Paramount seeks foothold in regional lubricants supply market
Paramount Jamaica Limited will look 'seriously' at supplying lubricants produced in Jamaica to the region once its joint venture plant is completed.
"It will give us the ability to focus in a serious way on the export market," said Paramount Managing Director Hugh Graham in an update on the company last Thursday at the monthly Mayberry Investors Forum in Kingston.
Manufacturing the lubricants locally will allow the company to avoid tariffs imposed on imported goods into the region.
"So with the benefit of being in Jamaica, and especially going into Caricom, then that should give us a shoe in, or at least a toe in, because we should have some advantages based on the tariff levels," he said.
Paramount is partnering with American company Allegheny Petroleum on the lubricants plant. The Jamaican outfit aims to achieve efficiency levels on par with Allegheny's United States operations.
"So all we have to do is be efficient and probably more efficient than what they are doing in the US," said Graham "We are building a brand-new factory and brand-new equipment with all the latest technologies, so I do not see any reason why we cannot have the best efficiencies that exist,"
From 2015, Paramount announced plans to form a joint venture with Allegheny Petroleum in a move that would result in a US$4-million or roughly $500-million investment. In July this year, the partners launched construction of a 13,500-square-foot plant in Kingston to manufacture industrial and food-grade lubricants. Graham expects the plant to become operational by Paramount's third quarter, ending February 2017.
Paramount already opened an oil, testing lab about two months ago as part of lubricants plant operation. The lab tests oils in high-performance engines and will obviate the need to mail such oils overseas for testing. Industrial and fleet customers depend on oil evaluation to inform the health and efficiency of their costly engines.
Paramount earned $15 million net profit on revenues of $252.7 million for its August 2016 first quarter. Profit was nearly two-thirds less than the $42.6 million earned a year earlier.
The company cited one-off expenses related to its rebranding and logo design, shifting
from Paramount Chemicals to Paramount Jamaica, and staff rewards as part of the company's 25th anniversary celebrations, among other initiatives, for the spike in spending.