THE ISSUE: New operating model needed
BARBADOS’ MANUFACTURING SECTOR is not dead. That is a statement made repeatedly in the last ten years by various officials, either in Government or representatives of the sector.
Such a view was expressed by Minister of Industry Donville Inniss as he toured long-standing producer Oran Limited in 2014.
Speaking in the context of Oran, he said: “The fact that we have Barbadian skills and . . . talent now being displayed and providing a lot of security in houses around the region, as far out as Belize [and] certainly down south in Trinidad, is indeed something that we must certainly feel proud of.
“The fact that we can go to homes and offices around this CARICOM region and see a Barbadian product is something that makes me feel very happy and something that all of us in Barbados must celebrate.”
Two years earlier at the official opening of a manufacturer’s forum, then Minister of Industry Denis Kellman voiced similar views. He said the export of some products had increased, but noted a problem for the sector was a reduction in productivity.
He added: “. . . Where we go from here will be determined by all represented here, drawn from the various fields and disciplines within our economic landscape. The fact that manufacturing can achieve growth in its export sector, in the midst of a protracted global economic crisis, suggests that it has found ways in which it can add value to its product offering in a manner that has taken advantage of niches within the international marketplace.”
But what do the statistics show? It is estimated that in the 1970s and 1980s manufacturing accounted for about 20 per cent of Barbados’ gross domestic product (GDP), a contribution that plummetted to about four per cent in 2014.
Based on figures the Central Bank released in January, manufacturing again contributed about four per cent of GDP last year. In dollar figures, the bank said the contribution was $44.5 million. This estimate is the lowest in the last eight years. The highest contribution in that period was 2008’s $60.7 million.
Manufacturing has fallen so low down the pecking order of Central Bank reports in recent times that it is hardly ever mentioned, especially when compared to tourism and the international business and financial services sectors.
The sector’s decline was illustrated by a reduction in exports, as noted in the Central Bank 2015 review.
“Total exports of goods were down by roughly seven per cent, owing to declines in food exports. Exports of chemicals, which account for 17 per cent of goods, increased by only one per cent. Rum exports rose by three per cent, on the strength of rum which is aged, bottled and packaged in Barbados for export,” the report stated.
There is a view that Barbados will never be able to compete against large producers from international countries, principally China, but would be better off focussing on niche markets. The focus on exporting special rums is an example of this.
Inniss revisited the issue of the sector’s viability last year at the opening of BMEX. He suggested a need to focus more on international exports. The minister said the groundwork had been laid via the signing of several agreements to facilitate international trade.
“You must exploit all potential opportunities that exist through Barbados being a signatory to these agreements, in particular CARICOM-Cuba, CARIFORUM-EU EPA, CARICOM/Costa Rica and the CARICOM/Dominican Republic,” he said.
Former Barbados Investment and Development Corporation chief executive officer Dr Leroy McClean offered his vision for the sector during an address a few years ago.
“Moving towards [the] future requires a new strategic approach driven by entrepreneurial and innovation-led initiatives. It requires that we utilise scientific approaches, take advantage of emerging technologies, emphasise creative thinking and reinforce competitiveness,” he said.
“This new, highly competitive manufacturing sector requires change agents and creative thinkers as part of a highly motivated workforce. It requires appropriate skills; the application of appropriate capital and technology; materials and process cost efficiency and high levels of company sophistication and business performance.”
He said all of this required a new operating model for manufacturing.