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Paramount blending facility operational, but minor works remain

Published:Tuesday | March 27, 2018 | 12:00 AM
Hugh Graham, managing director and CEO of of Paramount Trading Jamaica Limited, stands in front of barrels of lubricants at the company's plant in Kingston, July 21, 2016.

Elements of the project are outstanding, but the lubricants blending plant developed by Paramount Trading Jamaica and its American joint-venture partner, Allegheny Petroleum, has been up and running since January.

Paramount CEO Hugh Graham says three-quarters of the US$4-million budget has been spent to bring the project to 90 per cent completion.

The outstanding elements, he said, include civil works such as the completion of a new entrance and landscaping, emergency power generation, and the establishment of a solar power plant with net metering capabilities.

The project has passed several completion dates - the plant was initially to be commissioned by the end of 2016 - which Graham said was due to additions to the scope of works as construction progressed.

"We did a little bit more than just the physical plant. We put in a staff facility that has a wellness centre and other amenities," he told the Financial Gleaner.

The project also included establishment of a testing lab that has been operational since 2017. The lab has three segments: a technical grade lab for testing industrial parts and other physical components; a lube lab for testing oil thickness or viscosity, particles and their composition, along with oil contaminants; and a food grade lab for testing inputs and lubricants for the food and hospitality industry.

Graham is touting the lab as a "big success, in that Jamaica no longer has to send away samples for testing and wait weeks for the results", but declined to state the number of clients he has attracted.

The lubricants blending plant itself produces industrial-grade lubricants under the Altra brand owned by Allegheny, but Paramount is staying out of the retail market, at least for now.

"That's not where we are. Our model is a little different in that it caters to industrial customers. We're not sure about the rest of the market and how we'll deal with it when we get there, but we have to service the industries that we're in," Graham said.

The 13,500-square-foot plant, which sits on 1.3 acres, has capacity for 200,000 gallons of lubricants, which is being distributed locally and in the region. Paramount and Allegheny are 50-50 partners in the plant.

"We're doing the general lubricants for industrial applications and automotive-type engines. That entails our multigrade and mono-grade applications," Graham said.

Paramount has traded the Altra brand for just over five years, but as a distributor which imported the American product for local distribution.

The lubricants company has now segued into manufacturing the product, but some of the additives and inputs are imported from Venezuela and other source markets.

Graham described the local inputs in the plant as Jamaican technical expertise, labour and power generation. The Paramount boss is touting the plant as an import substitution initiative that saves on foreign exchange, and allows his company to participate in the economy as a producer, which adds value, instead of being reliant on foreign-made goods for profit.

"We were importing the product, and so we are moving to import substitution with the opening of this facility," he said, while noting that Paramount expects about 15-30 per cent savings from the elimination of expenses linked to payment of import duties.