade and Finance June 13, 2009
All protocols observed.
It is my distinct pleasure to be here today, to speak on a topic that I am very passionate about: the survival and future direction of Jamaica’s manufacturing sector. The reality is, if we want something to grow, we have to nurture it and it is no different for the manufacturing sector. If we want increased performance from the sector, we have to facilitate this development. Nevertheless, the fundamental question is: Why is it important to preserve and grow our local manufacturing sector? I will explain. 1. Manufacturing contributes to the socio-economic welfare of the country. In 2008, despite the emergence of a global economic crisis, manufacturing contributed 8.5% of Gross Domestic Product (GDP), employed 80,100 persons and earned US$1,244.7 million in exports. The make-up of the sector comprises numerous small and medium-sized enterprises which are able to respond more rapidly to economic changes and new opportunities. 2. There is a co-relation between growth in the manufacturing industry and economic development. To develop, the economy must be supported by investments that sustain wealth creation, which is the business of manufacturing. In addition, the greater the ability of the manufacturing sector to satisfy local demand, the lesser the strain on the economy to earn foreign exchange to support imports. Since manufacturing is strategically very important to the Jamaican economy, policies critical to the survival and growth of the sector must be implemented. 3. To counteract the problem facing Jamaica of not producing enough for exports: we have to be willing to do what it takes to make our manufacturers, not only survive, but prosper, in order to generate well-needed foreign exchange and reduce the country’s trade imbalance. Brand Jamaica is a fusion of our
manufacturing and agricultural products, services, tourism and human resource, a formula that would be incomplete without all its ingredients. Ladies and gentlemen, to know where we are going, we have to know where we are coming from. We need to return to or surpass the glory days, when manufacturing contributed approximately 20% to GDP and employed over 100, 000 persons. To see those days again, we have to have a plan for the survival and future prosperity of manufacturing. The Jamaica Manufacturers’ Association is very serious about the future of manufacturing and that is why we have developed a strategic plan for the manufacturing sector, within Jamaica’s 2030 Development Plan, as well as played a supporting role in the development of the National Export Strategy. These plans are vital, as they will not only have implications for the way forward in manufacturing, but for other areas of national development including agro-processing, non-metallic minerals, construction, information and communication technology, energy, tourism and the distributive trade. Our vision for the future is “a dynamic, vibrant, market led manufacturing sector making high value added world class products desired by consumers everywhere, using appropriate technologies and environmentally sustainable processes, linked to other sectors, with motivated, productive employees, within an enabling business and regulatory environment”. There is certainly a future for manufacturing, but for widespread prosperity, this future requires most skilful management with public-private sector partnership as well as regional collaboration. There are some fundamentals that must be addressed:
1. A Highly Competitive Manufacturing Production. This involves arming the
workforce with a high level of appropriate skills; which means improving the quality and relevance of training and accreditation at educational and training institutions by strengthening linkages to the manufacturing sector, thereby reducing significant investment to employee education and training, and ensuring that entrants to the workforce can perform on the job. The collection of data on the training needs of the manufacturing sector can help to facilitate the customization of programmes for the sector. It is also essential to have a highly motivated workforce, as this impacts productivity levels; providing productivity-linked incentives and encouraging
participatory decision-making and team building are some initiatives that can help to boost employee morale. In addition, the application of high levels of appropriate technology is necessary to simplify business processes and strengthen controls in order to improve and increase production. Rising cost of energy have also negatively impacted the sector, the way ahead should therefore be to encourage the development of alternate energy sources, by providing incentives to companies that invest in renewable energy. The continued uncertainty of the availability of Liquefied Natural Gas (LNG) threatens Jamaica’s energy generating capacity, which makes it even more pertinent to develop alternatives to fuel, thereby improving our energy efficiency. Additionally, reducing the cost of inputs is also necessary to achieve the level of competitiveness in manufacturing that we know we are capable of attaining, both locally and internationally. Encouraging collaboration and pseudo-group buying of inputs to obtain lower unit cost of supplies, outsourcing business processes, and providing benchmark data for manufacturing costs of production regionally and globally are some strategies that can be employed to lower input costs.
2. An Enabling Business and Regulatory Environment. Creating a facilitative
business environment will help to encourage investments, as well as new entrants to the sector and make industry players more competitive. In addition, improving customs and clearance processes for imports and exports, and business procedures, for instance through the creation of One-Stop Shops across the public sector, which will eliminate the need to visit multiple agencies to carry out a single transaction and cut back on non-productive time spent on the road, helping to accelerate the process of modernization. Competitive access to financing is also needed for manufacturers to implement environmental, health and quality management systems and to retool. Certification and marks of quality are very important in appealing to local consumers as well as accessing international markets. The crime situation in Jamaica also has an adverse impact on productivity, because of the high costs associated with security. Most producers are restricted to single-shift operations, and manufacturers operating a shift system
after dark, are subject to security charges as well as costs for special transportation to safeguard employees.
3. Strong Inter-Sectoral Linkages. If we are to solve some of our socio-economic
problems and respond to the changing global economic climate, we need an integrated approach that will generate more jobs and reduce poverty. Stronger ties must be created between the manufacturing, agriculture and tourism sectors, to keep valuable foreign exchange in the country; strengthening the capacity of producers to meet the demands of purchasers in the manufacturing sector, and establishing appropriate marketing and information systems to bring together producers in the manufacturing sector and purchasers in linkage sectors, are two strategies that can be utilized.
4. Environmentally Sustainable Sector. Sustainable manufacturing is essential to
protect the environment and to ensure that manufacturing is alive for years to come; greater compliance by manufacturers with international and domestic environmental standards, development of environmentally- friendly products, strengthened hazard mitigation, as well as increased environmental awareness would be a step in the right direction for manufacturing.
5. Products that Meet or Exceed Customer Expectations. To be competitive,
manufacturers will have to be innovative in their marketing approach. We have to develop the capacity of local manufacturers so that products can be priced competitively. To be a worthy contender on the world stage, research has to be undertaken to determine consumer preferences and expectations, and a pricing strategy developed. As it regards quality, the promotion and adoption of quality management and production systems and standards to strengthen quality performance at the business level is vital. Excellent distribution, delivery of shopping experience and customer service, and the effective promotion of Jamaican brands are also important elements of the marketing mix. A highly competitive manufacturing production, an enabling business and regulatory environment, stronger inter-sectoral linkages, an environmentally sustainable sector and products that meet or exceed customer expectations are factors that have to be considered in long-term planning for the manufacturing sector, to allow Jamaican manufacturing firms to achieve and maintain viable positions in an increasingly competitive environment.
The sooner these factors come together the brighter are Jamaica’s prospects for growing and maintaining a vigorous manufacturing sector. The sector has been affected and will be further affected by the current global economic crisis, as the sector recorded a negative 1.2% growth for 2008. However manufacturing remains extremely important for jobs, export and GCT and there have been initiatives by the government to soften the impact. We do expect to rebound and have a manufacturing sector that is: increasing exports as there are opportunities for the export of our niche products as the population and customers grow; contribution to GDP; employment; as well as achieving positive annual growth rates. Brand Jamaica is strong and there are numerous success stories and faces of competitiveness in the manufacturing sector. We are poised as the location for further manufacturing investment to be the hub for our regional markets and the rest of the world. There is no doubt that Jamaica has a number of attributes that provide advantages to manufacturing companies working and pursuing business, including:
strategic location; English speaking population; variety of incentives; growing tourism sector (opportunities for partnerships); proximity to main shipping lanes; and A good system of higher education at colleges and universities.
A comprehensive framework has been developed to grow and steer the future of manufacturing. We have to ensure as a nation that Jamaica remains an attractive place to do businesses and for skilled employees to choose to live. Thank you.
Manufacturing indicators 2003-2008
Year 2003 2004 2005 2006 2007 2008
Employment 71,700 69,400 73,800 76,400 69,350 80,100
Contribution GDP 9.6% 9.6% 9.1% 8.6% 8.5% 8.5%
to Growth -0.8% 3% -1.3% -2.4% 0.9% -1.2%
Export (US$ '000s) 277,846.9 359,137.8 484,167.4 799,002.2 905. 425 1, 224.75