SN Kraft - Small company trying to compete with Chinese imports

Avia Collinder, Business Writer

Static income in the last four years has forced SN Kraft (SNK) Limited, a traditional manufacturer of souvenir items, to diversify, backed by a J$2-million EXIM Bank loan.

The funds have been invested in equipment and will facilitate the family-run company's breaking into new markets.

SNK, which is based in Linstead, faces strong competition from Chinese imports that continue to flood Jamaica, but Keri-Ann Henry - daughter of the owner and tapped to become marketing manager of the 20-year-old company - says the debt capital will put SNK in a better position to compete.

The EXIM loan is repayable in four years.

CEO Norris Henry said with the new machine the company created "a contemporary collection of large statement pieces" that fit any style or décor for home or office, and hotels and restaurants.

"The main motivation, however, for us acquiring this machine was a desire to compete with the imported Chinese souvenirs, which are lightweight, relatively cheap and attractive," Henry said.

Two other family members help run the company - wife Sonia and son Norris Jr.

Having participated in the Private Sector of Jamaica FamBiz project - a two-year programme to improve competitiveness among small businesses run by families - the Henrys say they have acquired the confidence to assume some risk, as evidenced by the loan.

With the equipment purchased through EXIM, production and associated revenue, currently at J$10 million annually, is expected to improve 25 per cent. Another two or three workers will be employed this year, increasing the staff complement to about 15.

The current product portfolio features original designs including wall clocks, refrigerator magnets, wall plaques, fruit baskets, and key rings.

SNK markets to souvenir stores and hoteliers in the main tourist areas of Ocho Rios, Montego Bay and Negril, as well as to a corporate clientele, churches, schools, and service clubs.

The company also does personalised gifts items for individuals celebrating occasions such as engagements and birthdays.

Product diversification will see the creation of items that can be used for general home décor as opposed to just souvenirs.

The company has historically focused on manufacturing while leaving distribution strategy to exporters who have secured markets in craft outlets and airport stores.

Keri-Ann now says that having completed her schooling, she will be taking over the marketing portfolio and will be pushing aggressively for new placements both locally and abroad.

The company currently exports to Antigua, Trinidad, and St Kitts, with plans to expand into Barbados and the United States.

A challenge in this area is bureaucratic red tape, Keri-Ann said, noting that there is tendency on the part of Jamaican customs agents to poke holes in craft items in search of contraband. In addition, high shipping charges are difficult to overcome.

"Overall, shipping expenses are high whether we pay or the client pays. Sometimes people say it's not worth it. They pay for stuff twice. Additionally, materials are often heavy and Customs wants to bore holes in them thinking we might be hiding stuff. By the time they get to customers, they are damaged," said Keri-Ann.

"If these challenges did not exist, we could be earning more foreign exchange. We continually get calls from the United States and Canada. It's easy for China to send stuff  here but we can't send anything without excessive red tape," Keri-Ann laments.

But now that the family is pulling together more evenly, the expectation is that even these challenges can be overcome.

"FamBiz showed my Dad was doing everything. We just have to try and redistribute duties among four of us a family. It also showed that we have to diversify," said Keri-Ann.

"Even before FamBiz, we did a lot of customising for individuals, companies and other islands. Now we have a whole new line. It shows us that you just have to keep the wheels turning; not doing the same thing every day while the market and economy are changing."

There are no plans now to expand the 3,000 square-foot factory in Banbury district, Linstead, even though production is on the increase.

While the craft business is competitive and seasonal, the company is looking to year-long returns from "producing things that people can enjoy," Keri-Ann said.

With its new machines, the company said it can also make better use of local raw materials, avoiding the higher costs of imported inputs as well as the pitfalls involved in outsourcing printing jobs.

Keri-Ann Henry said that SN Kraft is profitable and is set to continue growing.

The company claims good relations with financing partners and has received through organisations such as Jampro and the Jamaica Exporters' Association industry targeted grants to help fund the operation.

business@gleanerjm.com