Energy costs limit manufacturing expansion — GK
Members of the Grace Agro-Processors (GAP) team prepare canned products for labelling at the GAP facility in Denbigh, Clarendon.

AS the cost of powering their manufacturing operations rises, local companies continue to seek new ways to reduce this expense.

GraceKennedy, which has been in expansion mode for some time, would have done even more in Jamaica, Group CEO Don Wehby told the Jamaica Observer, but energy costs are a high hurdle.

“GK remains focused on growing its manufacturing division, however, one of the limiting factors to achieving this goal is the high cost of energy in Jamaica, which impacts the ability to be competitive both regionally and globally,” the group CEO said.

Renewable energy sources are being considered as the main solution. Wehby outlined, “Over the next three years we have plans to invest US$6.3 million in renewable energy solutions for our manufacturing division.”

GraceKennedy operates six facilities in Jamaica: the Grace Food Processors meat plant, Dairy Industries Jamaica Limited, the Grace Agro-Processors facilities in Hounslow, St Elizabeth, and Denbigh, Clarendon, and the soon to be merged Grace Food Processors Canning and National Processors plants.

Export volumes from these plants grew seven per cent in 2021 over 2020, which represented 31 per cent of our total production volumes.

The company is aiming to increase exports even more. Wehby noted that last year's performance, “Is significant progress towards our ultimate goal of increasing our exports to 50 per cent of local production by 2025, as we seek to further establish ourselves as a regional powerhouse in food and beverage manufacturing.”

However, energy costs, which he declined to share in detail, are a negative factor in the mix. To combat this, GraceKennedy has, to date, employed renewable and alternative energy sources such as solar photovoltaic and liquefied natural gas (LNG) in some of our factories and local distribution operations.

Wehby added, “We have also invested in upgrading equipment to energy efficient models which reduce both electricity and fuel consumption.”

Solar generation

The CEO noted that a GK Energy Committee has also been established to oversee the introduction of a new energy policy for the group, which will guide energy strategy and be a key pillar of environmental, social, and governance (ESG) agenda going forward.

The Committee is also pursuing the implementation of increased alternative energy capacity across the group, including the addition of solar and LNG self-generation. GraceKennedy has overall invested over $752 million to increase operational efficiencies.

Grace Frankfurters on the line at the Grace Food Processors (GFP)Meats facility in Savanna-la-Mar, Westmoreland.
The Grace Food Processors (GFP) canning team packages Grace Tomato Ketchup for distribution at the GFP Canning facility in Kingston.
Grace Tropical Rhythms on the line at the Grace Food Processors (GFP) canning facility in Kingston
Don Wehby, Group CEO,GraceKennedy, says increasingenergy costs are a puzzle tobe solved before higher exporttargets can be achieved.
Grace Vienna Sausages on the line at the Grace Food Processors (GFP) Meats facility in Savanna-la-Mar, Westmoreland
Grace Tomato Ketchup is loaded on a truck at Grace Food Processors Canning in Kingston
BY AVIA USTANNY COLLINDER Senior business reporter collindera@jamaicaobserver.com

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