Manufacturing - a cut above the rest

Brian Pengelley, Deputy President, The Jamaica Manufacturers' Association

A response to "Samuda says manufacturers not trying hard enough", published in The Financial Gleaner, Friday, January 28, 2011.

Manufacturing creates wealth, sustains jobs, and is centr al to our economic success.

It has been the foundation of our strength as a trading nation in both the past and the present. Manufacturers have been faced with major challenges in the short term - the global economic slowdown compounded by high input prices for energy and raw materials - and in the longer term as the pace of globalisation continues to intensify.

Notwithstanding, kudos ought to be extended to the sector for its resilience and superior contribution to national GDP and employment over the years.

Throughout 2007-2009, manufacturing contributed more to GDP than the tourism and agriculture sectors and provided almost three times the employment than did tourism's hotel industry. Productivity contribution to national GDP has also been highest in the manufacturing sector when compared to the above. In fact, the latest data from the Jamaica Productivity Centre indicates that labour productivity within manufacturing increased by over 10 per cent during this period.

It is unfortunate, at best, that the minister, Mr Karl Sumuda, would make such berating and misleading statements regarding the performance of the manufacturing sector, which is subsumed in his portfolio.

Manufacturers have appreciated the incentives extended by the Government to the sector, however, the minister has failed to indicate that these incentive programmes were introduced at the onset of the global recession, and that one incentive, the Modernisation of Industry (MOI) programme, will come to an end in March of this year.

Negative growth

It would be unfair for anyone, including the minister, to compare the output of the sector in the years that preceded the recession with 2009, the year which felt the brunt of the impact. Even with the provision of incentives, every sector recorded negative growth in that year.

The sector has undeniably responded to the incentives, as is evidenced by the re-tooling of many factories and the numerous applications to the minister to import capital equipment under the MOI. Increased productivity throughout the period of its implementation is also testament to the sector's positive response to the incentives introduced.

The Jamaica Manufacturers' Association has also played its part by promoting productivity improvement among its members, and increasing awareness of Jamaican products with its 'Buy Jamaica ... Build Jamaica Campaign'.

The campaign has allowed the association to strengthen support for Jamaican products, which will, in due course, grow and sustain Jamaican jobs, boost our economy, and expand the range of economic opportunities for the private sector.

According to the World Bank's Doing Business Report 2011, a typical manufacturer makes 72 tax payments per year, which amounts to a total tax rate of 50.1 per cent. This may be compared to a total tax rate of 33.1 per cent for our major CARICOM competitor, Trinidad and Tobago. Therefore, contrary to the minister's statements, the sector actually pays numerous taxes, and has become more productive.

Additionally, according to GCT returns for 2007-2009, the manufacturing sector had the third largest number of micro and small businesses registered, which indicates that the sector has a significant role to play in filling government coffers.

Long-term support

It is difficult to underestimate the importance of manufacturing in the Jamaican economy. Manufacturing is the largest multiplier of all sectors of the economy.

Every dollar in final sales in manufacturing products supports other sectors of the nation. Now is not the time to pull incentives and support from the sector.

It is vital that Jamaican manufacturers have the right long-term framework and ministerial support to ensure it emerges from the global slowdown stronger and fitter than ever and better placed to exploit the new opportunities of an increasingly inter-connected economy.

Despite the criticism levelled at the sector, as evidenced by the pronouncements that we are "not trying hard enough", and in spite of the bureaucracy, unfriendly business environment, and the slow pace of support from Government, we continue to produce for the love of country and our 76,300 employees.