Mon | Feb 24, 2020

Manufacturing growth - Local product makers demand level playing field, urge greater focus on sector

Published:Sunday | January 12, 2020 | 12:17 AMDavid Salmon - Contributor
Richard Pandohie
Omar Azan

Local manufacturers are calling for greater emphasis to be placed on building the productive capacity of the Jamaican economy by developing a more business friendly environment.

Richard Pandohie, president of the Jamaica Manufacturers and Exporters’ Association, told The Sunday Gleaner last week that many manufacturers would argue that “sometimes it feels like we are battling with our own”.

Said Pandohie: “It takes so much effort to get everything done.”

Echoing those sentiments, fellow businessman Omar Azan explained that operating in the manufacturing sector has been particularly challenging due to the fact that there has never really been a push to encourage the development of the industry over the past 30 years, compared to other sectors.

“There has never been a real investment in manufacturing … because it is not a pretty sector to be in. It is not going into a hotel eating lobster and fish or sitting in a lovely restaurant,” Azan said.

He argued that, if renewed focus were placed on the local manufacturing sector, Jamaica could be 10 times ahead of where it is and the growth figures would be very different from what is currently being experienced.

“I truly believe that for a country to grow we have to be able to create wealth within our own country by our own countrymen. So, for example, we have spoken so much about tourism, which is good for Jamaica … . But we have had so much growth in tourism over the many years. Why hasn’t our country really grown with that level of growth that we see in tourism?”

Metry Seaga, managing director of Jamaica Fibreglass Products Limited, also shared this sentiment, saying that he hoped manufacturing could get back to a place of dominance and contribute in excess of 20 per cent to gross domestic product and contributing to the country seeing real growth.

“While I will never be so bold to say that (manufacturing) is the only way, I am convinced that for the last 25 years, we have put our eggs in the service basket and our economic growth has not been fulfilled,” Seaga argued.

“Every time there has been an increase in manufacturing, there is an increase in the growth of the economy.”

This lack of correlation with the increased prevalence of services and economic growth is the reason major industry leaders are calling for a level playing field to be established among the respective sectors prioritised by the Government.

Trojan horse

However, this stance has attracted some criticism in the past from academics such as Dr Damien King of The University of the West Indies, who argued that the manufacturing sector is pushing a Trojan horse, and that there is “no economic basis for creating privileges for manufacturers to the detriment of the rest of the productive sector”.

This argument has been rejected by industry leaders such as Seaga, who posits that this “black or white” interpretation is an overly simplistic view of the sector.

“I think that the proposals we have advocated for will set a level playing field… . The reason why we have asked for some of these things is because other sectors are getting it. If those sectors are going to be preferred, then it is a way of discouraging manufacturing. So, take it away from everybody or give it to everybody,” Seaga counters.

Furthermore, Pandohie revealed that one of the existing challenges to the manufacturing sector, at this economic juncture, is the lack of support received at the ministerial level.

“I would say, we have not got the buy-in from political leaders… . I think there has been a big emphasis placed on services, which is still an important sector. (Although) the idea of manufacturing being a key pillar has not been fully accepted… . Everybody says the right thing; however, the actions do not back up the speech.”

Moreover, Azan recognised the importance of small and medium-sized manufacturing businesses as he chronicled the formation of his business, Boss Furniture.

“I would say that, as a humble manufacturer, we started out very small, with nine employees, and tried to do something different … and we have grown,” he explained, noting that this growth has led to him employing more than 100 employees and exporting to 13 countries.

Seaga highlights that a change in mindset is needed to grow the manufacturing sector.

“We need to find a way to buy it locally whenever possible …Where companies locally are not competitive, we need to find a way to help them to be competitive so that they can sell to the Government. If a person on his own wants to buy something and he does not want to but it locally, it is his money. But when the Government is spending my money and your money, I feel they have a responsibility to at least look locally where possible. That, I think, would be the single biggest thing they could do to help the sector.”