BASSETERRE, St. Kitts – ECONOMIC pressures and abrupt changes in external markets have brought numerous challenges to the nation’s manufacturing sector, but the next six months are hopeful ones, say local stakeholders.
Though the sector got its fair squeeze from the global economic and financial crisis, it maintained a 92 point rating on the financial performance index and was among the top four industries in the region to get above 90. Entertainment, education and finance were least affected during the months March to August 2009.
Additionally, the outlook for 2010 is “optimistic” for the sector, as it has the highest financial outlook index scores. These statistics are based on a 12-month outlook for the manufacturing sector beginning September 2009 and were presented in the Barbados and OECS Corporate Performance and Outlook Report published by the Department of Management Studies at UWI, Cave Hill.
On the ground, the outlook is just as optimistic as reflected in the UWI report.
Speaking to SKNVibes, Plant Manager at Harowe Servo Controls Ltd. Carol Evelyn explained that in his company’s main building, where resolvers for the aerospace and commercial business are manufactured, business fell by 20% in 2009. In the other building, where capacitors for the US are produced, business fell by 30% last year.
Evelyn noted, however, that he anticipates a rebound before the end of the first quarter 2010.
“We had to cut down to four-day weeks, but we are back up to five-day weeks and we expect that this business [in the main building] will grow by at least 10%. This will be in new customers from the Czech Republic and Germany. We expect orders from the US to remain the same.
“[In the other building], business fell by 30% last year and that is going to come back within the first quarter and we will grow it by 10%. This is mainly because that company was doing subcontract work in Haiti, but they are still having difficulty accessing their business there [after the magnitude 7.0 earthquake]. So they will be transferring the work to St. Kitts,” Evelyn reported.
Evelyn said he is “very excited” about the next six months, noting that the company expects further growth as it strives to maintain the high quality of work that has kept it buoyant in the most uncertain economic circumstances.
At Kajola Kristada Ltd., the situation is also looking up. The company witnessed the highest sales ever in 2009 but kicked off the new year at a much slower rate. This slowness, according to Plant Manager Jose Rosa, is attributed to a change in the US market that significantly affected the company.
“When the US changed from analogue to digital [television] signal last June, our products were affected. The cable traps and filter that we manufacture are designed for analogue applications, so with that changeover they are of no more use in that market and we lost some business,” Rosa informed.
The manager said besides the changeover in the US, his company has not seen “any real big impact” in its products. Negotiations with new US and Central American companies have begun to roll out some hope for Kajola in the upcoming three to six months.
“The first three months will be slow, but we expect that by March it will pick up to reach at least 10% less than last year,” Rosa said. “We run a 4-day weekly schedule in some parts of the plant but it depends on how the next few months look that would determine how we adjust. But as of now, we do not see any further adjustments.”
The introduction of new products and the establishment of a new production line are expected to keep business flowing smoothly. No growth is expected this year, but if the global economy continues toward recovery, Rosa said his company should be “very hopeful”.
The optimism locally did not end there, as General Manager at Carib Brewery (St. Kitts-Nevis Ltd.) Mark Wilkin told this media house that his company “has held its own last year”.
He informed that even though sales in Nevis saw a reduction due to the closure of the Four Seasons and the overall economic circumstances, export sales remained consistent. This is expected to keep the business in good shape for the next six months.
“Export has picked up significantly in the last three years and it allows our overall cost to come down. What has happened in January and February [2010] is that our export sales have been above budget and we expect them to continue for the first six months,” he said.
The company’s 2009 annual report will be done by May and while Wilkin was careful not to disclose the details therein, he stated that “2009...showed some slight improvement over the prior year, as we were able to launch cost-saving initiatives and increase efficiencies on the bottling line”.
The nation is entering the final leg of negotiations for a partial scope agreement with Brazil to allow duty-free trade with that country. Manufacturers, including Evelyn and Rosa say that this move is “crucial and fundamental” for growth in this sector.
