Managing Director of Berger Paints Jamaica, Warren McDonald, holds a can of paint produced at the factory in Kingston in this November 12, 2004, photo. McDonald says the Bureau of Standards has fallen down on its monitoring of inferior paint imports. - File

Ashford W. Meikle, Business Reporter

Hurting from the competition, Berger Paints has charged that the Bureau of Standards Jamaica is not doing enough to keep inferior imported paint products off the market, and is failing to police its own standards.

"A lot of the imports are what you call cheapies," said managing director Warren McDonald.

"The quality is really substandard and this is one of the grouses the local industry has with the Bureau of Standards, because we developed minimum standards over the last two years with the bureau but they are not enforcing them," McDonald told Wednesday Business earlier this week.

The comment echoed concerns expressed to shareholders at the company's annual general meeting last Thursday, insisting then that consumers were being cheated.

"What you find is that when the cheap products come in consumers get cheated because they don't stay on the market for very long - the importers don't bring back the same brand," McDonald said.

"Other brands are imported when they (consumers) realise that the products are no good."

There are about two dozen brands of imported paint on the local market that compete with Berger's products that are manufactured at its Kingston plant.

The Bureau of Standards, on Tuesday, defended its monitoring programme, saying it was vigilant in its policing of the sector, but said it was aware there "may be unscrupulous persons who will seek to breach the established principles."

Efforts to get a comment from the Bureau of Standards were unsuccessful. Both executive director Dr. Camella Rhone and senior vice-president for technical services Gladstone Rose were said to be out of office.

McDonald said Berger was holding its own against the imported products, pointing to the company's research which indicates that its paint was still the preferred brand and had highest awareness on the market.

"We are cognisant of the fact that in today's world you will have more and more imported paint [and that] trade barriers are coming down," he said Monday.

Improving productivity

"This is a fact of life and we have been working on various fronts to improve our productivity and efficiency and to get our unit cost as far down as we can. We are still competitive with imports, if you are comparing like for like," he said on Monday.

But, some analysts hold a contrary view.

"Berger's product is a commodity product - it's like a tyre," says Mark Croskery, deputy general manager of Stocks and Securities Limited.

"A company may include in its sales pitch that its paint is a superior product or is longer lasting and so on but, at the end of the day, with commodity products, it boils down to price," he said.

"In a lower per capita income country such as Jamaica, those commodity products are even worse off as price points are even more critical."

Croskery said consumers will sway more towards a similar product that carries a lower cost point.

Berger's sales and profits have been under stress - revenues fell 10 per cent to $1.2 billion at its financial yearend to December 31, while net profit was down 71 per cent, to $38 million.

"You have to also take into consideration that Sherwin Williams is getting more aggressive and has recently announced an expansion into the paint industry," said Croskery, referring to Berger's major competitor.

Berger, he added, has a loyal following of consumers and shareholders, but said the brand was not as 'visual' on the market.

"This to an investor can also hint that the company is losing market share or will," said the stockbroker.

"Berger is in a rough trading environment with a commodity product, and I cannot foresee this changing. I would not buy for the long-term given this."

At Berger's AGM, McDonald, referring to the challenges facing the company, listed the cement crisis, political uncertainty with business community adopting a wait and see attitude with the imminent general elections and violence which prevented the company's supply trucks from delivering to the violence-prone areas.

"Our sales performance for the first eight months was negatively influenced by severe cement shortage [which] severely affected the cash flow of our retailers who experienced fall-off in their sales of up to 60 per cent for several months," he said.

"Left with unplanned high inventories, retailers were unable to pay for paint purchased in accordance with the agreed credit terms."

The paint maker said the cement shortage affected the company's most profitable period, it's fourth quarter, which saw net profit falling by 73 per cent.

"We had almost made a full recovery [but] the retailers were still having cash flow problems even though cement was available and a lot of them were behind in their payments and we had to be controlling the supplies because we can't just give away the product," McDonald said.

BSJ Paint Guidelines:

In the case of paint, all paint products, whether produced locally or imported are required, under the Trade (Household Paints Control) Order, 2004 to meet the established standards:

JS 110, the Jamaican Specification for Paint: interior and exterior, emulsion type, flat, in the case of flat emulsion;

JS 123, the Jamaican Specification for Paint: Emulsion type, interior and exterior low sheen and semi-gloss, in the case of flat emulsion (low sheen); and the

JS 131, the Jamaican Specification for Paint: interior and exterior oil modified alkyd, in the case of alkyd or oil paint.

Any paint that is sampled and found to be below the required standard is pulled from the marketplace.

ashford.meikle@gleanerjm.com