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Manufacturing: on the upswing but… Support must be expanded to strengthen the capacity of the sector

Published:Sunday | December 13, 2015 | 12:00 AM
Metry Seaga
In this 2012 photo, Prime Minister Portia Simpson Miller chats with Patrick Lee (left), director of Lee's Food Fair, and Lascelles Chin, chairman and CEO of LASCO Group of Companies, a groundbreaking ceremony for the company's new factory at White Marl, St Catherine.
Owner and operator of Liqy Liqy Sasha Palmer at the storefront located in the Entrepreneurial Centre at the Cecil Charlton Park.
Paulette Rhoden, JMA director and export director of Crimson Dawn Manufacturing, promotes her products to prospective buyers at the Turks and Caicos Trade Mission.
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The manufacturing sector remains inextricably linked to Jamaica's socio-economic welfare and is predicated upon a culture of resilience and dynamism.

The sector is not monolithic in nature, is continuously changing, bringing with it both opportunities and challenges to the fore, and demanding new insights and responses.

Manufacturing continues to provide a critical pathway for innovation, competitiveness, exports and growth in productivity, as well as contributing immensely to the life chances and employment of the populace.

In short, the Jamaican manufacturing sector continues to make its mark both domestically and internationally.

Undoubtedly, a strong manufacturing sector is needed to stimulate higher growth rates in the Jamaican economy and allow for the country's repositioning in the global economic landscape.

As such, support must be expanded to strengthen the capacity of the sector, amid challenges encountered, including, inter alia, inadequate access to financing, high cost of production, entrance of subsidised commodities into the market and devaluation of the Jamaican dollar.

Despite the challenges, the sector retains its significance as one of the key engines of economic growth and sustainability of the Jamaican economy.

An overview of 2014 highlights that manufacturing contributed approximately 8.3 per cent to Jamaica's GDP and employed approximately 73,000 individuals, which translated to 6.5 per cent of the total labour force.

Additionally, the total manufacturing exports amounted to US$680 million. What is abundantly apparent is that Jamaican manufacturers have demonstrated adaptability, creativity and continue to expand in the overall economic landscape of Jamaica, manifested in the sector's performance of 2015.

 

Manufacturing soars ahead in third quarter of 2015

 

The latest quarterly report obtained from the Planning Institute of Jamaica indicates that the manufacturing sector recorded the highest growth within the goods-producing industry, up 9.7 per cent.

This represents an unprecedented increase in comparison to the previous quarters over the year, when the sector recorded a -2 per cent and 0.2 per cent in the first and second quarters, respectively.

An in-depth analysis shows that the growth was largely influenced by higher outputs in the 'Food, Beverages and Tobacco' category as well as 'Other Manufacturing'.

'Food, Beverages and Tobacco' saw higher production in poultry, meat and rum as well as alcohol, while increased output in 'Other Manufacturing' was mainly as a result of higher production of petroleum and cement products.

The findings were also substantiated by the International Merchandise Trade Statistics presented by the Statistical Institute of Jamaica, which reflected a 0.5 per cent increase in 'Beverages and Tobacco' exports. There was also a 45.2 per cent increase in 'Chemical' exports.

This clearly gives credence to the view that manufacturing will continue to play a substantial role in the future development of the national economy.

Various financial institutions have also deepened their involvement in the manufacturing sector, offering capital and collateral support. Commercial bank loans to the sector increased by 10 per cent in the third quarter.

The Development Bank of Jamaica, among its various initiatives, recently launched IGNITE, a grant funding facility aimed at boosting young entrepreneurs to think innovatively and bring new ideas to the market environment.

The grant is channelled through Business Service Intermediaries, of which the Jamaica Manufacturers' Association (JMA) is one of three entities.

The JMA has also embarked on numerous initiatives to propel the sector forward. As part of the association's aim to accelerate the presence of the Jamaican brand, we have recently launched our new export division, in order to improve export performance and increase the market share of indigenous products.

The JMA is also a member of the Tourism Linkages Council, recognising the opportunities to stimulate growth through the linking of the productive sectors.

Existing manufacturing companies continue to reinvest, consolidate, expand and diversify into higher value-added commodities and activities, fundamental to increasing the production and competitiveness of their operations.

For example, large manufacturing companies such as Lasco, Wisynco and Petrojam have been expanding, with major upgrades to the manufacturing arm of their operations. The micro, small and medium-.term enterprises (MSMEs) have been vibrant in their business engagements, generating growth, employment and stability.

MSMEs such as Liqy Liqy, Springvale and Irie Rock continue to innovate to meet market demands and the subsector must be at the centre of any productive discourse and national growth strategy.

 

A look ahead

 

Going forward, the manufacturing sector is expected to remain a key pillar of growth for the Jamaican economy. While the sector is entering a dynamic new phase, innovation will continue to spark additional demands.

Manufacturers will have substantial new opportunities, albeit in a changing environment. However, the reality remains, for the sector to reach its fullest potential, the challenges encountered must be addressed in a holistic manner.

This will require a collaboration of all the requisite stakeholders, both public and private, in addressing issues such as productivity and innovation in an increasingly competitive global economy.

The unremitting growth of the sector also necessitates the implementation of effective sustainable strategies that will empower local operations while simultaneously connecting to the global vision.

One element of this is to create policies that will foster an enabling macro and micro-environment. This will assist in stimulating new business opportunities and accelerating business development.

There are significant strengths entrenched in the sector, demonstrated in the ability to produce quality, world-class products under one of the most globally recognisable brands - 'Brand Jamaica'.

There remain substantial opportunities for import substitution, linkages and exports, particularly in subsectors such as agro-processing, nutraceuticals, chemicals and contract manufacturing.

The continued viability of the sector will depend on effectively repositioning Jamaica in the global supply chain and further supporting the Jamaican brand. Equally, Jamaicans must develop a clear national consensus to buy Jamaican and grow Jamaica.

- Metry Seaga is the president of the Jamaica Manufacturers' Association. Send feedback to editorial@gleanerjm.com.