Daily Archives: June 1, 2009

A Strategy for expanding the manufacturing sector in Barbados

Manufacturing Success Is No Accident!

by Corey Weekes

barbados-flag-2As the right honourable Prime Minister indicated in his latest budget speech, we are experiencing very difficult times, and now more than ever, it is important to embark on strategies that generate sustained future growth in exports and foreign exchange. The strategy outlined in this article is penned with the idea of propelling the country on such a journey. It relates to the question of how we can bolster our manufacturing sector for greater foreign export earnings

Despite the policies of several governments, the challenge of increasing manufacturing’s contribution to Gross Domestic Product (GDP) remains. A review of central bank reports leads one to the conclusion that successful manufacturing in Barbados is a mirage, with no future in today’s apparent world of services.

But, before we detrimentally forecast this sector’s demise, let’s examine a model of success that continues in this area, and serves as a platform for sectoral development.

I have written before that the success of the medical device manufacturer, Lenstec Barbados Inc, is no accident, and has precedence for where team Barbados’s focus should be. The initial attractiveness of Barbados as a destination for manufacturing foreign direct investment (FDI) is very much present, in the form of low tax rates and duty-free material access etc, as found in the international business company act. These policies are the first important pillar for a successful manufacturing strategy, and remain laudable and attractive, but by themselves, are not enough to lure industrial FDI en masse.

What has attracted and maintained Lenstec Barbados Inc, when other large manufacturing companies e.g. Intel have left, is the fact that the majority of critical elements needed for successful manufacturing, and more importantly supply chain management, remain present today.

Make no mistake, no manufacturing enterprise will succeed and grow in the long term, unless the elements of successful manufacturing supply chain management exist. To fully appreciate this we need to look at the business of manufacturing and its supply chain. Raw material inputs have to be affordably procured and moved to a production location, where skilled, affordable labor and facilities convert inputs to products. Importantly, these products have to be distributed quickly and efficiently across the globe. Yes globally, a market of 280,000 can hardly sustain the production volumes needed to properly amortize capital purchases found in significant manufacturing. Unless we are processing food and beverages which benefit from the effects of repeat local consumption.

After all, many of us enjoy a good Banks beer more than once per year.

This highlights the second pillar of our manufacturing policy which is to focus on attracting an industry with global appeal and not only serve a local market base. Small business and small business incentives should always be encouraged, but to generate significant FDI inflows and foreign exchange, the focus has to be on a global industry from the outset. Lenstec Barbados Inc has a global focus as it ships its medical devices world-wide from its Barbados location.

This leads us to the third pillar of the manufacturing policy, which is the provision of an efficient logistics environment to the customer base. The best designed and made product is useless if it can’t reach the target market. Less-than-container load (LCL), Full-container-load (FCL), airfreight and parcel lanes and capacity are crucial. We can have trade agreements with Venezuela and Colombia for example, and future agreements with Nigeria, but without efficient freight lanes to these countries, no products will move there. Continue reading

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