EU assists local manufacturers to become competitive
FIFTEEN small and medium-sized Jamaican manufacturing firms are being assisted by the European Union (EU) in re-engineering their operations to enter the “big bad world” of free commerce that is being ushered in by various trade arrangements.
Over the next two months, a team of trade and industrial management experts will diagnose the operations of these firms from the agro-processing and apparel industries and assist them in benchmarking or raising the standard of their operations to first-world levels.
The experts will use Microscope, a software programme developed by International Business Machines (IBM) and which is widely used by European companies.
Among the companies to be assisted are Canco (ackee processors), Walker’s Wood, Caribbean Foods, Honeybun, Just Kids (an apparel manufacturer), Salada Foods, Blue Mountain Aromatics, Starfish Oils, Gerry’s Sportswear and Bill Edwards Clothing.
“It is of utmost importance that we measure certain production criteria against the best in the world,” Patricia Francis, president of Jamaica Promotions Ltd (Jampro), told representatives of the targeted companies at a workshop held last week at the Hilton Kingston Hotel.
The visit of the team of consultants is organised by Jampro, the government’s trade promotion agency, under the Trade Development Project, into which the EU and Jamaican government have poured 6 million euro and $0.8 million respectively.
“We have no choice today but to ensure that we are preparing ourselves for the big bad world out there. We (small and medium-size firms) have got to make an adjustment or we are going to die,” Francis added.
Adebayo.Babajide, economic advisor to the European Commission in Jamaica, noted that development co-operation in Jamaica has focussed on economic co-operation, macroeconomic support to government and, lately, private sector development.
“While macroeconomic adjustment is important in order to achieve growth… what we also need is private sector development,” said Babajide, “and we feel we have to focus especially on the small and medium-sized enterprises in order to reach this growth that we need for the recovery of the economy.”
During the next three to five years, Jamaican manufacturers will have to face stiffer competition arising from various trade pacts and arrangements now being finalised.
Negotiations are currently in place for a new round of multilateral trade talks under the umbrella of the World Trade Organisation (WTO).
These negotiations, which are scheduled to end by January 2005, are aimed at removing more trade barriers for industrial and agricultural products and services. The WTO negotiations are also addressing trade in relation to sound environmental practices and trade in intellectual property right as it relates to geographical distinctiveness (for example, Jamaica’s right of ownership to Blue Mountain Coffee).
Negotiations are also currently taking place regarding the shaping of the Free Trade Area of the Americas (FTAA), which is to come into force in 2005. This will present challenges to Jamaican firms which will have to compete with companies elsewhere in the emerging trade bloc of 800 million people of the Caribbean, North, Central and South America. It will be the largest free trade area in the world.
Negotiations will start this September for a new partnership agreement between the African, Caribbean and Pacific (ACP) grouping and the European Commission (EC) to come in force in 2008.
The primary aim of this new partnership agreement will be to facilitate transition to the liberalised global economy and facilitate the development of globally competitive firms and industries.
Caricom governments also plan to create an economic bloc — Caribbean Single Market and Economy — removing all trade restrictions by 2005. Governments of the region see the single market as a preparatory phase ahead of wider trade arrangements.
At last Wednesday’s workshop, the trade/industrial experts acknowledged the comparative advantages that Jamaican and Caricom firms have in the production of ethnic/organic/herbal food.
“We have got the traditional ethnic foods — the jerk sauces and the seasonings — as proven market success,” said Richard Parrish, trade expert on access to the European market.
He said that there was a growing market for organic foods (grown without the use of herbicides and fertilisers) because the European consumers were tired of food scares and had, consequently, lost confidence in mainstream food processing.
“It is something this region should think about seriously,” he suggested.
European consumers, Parrish added, don’t trust the pharmaceutical industry and are, consequently, “going back to nature” to use herbal remedies. “And you, in this region, are in an ideal position to meet those needs,” he said.
Last week, Prince Charles, heir to the British Throne, identified the Caribbean, Guyana in particular, as a place to produce organic foods. The Prince was addressing a conference promoting Caribbean organic foods in London.
However, according to Parrish, the success of Caribbean ethnic foods in crossing over into mainstream market in Europe, mainly the United Kingdom, has presented new challenges for Caribbean food manufacturers to get their products beyond the shrinking West Indian market of half million people.
Said Parrish: “The younger section of that particular buying group is becoming more mainstream. They are not buying purely because (the product) comes from home… So the actual traditional market is declining and it is not one that you can build a future on.”
But he indicated that there were high-income earners in the European mainstream market who consumed ethnic/exotic foods as part of their lifestyle. “They are the people that your success will depend on.”
Despite the traditional markets of Europe and the US, Ena Harvey, agro-industry expert and head of the consulting team, suggested that local and regional manufacturers seek marketing opportunities that existed in the Americas, even before the advent of the FTAA.
According to Harvey, the annual increase in intra-regional trade during the last decade was 20 per cent in the Andean Pact countries of South America, 12 per cent among North America Free Trade Agreement (NAFTA) member countries and 20 per cent within Caricom. This compares to eight per cent growth in world trade over the same period.
“The hemisphere is emerging not only as the fastest growing sub-region of the world, but the sub-region with the greatest potential for future growth,” Harvey stated emphatically; noting the necessity for Caricom business people to learn Spanish.
She argued that the “most significant assets” of the Caribbean countries were its people and its cultural heritage.
“They can put names of our countries on their pepper sauce and not have one ingredient, but they can’t sing and do art and put together a package with our panache,” Harvey said.
She enumerated factors that were necessary for regional firms to succeed in the global marketplace — consolidated purchasing, joint marketing, contract processing, bulk shipment, franchising, e-commerce and overseas warehousing.
Said Harvey: “(There) is reluctance to find co-operative ways of reducing product costs. We stab each other in the back. We cannot form an agro-processors’ association that works where we can buy inputs together and save.”S
She also underscored the importance of having a functionally literate workforce if Jamaica is to build its competitiveness. “If we don’t bring up our own staff, we do them a disservice…”
“This is (a negative feature of) our Caribbean culture. We don’t see the bigger picture — functional literacy and social skills, she added.