Mr. Omar Azan
President, Jamaica Manufacturers’ Association
Investment & Capital Markets Conference
Wednesday, January 26, 2011, 1:00pm
· Good Afternoon ladies and gentlemen
The truth is, the topic of whether the manufacturing industry is dead, is one that I myself and presidents before me have had to battle time and time again. Instead of giving you an emphatic no or yes, I will let the statistics speak for itself. In 2009, manufacturing contributed 8.3% of GDP, employed 77,700 persons and exported goods valued at US$722.9million, which represents 62.7% of all goods and services exported. This compares with tourism and agriculture, which contributed 5.8% and 5.6% respectively to GDP in 2009.
Additionally, manufacturing has direct links to other sectors of the economy. It has backward linkages to the mining and construction sector, as well as forward linkages to tourism and agriculture. The multiplier effect is great, because growth in manufacturing fuels growth in other sectors.
In addition, micro and small manufacturers continue to make a significant contribution to government coffers. In 2009, over 1000 Micro and Small Enterprises in the manufacturing industry filed GCT returns, in comparison to 167 in agriculture.
In the same vein, manufacturing productivity consistently outpaces productivity growth in other sectors of the economy. In 2009, the labour productivity level for the industry was $519,000 per worker, and on the rise, with figures representing a 3.2 per cent increase over 2008.
The indicators therefore show that manufacturing is very important in the linkages thrust, creating jobs, local and foreign exchange earnings, productivity and to Jamaica’s overall GDP.
So why is manufacturing regarded as “dead” by some? Well, for one, they could just be misinformed; unaware of the wide range of quality world-class products manufactured in Jamaica and didn’t get the opportunity to witness the brilliant display at Expo.
Or two, their picture of manufacturing today may be in relation to manufacturing in the 1980s, when manufacturing contributed approximately 20% to GDP and employed over 100,000 persons, and they may remember the eventual closure of the many factories, which operated at the Freezone and elsewhere. However, the shedding of jobs by the sector was due to factors such as globalization; the painful transition of successive Governments that focused on making Jamaica a services economy; and the competition not only against ourselves, but with the tough economic environment that prevailed.
Despite this, manufacturing is thriving and adapting to the changing climate. Therefore at this juncture, we cannot continue to act as though the services sector is our only engine of growth, because if we do, we will not only continue to expose ourselves to the shocks, but will also fail to capitalise on the opportunities that exist in manufacturing. We must make manufacturing the fundamental base for the economic health and security of the Jamaican economy.
Today, I say to those who hold a negative perception of manufacturing, that belief kills and belief cures, and that bringing back the glory days of manufacturing and curing some of our socio-economic ills, will require belief in production. In other words, we don’t need to perform a miracle to stimulate production, what is necessary, is for us as citizens to create demand by supporting our brands.
So, ask not if manufacturing is dead, because you know the answer to that, instead, ask how you can help to breathe new life into the sector. Well, the first step is acknowledging that we all have a role to play in stimulating production. The second step is doing our part.
As Government, we have to facilitate manufacturers on two fronts:
1. By creating an enabling business environment – If we want the manufacturing sector to grow and to be more competitive, we have to nurture it. The role of the Government spans the removal of impediments and reduction in the costs of doing business. Manufacturers must be able to access financing to retool and expand; incentives must be provided to give manufacturers a level-playing field to compete; our energy sources must be diversified to reduce our dependence on petroleum and the cost of energy. We must also remove bureaucratic red tape to drive productivity. Stimulating production will have a rippling effect, as this will lead to expansion and job creation, more revenue for the country as more taxes are being paid as well as the alleviation of crime and poverty. We must stand up for businesses and pay more attention to manufacturing.
2. By buying Jamaican – The Government is the largest procurer of goods, and must show that there is buy-in for the buy Jamaican concept at the top. When I say we need support from Government, this is not limited to their physical or monetary support of buy Jamaican events, but also in their own procurement. While we continue to advocate for the implementation the Procurement Policy to ensure Government support for local manufacturers, it does not take legislation to realise that if we procure from our local industries, we contribute to the long-term sustainable growth of this country.
To propel manufacturing, which is the backbone of a successful economy, we also need to support and trust each other as manufacturers. Information sharing is necessary in paving the way forward whether it is for clustering purposes to cut costs or to improve internal efficiencies and reduce waste.
Similarly, strengthening ties with other sectors is vital in keeping the production line running, as there are many untapped opportunities. Additionally, a more integrated approach which is steeped in collaborative efforts between the private and public sectors is also pivotal, which can encompass the exposing of brands locally and internationally and establishing links between manufacturing, tourism and agriculture.
As consumers, we must possess the mindset to buy Jamaican and build Jamaica, because our action or inaction, indirectly affect the quality of the roads we drive on, the modernization of our health-care system and the improvement of our educational system. The more we buy Jamaican, the more revenue we will have at our disposal to improve infrastructure and essential services. It is a two-step process – read your labels, buy Jamaican.
Ladies and gentlemen, our manufacturers are resilient but that will take us only so far. Can you imagine a Jamaica without manufacturers? I cannot. So let us declare victory for the manufacturing sector and leave no doubt that production is alive and well, by what we do in our personal and professional lives. Let us not define the sector by what it was, but let us redefine manufacturing in Jamaica, by buying Jamaican and creating an enabling business landscape. The future of manufacturing is in our hands; let us use those hands to mould a better, brighter Jamaica for future generations.