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THE ISSUE: Increasing exports, boosting sector the key

Natasha Beckles

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Local manufacturing undoubtedly has a role to play alongside other productive sectors of Barbados’ economy, including tourism, international business and agriculture.
However, there has often been some concern that not enough was being done to assist the sector or that manufacturers do not take advantage of the opportunities available to them to grow their businesses.
It has also been difficult in some cases to convince Barbadians that locally made products are of a high quality.
In the July 25 BARBADOS BUSINESS AUTHORITY two Central Bank of Barbados researchers suggested that multi-dimensional improvements have to be made to the island’s manufacturing sector if it is to make a meaningful economic contribution.
According to Jason LaCorbinière and Anton Belgrave, the industry’s failure to take advantage of the myriad fiscal and other Government-sponsored incentives reveals underlying structural weaknesses in the sector.
“Chief among these are the sector’s relative productivity weakness and failure to benefit fully from the transfer of technology brought in by foreign firms,” they said.
Writing in the June 2011 edition of the bank’s online journal Economic Review, they said the relatively less competitive real exchange rate coupled with high transportation costs limited the extent to which Barbados could compete in price-sensitive manufactured goods.
LaCorbinière and Belgrave suggested that there needed to be greater emphasis on research and development, both at the macro and micro levels of the sector.
“For the former, research is needed to determine the broad reasons for the differences between Barbados’ productivity levels and those in other competing jurisdictions.
“At the level of the firm, it is important to understand how these differences influence decision-making and what is necessary to improve the efficiency of domestic industry,” they said.
These challenges notwithstanding, executive director of the Barbados Manufacturers’ Association (BMA) Bobbi McKay said the sector should be lauded not only for the quality of its output but the role it plays in creating employment.
“In the manufacturing sector, we hire a lot of people who wouldn’t get jobs in other sectors because some can’t read and write,” she said in the July 25 BARBADOS BUSINESS AUTHORITY.
“Some couldn’t even fill out an application form to get a job in some other places but they’re creative with their hands. They can carve and they can make things.”
McKay said she was pleased the sector was finally getting attention since “for too many years we were told manufacturing is dead, and it’s not”.
“We’re working on a directory and we’re finding people making products that are amazing. Our database is growing every day.?So we’re over the 500 mark, if we count the micro businesses,” she explained.
McKay noted that while the sector employed 10 000 people directly, it also supported 30 000 jobs.
“We support the people who deliver the products . . . who design the labels [and] import the supplies,” she said.
The executive director added that the only people who believed local products were of an inferior quality were “some Barbadians”.
“We are known for quality around the world. We’re known for quality all through the Caribbean.
“The only time I hear our products don’t match up is right here in Barbados, and less and less every day,” McKay said.
This was illustrated in the March 21 BARBADOS BUSINESS AUTHORITY where it was noted that the furniture manufacturing industry still faced “an uphill battle” proving to local buyers that their products were just as good, if not better than furniture produced in the Far East or elsewhere.
The BMA said furniture manufacturing has undergone “tremendous” growth and development over the years and despite the view by some that local furniture manufacturing was dead, “the quality, creativity and craftsmanship demonstrated in furniture in a number of large hotels and homes across the island suggest quite the opposite”.
It was noted that the cost of doing business and limited resources available in a “normal” business environment, compounded by the global economically challenging times, did not allow local manufacturers “the luxury” of mass-producing and stockpiling furniture in the hope of an upcoming project.
“It would therefore be unfair to ask small manufacturers to compete against mass-producing nations which operate at a fraction of the cost and with resources much greater within the same time frame,” according to the statement.
The association said it was working not only to prove manufacturing was not dying, but also to boost exports, reduce import bills, secure jobs and strengthen the overall manufacturing sector.
In the September 19 BARBADOS BUSINESS AUTHORITY, Minister of Industry, Small Business and Rural Development Denis Kellman said his Ministry would be paying closer attention to the manufacturing sector.
“In our current review of the sector, we cannot help but observe its potential to make a more meaningful contribution to the Barbadian economy,” Kellman said.
“This potential, however, cannot be realized unless the old strategies are revisited and the necessary changes made to adapt the operations of the sector to the new environment in which we find ourselves.”
Kellman said it therefore called for new models to be implemented, new technologies to be introduced and in some cases, more risks to be taken.
He pointed out that the size of the local economy did not permit the luxury of comparative advantage as in other jurisdictions, since it did not allow for “positive balances” of trade with most countries.
He noted, however, that the further development of the sector could be facilitated through partnerships between local and overseas manufacturers.
The minister said companies forming partnerships would not only increase their production but enhance their geographical outreach and the potential to increase foreign exchange earnings through exports.