THE ISSUE: Start with research
The local manufacturing sector employs about 10 000 people directly and is said to support as many as 30 000 Barbadians.
Along with tourism, international business and financial services, and agriculture it is one of our key productive sectors.
There is, however, some concern that the manufacturing industry is not living up to its true potential.
Two Central Bank of Barbados researchers have called for multi-dimensional improvements to be made to the sector in order for it to make a meaningful economic contribution.
According to Jason LaCorbinière and Anton Belgrave, the failure of the industry to take advantage of myriad fiscal and other Government incentives reveals underlying structural weaknesses affecting 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, limits the extent to which Barbados can compete in price-sensitive manufactured goods.
LaCorbinière and Belgrave suggested that there needs 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.
Also, given that transportation costs issues are likely to persist, the researchers suggested that one approach to strengthening the sector could be to focus on goods with high value-to-weight ratios which would be amenable to air transportation.
LaCorbinière and Belgrave added: “As ICT processes become increasingly fundamental in manufacturing processes, Barbados’ scientific and technological absorptive capacity will have to be enhanced to attract and truly gain from the high-technology and high value-added manufacturing goods that Barbados needs to compete”.
The October 16, 2010 SATURDAY SUN reported that local manufacturers and businesses had appealed to newly appointed Minister of Finance Chris Sinckler to give them some relief from the tough economic climate in his first Budget.
Ian Pickup, then president of the Barbados Manufacturers’ Association, said bearing in mind the financial situation, they thought it would be improper to go asking for large concessions.
However, he said there was no running away from the fact that the cost of doing business remained high and that the sector was “under tremendous pressure”.
He pointed to rising commodity prices as well as recent hikes in the domestic price of electricity and water, which he said had significantly affected the bottom line. In addition, he said local manufacturers were forced to grapple with high port charges.
“People have to understand, I think, that even at the lowest level for a single small 20-foot container, the Barbadian importer pays 121 per cent more than a Trinidadian importer would to bring it through the port – and if you are talking about a 40-foot refrigerated container, then Barbadian importers are paying 434 per cent more than their Trinidadian counterparts,” explained Pickup.
Import challenges were also a concern for Glendine Greaves, director of sales and marketing for condiment manufacturer C&G Star Trading Ltd.
The June 29, 2009 BARBADOS BUSINESS AUTHORITY reported that amid the global economic crisis, her foremost concern was not dampening demand for products for export but rather the means to get products to the market in a timely manner at a competitive price.
“Oftentimes the customer will give an order and payment is only made after the goods are received by them, which means that the onus is on the small manufacturer to finance the actual production of the goods,” she added.
Greaves said this was a problem that caused small Barbadian export manufacturers to lose out to regional competitors such as those in Trinidad and Tobago and Jamaica.
Regional competition was also a challenge for Good Time Snacks director Rosie Noel who said local manufacturers were struggling while Trinidadians were thriving.
“It’s rough competing with Trinidad because they get subsidized gas and oil and diesel for their trucks and we have to pay an electricity bill that has doubled in the last two to three years,” she said in the March 5, 2012 BARBADOS BUSINESS AUTHORITY.
Meanwhile, the March 21, 2011 BARBADOS BUSINESS AUTHORITY reported that the local furniture manufacturing industry still faces “an uphill battle” proving to local buyers that their products are just as good, if not better than, furniture produced in the Far East or elsewhere.
According to a statement issued by the Barbados Manufacturers’ Association (BMA), 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 resident in a number of large hotels and homes across the island suggest quite the opposite”.
The statement said that what the manufacturing sector was requesting from consumers was a “level playing field”.
It also said 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 BMA said it realized that the island was not self-sufficient and the strength of the local sector “is our ability to respond to the customized needs of buyers”.
The association said it was working to not only prove that manufacturing was not dying, but also to boost exports, reduce import bills, secure jobs and strengthen the overall manufacturing sector.