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Douglas Orane (left), chairman and CEO of Grace, Kennedy and Company Ltd., shows Prime Minister Patterson (right) and Doreen Frankson, president of the Jamaica Manufacturers' Association, the new June plum flavour of the popular Tropical Rhythm juices.
Susan Smith, Staff Reporter
"YEAR 2005 promises to provide a more predictable business environment for local manufacturers," says Nicola Gordon Rowe, executive director of the Jamaica Manufacturers' Association.
She said expectations for higher growth in 2004 were thwarted by price increases, Hurricane Ivan, the fire at Petrojam and the congestions at the port. For the year 2005, the sector intends to build on the positives of 2004.
However, speaking with several local manufacturers the Financial Gleaner understands that this new-found optimism for year 2005 is born of the recent stability of the Jamaican dollar and a sustainable and steady macro environment. However, the expected shortage of raw material in the first quarter of this year is a factor that could impinge on their optimism.
"There are opportunities such as the investments slated for the tourism and construction sectors which should have a positive impact on output in the manufacturing sector," explained Mrs. Gordon Rowe. She also foresees continuous benefits coming from the Buy Jamaican Campaign for year 2005.
Mr. Gary Wallace, business manager for Leder Mode and a local manufacturer whose business is directly affected by the exchange rate, says he is banking on a stable dollar to alleviate the cost of importing raw material for his business. His outlook is a bit mixed with politics casting its shadow over the performance of the economy.
POSITIVE THINGS AHEAD
"Generally, there seems to be some positive things ahead but I believe the outcome on the political scene will help to determine the kinds of changes that will come, and how Government handles its financial obligations to the sector," he outlined, noting that he personally expects 2005 to be a better year than 2004. Mr Wallace is confident that with the advent of the Caribbean Single Market Economy (CSME), a bigger market will facilitate even more sales.
"The CSME will provide us with a bigger market like the U.S. and Canada," he said. "It will also free up the market and make things better without all these tariffs," he added. Mr. Emile Azan, managing director of Boss Furniture, was a little less upbeat about the sector for this year but also hopes for a stable dollar .
PROJECTED GROWTH
"I think it will be business as usual," he said, admitting it is still too early to tell. "Things will get a little slower between March to June but it usually picks up after that," he explained. "Our industry always slows down in the first quarter of the year so we tend to get more business from exports and tourism during that lull."
Mr. Azan told the Financial Gleaner that he is projecting a 15 to 20 per cent growth in business this year for the company, but that some tightening up will have to be done as well. He said interest rates, overheads on utilities and rentals of properties are usually very high for the sector. He was indifferent about the conditions changing for year 2005. "For year 2005, we look to other investments opportunities and integrating our production line, like making some of our raw material here instead of importing them," he explained.
In spite of the problems faced by businesses and countries, Mr. Azan says he is going forward into year 2005 "thinking positively because we survived 1997 which was a particularly hard year for manufacturing."
Manufacturers in the food and distributing trade also mentioned the pivotal role of the dollar for this year. "I don't see much change for the food production sector on the local scene," says Mr. Michael Ranglin, general manager of Food Trading at Grace, Kennedy and Company Limited. "Manufacturers should be better able to plan the cost of raw material with a stable dollar," he said.
"Last year was a good year and it has been a long time since we have had a year like that. So we are positive for 2005," he added.
He believes the tsunami disaster in the Far East will affect the supply of raw materials to the country. "The short term to medium term effect of the disaster could affect raw material. In addition, people are still being affected by this back up of supplies on the wharf," he added.
Mr. Ranglin holds the view that things will look up perhaps at the end of the first quarter when supplies are cleared on the wharves.
"I am expecting a better year than year 2004," says Mr. Woodrow Mitchell, managing director of Walkerswood Caribbean Foods Limited. "The only negative I can forsee will come in the first quarter. We are still feeling the effects of Hurricane Ivan on our supply of raw materials," he explained. He, too, is projecting a 15 per cent increase in business this year but said he expects to exceed this.
"We will not have an abundance of supplies for the first quarter and will have to import raw materials," he explained. He said the stability of the exchange rate will not be too problematic for his business but that having to import the raw materials will take a toll on production.
The manufacturing sector posted growth rates of 5.5 per cent for the first half of the year 2004, and according to the Planning Institute of Jamaica (PIOJ) is expected to project a growth of 2.4 per cent, for year 2004.
