Fri | Jun 5, 2020

Editorial | Mr Pandohie’s call to arms

Published:Wednesday | October 9, 2019 | 12:00 AM

Richard Pandohie’s impassioned call to arms in support of Jamaican manufacturing can’t but have inspired his audience at Saturday night’s exporters’ awards ceremony. It will, however, need strong analytic work, underpinned by sound policies, to translate the enthusiasm he excited to spinning gears in factories. For Mr Pandohie, the president of the Jamaica Manufacturers and Exporters’ Association (JMEA), observed that a stable macroeconomic environment, clearly, isn’t of itself sufficient to ensure competitiveness in industry.

Apart from his role at the helm of the JMEA, Mr Pandohie is CEO of the Seprod Group of Companies, perhaps Jamaica’s largest and most diversified manufacturing conglomerate, whose regular investments in new ventures demonstrate an appetite for risk. So we take seriously what he has to say about manufacturing, including his observation about the need to “galvanise the entire country around a single-minded focus to drive our exports”.

This newspaper was among those who anticipated that the fiscal discipline and broadly sound economic policies that Jamaica has pursued for the past seven years would have translated into a general increase in competitiveness and relatively robust growth, including in manufacturing. Yet, in spite of the balanced Budget, a 50-percentage-point tumble in the debt-to-gross domestic product (GDP ratio), low inflation, and falling unemployment, growth, as Mr Pandohie said, remains “anaemic”, at below two per cent.

Moreover, manufacturing continues to lag. Thirty years ago, the JMEA president noted, manufacturing contributed around a fifth of Jamaica’s GDP and accounted for 120,000 “high-quality, good-paying jobs”. Now, the sector’s portion of GDP is 7.7 per cent, and factory employment has tumbled by more than a third, to 79,000, or a bit over six per cent of the employed labour force.

Manufacturing’s problems accelerated in the 1990s as Jamaica’s debt spiralled amid stratospheric interest rates, exacerbated by the collapse of the financial sector and high energy costs. Factories shuttered. Some left Jamaica for more competitive environments. Imports rocketed, while exports, in all categories, slumped. In 2018, the island’s imports topped US$6 billion, while exports trailed at US$1.82 billion, for a deficit on visible trade of US$4.3 billion. Put another way, Jamaica exports less than 30 per cent of the value of its imports. It, however, has been able, in large part, to cover the gap because of the inflows from services, especially tourism, and remittances. Mr Pandohie, however, now wants to reverse the trends and has urged his constituents to again see themselves “as winners”.

“We must believe that with the right support system, we can compete in the global village,” he said, thereby substituting, with domestic production, a significant portion of imports, including the approximately US$1 billion spent on food.

role for government

We agree with Mr Pandohie, with the proviso that our support does not mean a wholesale return to subsidies, or a crude attempt at picking winners, which too often means a misallocation of resources and a stifling of competition. That, however, doesn’t mean that there is no role for Government in ensuring market competitiveness, or that it has a place in, without employing a heavy hand, identifying areas of strategic interest.

With regard to the latter, food security is one of the few that this newspaper could countenance. This would begin with the Government leaving the best lands available for agriculture, rather than planting them in concrete, as is the intention of Prime Minister Andrew Holness’ proposed city at Bernard Lodge, which, according to the National Environment and Planning Agency, possesses Jamaica’s “most fertile soils”.

More critically, perhaps, is the need for a major assault on a deficient education and training system, to produce workers capable of competing in today’s global knowledge-based economy, where factories demand the capacities in science, technology, engineering and mathematics and the ability to manipulate technologies, rather than merely pulling levers and counting widgets.

It may require, too, that the Economic Growth Council dust off, and update, Professor Don Harris’ National Industrial Policy of 1996, while the Government enhances it efforts at ensuring citizen safety and security. Competitiveness, whether in manufacturing, or generally, insists upon an integrated approach to lifting national productivity.