The Jamaica Manufacturers and Exporters Association (JMEA) is composed of a wide mix of companies with 74 per cent of the membership being micro, small and medium-sized companies.

Overall, the industry has weathered the pandemic well, but the individual company experiences have varied greatly.

Some companies, especially those in the agro-processing space, have not only survived but they have seen increased business. We have had local manufacturers pivoting to supply key products that are required during the pandemic; sanitising gel, bleach, mask, testing chambers made of fibre glass, among others. Companies in the chemical space have also seen increased in export. Companies that supplied products for the construction industry and for home renovations/repairs also did much better than expectation.

On the other hand, companies that were heavily linked to the tourism industry were very badly impacted and this resulted in reduced staff level, stopping capital investments and decimated cashflow.

Schools closure also had a huge impact on the local demand for several products such as patties, juices, and biscuits.

The work environment has changed with lots more health protocols to adhere to. Companies have had to increase their operational cost to implement measures to protect their staff. These measures include:

• transporting staff to minimise their use of public transportation.

• separation of shifts to avoid workers interacting.

• huge expenditure on mask, sanitising products, safety equipment.

• significant cost spent to test employees and conduct contact tracing. For each positive worker, approximately three-five other workers must be removed from the workspace for quarantine.

Despite the overwhelming negatives of the pandemic, there have been some positive outcomes, such as:

• higher export demand for natural products.

• increased digitisation has resulted in e-commerce platform becoming another selling channel. Potentially widening the customer base.

• shifting of purchase by consumers to the formal retail sector due to their greater adherence to protocols, has created a bigger pie for local manufacturers. The informal sector carries a lot of “grey” products.

• embracing previously frowned upon working arrangements such as remote work. Of course, many workers (more than 80 per cent) in the industry must be at the workplace to do their jobs.

The JMEA had the privilege to be a part of the COVID-19 Recovery Task Force, chaired by Finance Minister Nigel Clarke. We are hopeful that the recommendations will move to implemention sooner than later. It has been a major disappointment with the lack of policy support to drive reserach and development (R&D), export, digitisation of SMEs and reduced bureaucracy. We are missing a huge opportunity to strengthen our productive base that would contribute to economic resilience, a sharp economic recovery and more inclusive growth.

JMEA QUARTER 4, 2020 SURVEY

• There is definite increased cost of operations as companies implement measures to protect their labour force. Measures include staff transportation, reduction in production hours to allow for separation of shifts, higher sanitation activities and purchase of protective equipment. Companies have also been aggressive in testing employees, contact tracing and removal of suspect workers from the workforce until they are confirmed to be not a risk to the operation.

• Almost all companies have seen increase in prices of input material, with many commodities now being at four-year highs and rising. This is compounded by sharp escalation in shipping cost and rise in local fuel/energy cost.

• Forecasting further contraction in the industry until end August/September 2021 but with the global vaccination roll-out and subsequent taming of the pandemic. We anticipate strong recovery to the tourism and hospitality sectors which will have a linkage induced positive impact on manufacturing demand

IMPACT ON DEMAND

The responses in the survey conducted at the end of quarter fout (Q4) of 2020 indicate that roughly 44.5 per cent of the respondents saw a decrease in demand for their goods and services; approximately 33.3 per cent of the respondents saw an increase in demand for their products. Companies that saw a positive uplift in demand were primarily those in food, chemical (for example, makers of sanitising gel and bleach) and paper (tissue manufacturers) subsectors. The result was mixed for the textile subsector, many of which had pivoted to produce mask but demand for these fell. The petroleum subsector continues to be badly impacted by reduction of sale in jet fuel due to less flights and reduction in petroleum export to Caricom due to Guyana’s entrance in the sector.

The excessive rains in Q4 which badly affected primary agriculture production had a domino effect on the agro-processors, due to shortage of raw material.

December 2020

Indicated a decrease in sales revenue 62.2%

Indicated an increase in sales revenue 20%

Stable sales revenue 17.8%

IMPACT ON EXPORTS

Thirty-seven per cent of our members surveyed

saw an increase in exports, primarily related to

natural food and beverage.

December 2020

Indicated a decrease in exports 52%

Indicated an increase in exports 37%

Stable exports 11%

IMPACT ON SALES REVENUE

Among the survey respondents, 62.2 per cent saw a decrease in sales revenue for Q4 2020. Meanwhile, 20 per cent of respondents reported an increase in sales revenue. Approximately 17.8 per cent of respondents reported having stable sales

revenue in Q4.

December 2020

Indicated a decrease in sales revenue 62.2%

Indicated an increase in sales revenue 20%

Stable sales revenue 17.8%

IMPACT ON EXPORTS

Thirty-seven per cent of our members surveyed

saw an increase in exports, primarily related to

natural food and beverage.

December 2020

Indicated a decrease in exports 52%

Indicated an increase in exports 37%

Stable exports 11%

IMPACT ON SUPPLIERS IN TOURISM/ENTERTAINMENT SECTOR

The surveys conducted also aspired to capture the effect of the fallout experienced by members who supply the tourism and entertainment sectors. Over half (53.3. per cent) of our sample indicated that they supply the tourism/entertainment sector

and experienced a decrease in sales to that industry for Q4 of 2020.

December 2020

1 – 25% fallout 15.6%

25 – 50% fallout 8.9%

50 – 75% fallout 6.7%

75 – 100% fallout 22.2%

Not applicable 46.7%

Richard Pandohie — President Jamaica Manufacturers and Exporters Association