Letter of the Day - The fall and rise of companies

THE EDITOR, Sir:

I HAVE no problem with foreigners taking controlling interest in Jamaican companies.

In fact, I am minded to view it as a good thing. Some of these same companies which were very profitable in the good times, uniformly fell upon hard times in the late 1990s, many ultimately collapsing. It is striking how they generally become profitable very soon after coming under foreign control. Is there a lesson here?

There seem to be large issues involved. In a difficult environment many businesses went under while many others did very well. Almost every locally controlled commercial bank crumbled, or would have. In the same environment the foreign controlled ones did very well. Doesn't this invite questions about competence and business practice of some Jamaican enterprises? Almost every one of our big life insurance companies went under. Into this same environment come our Caribbean neighbours, jostling with each other for the still warm bodies of the recent dead.

The year after claiming these cadavers, the dead are raised, and profits are being made. Doesn't this raise serious questions about how we run our businesses in this country? Remember Caribbean Cement Company? A dead loss despite its monopoly status. In comes Trinidad Cement, buys the company and starts to operate profitably almost immediately.

The issues raised by these examples concern me.

Why did these big, long established companies collapse? We have all heard the arguments about high interest rates, mismatch of assets etc. But are these primary causes, or merely their effects? Why would foreign-owned companies thrive in an environment lethal to Jamaican companies? Why would our Caribbean brethren be rushing into such an environment to buy into companies? Why do they turn these losers around in so short a time? We need more forthright answers than we have been getting so far, and in their absence speculation, innuendo, and suspicion run unchecked.

I am, etc.,

MICHAEL R. NICHOLSON

P.O. Box 281

Kingston 10

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