Hendrickson smarts from import restrictions and labour challenges, but ploughs ahead with investments

Gary ‘Butch’ Hendrickson, head of National Baking Company Limited, is exasperated with what he describes as recurring issues relating to raw materials import restrictions caused by government regulations that serve no one’s interests and continue to hobble business.

He raised the issue in an interview related to the latest investments in new products by the seven-decade-old company that produces a wide range of biscuits, snacks, pastries and breads, and its multiyear, multibillion-dollar expansion programme that’s been ongoing for four years. One of the new distribution centres under development is now expected to be commissioned in January.

The restrictions resulted from “onerous” import duties that “provide little to no incentive for local manufacturers to innovate” and are “prohibitive for manufacturing,” Hendrickson asserted, citing a recent experience in trying to procure an input made from a fibrous fruit that is not produced in Jamaica.

“Specifically, I wanted to make a particular product that involved date paste, only to find out that there is a huge duty on it and all sorts of additional charges. What date industry are we protecting in Jamaica?” he demanded in exasperation. “For something that does not grow in the country, these are duties that will make us uncompetitive anywhere,” he said.

Additionally, Hendrickson is smarting from the lack of available skills required to operate more advanced equipment, and the limited options to plug the skills gap at his company – a problem that is widespread throughout the manufacturing sector.

“As a Jamaican, it pains me and hurts me to say so, but we don’t have people sophisticated enough to run some of the equipment we bring in. Things are changing and education levels needed to change with it. It’s something we’ll need to be concerned about,” the businessman said.

“I don’t have a single non-Jamaican working at the plant, out of over 800 people. But I will have to start thinking about looking overseas,” he added. “A lot of my managers are getting older. They need to be replaced.”

Hendrickson is just the latest employer to put the issue of opening up Jamaica to imported skills. Although controversial, the Holness administration has now signalled it is willing to give consideration to the request amid record low unemployment in Jamaica.

On Tuesday, Prime Minister Andrew Holness, while noting that the unemployment rate of 4.5 per cent does not take into account those who are not seeking work or who have otherwise opted to stay outside the labour force, there would come a time, if the present rate of development continues, when alternatives such as skills importation will have to be found.

“If we continue to grow and our growth base increases, we will use up those who are outside (the labour force), maybe in the next five years, six years, or even 10 years; but you can’t wait till that point in the future to make policies for that time. You have to be thinking ahead,” Holness argued.

National is one of the most popular baked good brands in Jamaica, with an expansive product range.

The company recently poured $200 million into equipment upgrades, and rolled out five new products, including one called Bulla Bites.

“The investment in equipment specifically for the Bulla Bites line has been approximately $25 million; however, our efforts to improve efficiencies through equipment upgrades year-to-date would be in excess of $200 million this year,” said Hendrickson.

National Bakery was founded in 1952 by Karl Hendrickson. The business was passed to son Gary in 1994.

Alongside the current product innovations, the company is reporting progress on its expansion programme, which was disclosed in 2019 as a massive project worth $7 billion, under which National Baking is developing new distribution centres and a second production plant.

On Wednesday, Hendrickson put a current price tag of $7.5 billion on the works.

The centre in Mandeville is due to open in January 2024. And Montego Bay will open in 20 months, “the same time as the new plant in Catherine Hall,” he said. Catherine Hall is also in Montego Bay.

The additional production plant was needed to help fill orders for the export market, which Hendrickson says is growing. National ships bread and buns to London, New York, Toronto, and a fast-expanding South Florida market.

The “total expansion – Mandeville warehouse, fleet facility and store; Montego Bay factory, warehouse, fleet facility and store – is in excess of $7.5 billion,” he told the Financial Gleaner.

National Baking Company operates various brands, inclusive of National, HoMade, HTB and Crave – all produced at the sole bakery plant at 43 Half-Way Tree Road in Kingston, which runs three production lines. Crave, which is a line of sweet pastries, was started by Gary’s son, Craig Hendrickson, in January 2018.

avia.collinder@gleanerjm.com