CARIBBEAN MANUFACTURING: IS THERE A FUTURE?

Address By Kerston Coombs, Chairman, Ventrin Petroleum Company Limited at a Panel Discussion on Competitiveness held on May 19th 2006 at the Trade and Industry Conference Centre of Excellence, Macoya, Trinidad and Tobago

Introduction

I first wish to congratulate the TTMA, RBTT and the Ministry of Trade as the main sponsors and all the other sponsors on once again putting on what has become the premier event of its kind in the Caribbean This trade and industry exposition grows in strength every year and consequently attracts more exhibitors and visitors each time it is held. Once again congratulations to all concerned.

However, notwithstanding the obvious pride, satisfaction and confidence being shown here, there is no doubt that the future of manufacturing in the region is undergoing serious challenges. Much of what Dr. Harvey has told us bears this out in stark relief. Indeed the most common feature of our manufacturing businesses across the Region seems to be one of underperformance. There are many reasons for this of course, most of them well known and clearly documented. Why then do we consistently perform below our potential?

Is it because of the small size of our economies, our limited home markets and lack of resources or rather is the problem due to our open economies, and the occasional external economic and physical shocks that hit us and over which we have no control. I do not believe there is a single business person in this room and in the region a whole who would not agree with some if not most of these statements.

And yet the picture is not one-dimensional. In spite of the problems both perceived and real, there are success stories out there. Some how there are many among our manufacturers who have been able to surmount the difficulties and gain new markets and expand their businesses. One common feature among the successes appears to be the use of innovation whether in product development, new packaging or targeted marketing.

The New World

Ladies and Gentlemen: there is a New World out there. The liberating influence of information and computer technology has changed forever the Old World as we knew it only a few years ago. The result is a shift in routine manufacturing and services work from the developed countries to countries such as India and China. This out sourcing has grown at geometric speed and promises to continue well into the future. We are witnessing a shrinking of distance and elimination of the barriers of time and place in the pursuit and execution of business activity. In fact as the saying goes the playing field is being leveled. Or as the author Thomas Friedman, who has written extensively on globalization and its effects, has declared. “ The World is Flat.” Perhaps the most ubiquitous example of this phenomenon has been the rapid spread and use of call centres.

These centres are now used for everything from taking theatre and airline bookings to reporting financial data and processing medical records. The defining condition that has lead to the dramatic changes we are seeing in the way business is being conducted may be summed up as competitiveness. Those countries or businesses whether service or manufacturing that are more competitive than their rivals will outperform them. And in large measure that competitiveness is directly linked to the productivity of the persons involved in the enterprise. It is not the only factor of course, however it is crucial.

Trinidad & Tobago and the Caribbean

Could this then give us a clue to explain some of he difficulties we face in the Region? Indeed to quote from the World Economic Forum, Executive Opinion Survey 2005. the most problematic issues surrounding doing business in Trinidad & Tobago by those surveyed were in order of importance: crime and theft; inefficient government bureaucracy; poor work ethic in the national work force; inadequate infrastructure and corruption. It is instructive that these characteristics are largely absent from the most competitive countries such as Finland, Singapore, Iceland and Switzerland. Instead these countries show far more positive images such as superior educational attainment of the bulk of the population, constant innovation based on research and development of new products and processes, low levels of corruption, good infrastructure and a positive attitude to work. It is also instructive that the countries mentioned do not have large populations or extensive mineral or petroleum resources. Could we in the Caribbean learn from their approach to national development?

In a sense, our business performance is as much a reflection of our national attitudes as it is about market access or lack thereof, lack of financing or inadequate infrastructure. We can demonstrate remarkable productivity, innovation and enterprise in those pursuits that we love or consider immediately relevant. The entertainment industry comes to mind as a prime example of this. The strides being made in tourism development are also note worthy. Where we seem to falter is in agriculture and manufacturing. However there is a paradox here because there are areas of manufacturing e.g. down stream petrochemicals in Trinidad & Tobago, alcohol beverages in Guyana, processed foods in Jamaica that can and are holding their own in the wider market place.

Frontiers of Change

Interestingly, the problems we face in the Caribbean are not unique. For example, who would have believed a decade ago that in ten years not only would Toyota be the world’s leading automobile company, but even more amazingly that General Motors would be in danger of going bankrupt. Or that companies with names like Microsoft, AOL, FEDEX, and Nokia would be among the biggest and best in their respective fields. In each case, the difference has been the competitive advantage each one has been able to carve out for itself.

It is clear that we must turnaround those negative attitudes and characteristics that prevent our businesses from realizing their full potential by improved education of our population, greater efforts in research and development, less government bureaucracy, less corruption or perception of corruption, by encouraging more citizens to go into business, and by a steady reduction in the incidence of crime.

If even we are able to accomplish some of these goals I believe we will be on our way to accomplishing the objective of increased competitiveness and a better future for our manufacturers and businesses in general.