Now is the time to retool, says Tufton
Published:Sunday | September 18, 2011 | 12:00 AM
Minister of Industry, Investment and Commerce Dr Christopher Tufton, has urged manufacturers to use the opportunity provided by the existing low interest rates to retool their operations as part of the strategy towards building a more efficient and competitive industry.
"This is the best time, in at least 30 years, for manufacturers to pursue a retooling programme that will take them into a modern industry and achieve critical efficiencies that will allow them to be competitive," he said.
Tufton said on a tour of Wray & Nephew's rum plant in Kingston on Thursday that over the past 25 or more years, Jamaica's macro-economic climate has been erratic and quite hostile to the manufacturing sector.
"The cost of money - interest rate that is, inflation rate, erratic exchange rates have wreaked havoc on the manufacturing sector," said the minister.
Emphasising that macro-economic environment has substantially changed over the last few years, Tufton said that despite what the global competitive index suggests, "the fact of the matter is that on the critical variables of exchange rates, interest rates and inflation rates the country and our economy have not seen this level of stability over the past two plus decades."
The harsh economic climate that existed has created for manufacturers a major disadvantage where they were unable to access money because of the high interest rates and, where they decided to take the risk, more often than not, they did not have the capacity to invest in the latest technology, he said.
"In other words, very often manufacturers retooled in the past by purchasing used equipment and in some instances equipment that would have been discarded or would have been rendered outdated ... in other jurisdictions," Tufton said.
Those manufacturers ended up competing with Jamaica, which effectively entrenched the uncompetitive nature and the low productivity seen in the local industry over many years, he said.
Signal and an opportunity
"Very few, over the last couple of decades, have been able to break out of that cycle and where they have been able to, they have had to use very creative ways to do it, particularly as it relates to accessing the funds to do it," said the minister, who is now two months into his new assignment.
"Today that scenario has changed, and as a consequence we are seeing interest rates below 10 per cent for the first time, and it is for me to be used as a signal and an opportunity to engage the process and to retool," he said. "My encouragement to manufacturers is to embrace best practices. Look at what your major competitors are doing and follow their lead. And where you can, use your own local knowledge and creativity to surpass them, but never allow the platform that you use to create your goods and services to be surpassed by others who are competing against you."
Having observed Wray and Nephew's rum bulk-handling and ageing facility, as well as its blending, bottling and warehousing operations, the minister observed that the company has demonstrated that it has been retooling.
Tufton said that having discussed and observed the activities in the company, combined with his background knowledge of the farming side of the spirits business in his former role as minister of agriculture, "I must conclude that I'm quite encouraged with what is happening and believe from the example that I've seen here that manufacturing in Jamaica certainly has a future and should be encouraged and promoted."