Manufacturers lay the foundation for recovery

By Julian Richardson Assistant Business Co-ordinator

Monday, October 08, 2012

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Jamaican manufacturers could employ an additional 50,000 people and contribute in excess of three percentage points more to GDP in five years, says the leader of the island's manufacturing association.

Brian Pengelley, president of the Jamaica Manufacturers' Association (JMA), on Thursday introduced five pillars on which the nation must build the recovery of the sector, which has seen its contribution to GDP and employment decline over the last 30 years. Preferential treatment towards local products; an investor friendly environment; more investments in the productive sector; efficiencies and productivity; and collaboration among all stakeholders formed the foundation outlined by the JMA boss.

"Manufacturers, we have a critical role to play in the recovery of Jamaica' s economy and we must take the lead on communicating and aligning consumers, government and all Jamaicans on the importance of our sector as one of the primary engines of growth," said Pengelley.

"There will be no recovery should we continue to be a nation of importers," he said at the JMA's 44th Annual Awards Banquet and presentation ceremony.

Indeed, once a vibrant industry that employed over 120,000 persons and contributed more than 20 per cent to GDP up to the 1980s, Jamaican manufacturing has been stymied by numerous factors, including macro-economic uncertainty, the high cost of electricity, crime, bureaucracy, shortage of skills and a lack of support for locally made products.

Today the sector contributes 8.6 per cent to GDP and employs 74,800 persons. Still, there's no questioning the importance of the industry to nation building. It contributes $30.5 billion in taxes and earns US$739.2 million in foreign exchange annually.

"We fervently believe that in five years we can improve these numbers to that of 12 per cent of GDP and employ an additional 50,000 people. That must be worth going after," said Pengelley.

He urged Jamaicans to buy local products, calling it one of the most simple yet impactful action of stimulating growth and job creation. Food imports currently cost the country a whopping US$800 million per annum.

"Manufacturers, government, service providers and all consumers look at where you can purchase those everyday items which are made in Jamaica. Distributors, you need to be more supportive of your local manufacturers especially start ups in getting their products on the shelf," said Pengelley.

The JMA president also called for an update and enforcement of the local procurement policy.

"Should we stand by and have our company taxes and mine and your personal taxes used to import school books, pharmaceutical products and many other products that are made here or can be made here? No... " he said.

Pengelley also highlighted that there are opportunities for Jamaicans to start their own business or diversify into manufacturing. He urged persons to explore products for import substitution, export and sectoral linkages. Studies have shown that there is the capability to substitute up to 30 per cent of food imports

Pengelley said manufacturers also have a responsibility to improve productivity and efficiency in an increasingly competitive marketplace, and added that Government must play its part in facilitating an investor friendly environment without burdensome red tape.

Tax reform, energy diversification, public sector and pension reform, and security and bureaucracy issues are other areas he said must be addressed to drive recovery of the sector. He noted, however, that it must be a team effort.

"The plans to grow our country cannot be determined solely by politicians, this must be a collaborative and transparent process, we need to be at the table, private sector, government, unions and anyone else that can bring value," said Pengelley. "We need to know and more importantly we want to be a part of the solution, what are the initiatives that our government is planning to communicate to the IMF to meet the four pillars of growth, competitiveness, fiscal and social responsibility."

Guest speaker Prime Minister Portia Simpson-Miller assured manufacturers that they have the backing of her administration. Noting that the success and growth of the sector depend very significantly on macro-economic conditions, Simpson-Miller acknowledged Government's role in facilitating an enabling environment.

"The manufacturing sector is a critical element of the government's growth strategy as we seek to work together to strengthen and build our economy," said the Prime Minister. "We have to manage the fiscal deficit. We have to reduce the debt to GDP ratio within a reasonable time frame. These issues are the subject of current discussions with the International Monetary Fund," she said.

Meanwhile, the JMA presented 25 awards to numerous local manufacturers in various categories on the night. The big winners were P A Benjamin and Red Stripe, which won four awards each, and Wisynco.

P A Benjamin won awards for community development in the small manufacturer category, and skills and productivity for small and medium-sized enterprises (SMEs). The company was also recognised for competitiveness and overall best SME.

Red Stripe was honoured for community development and skills and productivity in the large manufacturer category, as well as for HIV advocacy and being champion exporter among large exporters.

Wisynco was awarded the prestigious Governor General's award for Manufacturer of the Year 2011.





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