BH scales back regional production, doubles Jamaican operation
Published:Friday | September 2, 2011 | 12:00 AM
Sabrina Gordon, Business Reporter
After a half-century operating mostly under the radar, BH Paints West Indies Limited is ready to go bold in one of its regional markets.
BH will double its production and warehousing capacity in Jamaica and expand into retailing as it positions to take a larger slice of the local paint market over the next two years on a relatively small capital budget approximating J$130 million.
Concurrent with its Jamaican expansion, the paint company is exiting production in two of its Caribbean markets where it has manufacturing assets.
The Kingston plant will become the company's manufacturing hub and the central point from which BH services its domestic and Caribbean markets.
"Our long-term plan is to take back our rightful place in the market," said Radcliffe Myers, business unit head at BH Paints.
"We have been in Jamaica for a long time, but we have been on the back page. Now, at 50, we believe it is time to refresh and get back our place in the market," he said.
Over the next two and a half years, BH Paints said it intends to invest US$1.2 million to upgrade its plant on Bell Road; the other US$300,000 will be poured into five retail 'BH Colour Centres' nationwide, the first of which was opened on Saturday, August 27, at Premier Plaza in Kingston.
Another store will open in two weeks, and three others in Montego Bay, Mandeville and Savanna-la-Mar by October.
Over the years, BH has distributed its paints through dealer hardware stores and from its base on Bell Road, and will maintain that network alongside its colour stores, the company said.
Along with Jamaica, BH Paints operates four multi-purpose plants that produced both water and oil-based paints in St Lucia, Barbados, Dominica and Guyana.
"We will be consolidating our production across the Caribbean, with Jamaica to be made the main facility," said Myers.
Operations will not cease totally at all the plants. Barbados will remain focused on water-based or emulsion paints only, and Dominica will produce both water and oil paints while acting as a backup facility.
But Guyana will be shuttered this month while St Lucia will be ramped down in January. Their equipment will be shipped to Jamaica and Barbados, and the two small plants will become storage facilities, BH said.
Jamaica will continue to manufacture both water and oil paints for distribution throughout the region.
Capacity at the Bell Road plant in Kingston will be upgraded from 500,000 gallons per year to one million gallons over the next two and a half years, and some of the systems upgraded.
"All of the work is now done manually, but we intend to make it semi-automated with the purchase of a semi-automated filling machine," said Myers.
To accommodate the added capacity, the warehouse will be doubled from its current storage capacity of 450,000 gallons of paint.
BH Paints is owned by the Barbados-based Harris Group of Companies since 2006.
The business, which has operated in Jamaica since 1961-62, currently estimates its domestic market share at 18 per cent.
BH Paints operated at a loss at the height of the recession, but recovered at financial year ending March 31, 2011 to report net profit of J$67.8 million.
The company regressed in its first quarter with a loss of J$13 million at June 2011, although sales grew by nine per cent to J$318.7 million. The company, in its earnings report, attributed the loss to a J$17.5 million one-off charge related to BH's reorganisation.
"We looked at our internal processing and realigned them - revamped formulations to more international standards; we reorganised our supply and procurement procedures, all of which have reduced losses significantly," said Myers.
"We used to manufacture paint at US$1 per gallon, but have realigned to bring it down to US$0.85 - a 15 per cent saving," he said.
The company also cut staff from 98 to 58 in Jamaica; but with the upgrade and new retail network BH plans to boost its workforce by 28 workers.
The restructuring, Myers said, is expected to grow revenues by 15 per cent in the first year, and 10 per cent annually thereafter.