Local manufacturers could get war windfall
Published:Sunday | March 27, 2022 | 12:08 AM
Jamaican business stakeholders are urging the local manufacturing and sale of more construction inputs and renewable energy to offset the commodity spikes and supply disruptions resulting from the global economic upheavals caused by the Russian invasion.
“We have got to learn to make things here, rather than buy from overseas just because it is cheaper. In doing this, we are burdening our foreign exchange and making other countries richer,” declared manufacturer Metry Seaga, the CEO of furniture maker JFP Limited and a past president of the umbrella Jamaica Manufacturers and Exporters Association.
Seaga reasoned that shipping costs are now multiples of what they were prior to the COVID-19 pandemic which place Jamaican manufacturers in a favourable position to get orders to customers who traditionally sourced from China.
“Let’s not waste an opportunity,” Seaga said while participating as a panellist at a Jamaica Institution of Engineers-organised forum titled ‘Resilience Through Engineering: Securing Our Future’. The forum, which was held on Thursday, discussed the impact of the Russian attack on Ukraine on three sectors in Jamaica, namely, construction, energy and manufacturing.
The stakeholders also urged real estate developers to consider utilising new materials in construction to offset rising steel, lumber and fuel prices. Without such substitutions, expect higher real estate prices, was the consensus.
“This (not substituting) will naturally end up in higher building costs,” said Hugh Graham, managing director of Paramount Trading Limited.
Graham suggested that engineers consider building with carbon fibre and polyurethane materials, where possible, instead of steel and lumber.
As a result of Russia’s invasion of Ukraine, prices of imported raw materials and local goods have continued to spike. Crude oil prices on the world market jumped to US$112 a barrel on Friday or 92 per cent higher than a year ago. Natural gas traded at US$5.51 per unit or 112 per cent higher than a year earlier. Lumber trades at US$1,000 per unit, from its pandemic April 2020 low of US$330.
The “silver lining” of the higher commodity prices was the stability of cement prices, noted Lenworth Kelly, president of the Incorporated Masterbuilders Association of Jamaica. He pointed out that lumber could be an obvious area for manufacture in the country.
“We have to plan, and think about growing lumber trees and investing in an insurance policy. We are still the land of wood and water,” Kelly said.
From an energy perspective, panellists noted that fuel prices have doubled year over year, including the price of liquefied natural gas which fuels most of the island’s electricity grid. Liquefied natural gas, or LNG, accounts for 59 per cent of the country’s energy mix, which is 28 per cent diesel fuel and 13 per cent renewables. Seven years ago, Jamaica relied 95 per cent diesel fuel and five per cent renewables, according to government data.
“We need more emphasis on renewables in particular wind, solar and hydro,” said David Barrett, principal consultant, ENBAR Consulting.
Owen Gunning, president of Jamaica Society of Energy Engineers, added: “We have no control over wars and the pandemic, but we can produce and use what God has given us. That is sun and wind, and we have not been using renewable energy sufficiently.”
Stanley Smellie, an energy engineer and researcher at The University of the West Indies, noted that “renewables are good for energy security in the long run”.