MANUFACTURING− A LEGACY, A FUTURE FOR BARBADOS
I've always considered business networking to be an art form, and one that the entrepreneurs among us especially, should master in order to build relationships, which are an invaluable commodity. Our ability to develop and nurture them is what can potentially make or break us in our effort to grow and develop personally and in business. Occasions such as this can go a long way in helping you to tap into a wider business group where you can share business ideas and opportunities. Who knows, you may this evening end up meeting prospective leads, clients, future employees, a mentor or even a business partner.
I'd like to begin my presentation this evening with a look into past. In 1956, the Barbados Development Board was established and challenged to initiate a process for the transformation of this island's economy from one that was highly dependent on a mono-crop agriculture and in which large sections of the workforce were employed seasonally; to one that was more diversified and less constrained in its capacity to earn foreign exchange.
In response to its pursuit of Industrialization by Invitation, Barbados welcomed some of the biggest international companies, among them global giants like Germany's Berger Paints, the US-owned, Tansitor Electronics, Intel, TRW, Corcom, RR Donnelly and Sons, Cooper Canada, Playtex International, Maple Leaf Mills, Supreme Aluminum and the Kelvin Corporation. At the same time, a steady stream of Barbadian owned companies emerged on the industrial scene, Banks Brewery, Husbands Wrought Iron Works, Acme Engineering, Harris Paints, to name a few; a further testimony to the favourable economic, infrastructural and legislative climate that prevailed. From food and beverages, clothing, shoes, brooms, electronics, furniture and cigarettes− you name it, it was probably made right here in Barbados.
Throughout this period of growth and development, the manufacturing sector as you would imagine, emerged as a vital cog in the country's economic engine. Indeed, there is independent research available to demonstrate that the sector generally performed better than the rest of the economy throughout the seventies and eighties.
In this remarkable period, the sector recorded growth in output, in employment, in the export of manufactured goods vis-a-vis other exports, in productivity, and in its contribution to the country's overall current account balance. It is accurate to say that the sector's performance surpassed that of the economy on the whole. That was the period where we as Barbadians exhibited true Pride in Industry.
In the early 1990s the country's economy was hit hard when real GDP per capita declined by 5.1% per year between 1989 and 1992 partly due to the 1990 oil price spike. Barbados joined the World Trade Organization on 1 January 1995. Following the membership in the World Trade Organization (WTO), the Government of Barbados aggressively tried to make the Barbados economy fully WTO compliant. This led to collapse of much of the manufacturing industry of Barbados during the late 1990s with many companies moving to lower cost Asian economies.
Enough of the past
This glimpse into our history emphasizes a fundamental truth we must keep foremost in our minds if we are indeed to build a robust and sustainable industry. It is that our survival in this super-competitive world is not determined by the ebb and flow of foreign companies and investors who come and go, but rather by the ingenuity, passion and pride of local businesses.
Attention must now be given to the prospects, challenges and opportunities before us as we explore a new Barbados model, an approach that leverages what is uniquely ours against the needs, challenges and opportunities that are out there for the sector in the decades ahead. Of immediate concern, is the need for us to broaden our vision of the contribution which manufacturing can make to this country. Regrettably it seems that we tend only to remember Pride in Industry in November. For 30 days only we stop and salute what is great about Barbados. There is therefore no consistent effort to utilise the things that are fundamentally ours and that really set us apart. And ironically, that is the very definition of our success. Having something to boast about that is unique and distinctly different.
It is my belief that we in Barbados can do a lot better than we are doing. How can we as a nation be so highly educated and yet so far down the ladder in terms of economic development? We must become better at using what we have to get where we want to be. We've done it before and we can it again.
Let's take a look at where we are today
The good news is that Barbados is tops amongst the most competitive nations in Latin America and the Caribbean, coming in at #2 in the region, according to the World Economic Forum. On the world stage however, Barbados in the last year fell two notches on the Forum's Global Competitiveness Index to 44th place out of 144 countries assessed. The Global Competitive Index comprises 12 pillars of competitiveness: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation, which together provide a comprehensive picture of a country's competitiveness landscape. The just released 2012/2013 Report has attributed Barbados' decline to the continued deterioration of the macroeconomic framework and notes that the business community continues to face important challenges in engaging in new investment projects. But notwithstanding the aforementioned, Barbados was given high marks for its well-functioning institutions (24th) and good infrastructure (22nd). Moreover, our very high quality educational system (11th), high use of ICT (32nd), and fairly sophisticated business community (36th) were mentioned as drivers of innovation.
It should be noted that apart from the Forum's acclamations, Barbados also has a tradition of excellence.
What the island lacks are: an entrepreneurial culture, economies of scale and according to the Forum, R&D investment (72nd) and technological innovation capacity (91st).
It is generally felt that the right model for industrial development is strategic collaboration between the private sector and the government, with the aim of uncovering where the most significant obstacles to progression lie, and what type of interventions will most likely remove them. At the same time, it is well recognized that the competitiveness of manufacturing enterprises is determined by their ability to combine technology, managerial entrepreneurship, employee skills, business operations and technology to service markets and interact with customers and suppliers.
It may be noted that most of the strategic factors noted above relate primarily to competitiveness in the domestic market. However, these factors alone will not compensate for continued uncompetitive aspects of the supporting environment and infrastructure as discussed above. In particular, the development of export manufacturing will require that Barbados increase its competitiveness on a sustained basis to levels that are comparable to its regional and global competitors by addressing the main constraints to competitiveness at the national, sector and enterprise levels.
Another report by the World Economic Forum in collaboration with Deloitte Touche Tohmatsu Limited (DTTL) that discusses The Future of Manufacturing: Opportunities to Drive Economic Growth, explains that challenges in talent, innovation, infrastructure, and energy consumption are what countries and companies in the manufacturing industry must prepare to face in the coming years.
It has been stated that those companies and countries that can attract, develop and retain the highest skilled talent, those that innovate to stay ahead of competition, and those that can find clean energy strategies and effective energy policies are the ones that will come out on top.
As mentioned earlier, the key to success in these areas will be collaboration between government and the private sector. We will be counting on you as we seek out the right combination of trade, tax, labour, energy, education, science, technology, and industrial policy levers to generate the best possible future for Barbadians.
But what is that future?
We must recognize that the future we yearn for is ours to construct- brick by brick, opportunity upon opportunity, idea upon idea. But what is the blueprint of that future? What is it that collectively we are in pursuit of? And what do we have to build this exciting future?
We boast of being resourceful and being craftsmen of our own fate, so what is holding back this generation of businesses from turning this era of our history into one of our greatest? Archimedes is credited with the phrase "Give me a lever long enough and a fulcrum on which to place it, and I shall move the world." What is the lever that we need to move this 166 sq miles of talent and tenacity to the #1 place in the world for business?
I would like to suggest that the lever is passion, a deep burning passion and love for our country that will drive us to collaborate, share ideas, sit around tables find solutions, to do all the things we say we will do. Twenty-six years ago the Rt Honourable Errol Walton Barrow asked a poignant question in his address to Barbadians – "What mirror image do you have of yourself?" This evening I want to suggest that the image we have of ourselves, of our country, of industry can be one of an extraordinarily talented people who ferret out opportunities rather than wait passively for them to fall conveniently onto our path. We must intercept opportunities that come and go at lightning speed.
Moving towards this future requires a new strategic approach driven by entrepreneurial and innovation-led initiatives. It requires that we utilise scientific approaches, take advantage of emerging technologies, emphasize creative thinking and reinforce competitiveness.
A new vision must be clearly defined and aggressively pursued. We at the BIDC envision a manufacturing sector that is bold, innovative, dynamic, creative and sustainable; that is export-focused; that transcends traditional industries and that promotes national economic growth.
- A manufacturing sector that achieves and maintains international competitiveness at the sector and enterprise levels;
- A manufacturing sector with unique product offerings that appeal to both the domestic and international markets, that takes advantage of the strength of the Barbados brand and that leverages its tradition of excellence;
- A manufacturing sector that is increasingly linked to other productive sectors and that makes a significant contribution to economic growth and employment;
- A manufacturing sector that is environmentally sustainable, preserving and conserving our natural resources, boasting resilience to hazards and minimizing negative environmental impacts;
- A manufacturing sector that employs increased levels of relevant research and technology;
- A manufacturing sector which produces goods that meet and exceed the expectations of customers;
- A manufacturing sector that boasts outstanding human resources and leadership;
- A manufacturing sector that is supported by a facilitatory policy and legislative framework and an efficient business environment.
This new, highly competitive manufacturing sector requires change agents and creative thinkers as part of a highly motivated workforce. It requires appropriate skills; the application of appropriate capital and technology; materials and process cost-efficiency and high levels of company sophistication and business performance. This suggests that for the future, a new model is necessary. In addition a new kind of management is required to ensure success of this new operating model.
Exploiting these possibilities will require imagination and continuous innovation—something that traditional organizations are not good at. Traditional management will not get the job done. Traditional organizations will have to learn how to be part of the emerging Creative Economy. Firms like Apple, Amazon and Intuit have shown us that any firm can learn how. It's not rocket science. It's called radical management. To make something, we may have to break something.
Radical management organizes work in client-driven cycles; with value-added solutions delivered to clients, in an environment of radical transparency; continuous self-improvement and interactive communications. In companies where these principles and practices are effectively implemented, the results have included two to four-time gains in productivity, continuous innovation, deep job satisfaction and client delight.
Radical management brings passion and ability together. This to me, is reminiscent of Keith Ferrazzi's concept of the blue flame. The blue is the hottest part of a flame and a powerful force in getting you where you want to go. Ferrazzi describes this as "that intersection of desire and talent, or passion and ability". As Ferrazzi discovered early in life, what distinguishes highly successful people from everyone else is the way they use the power of relationships—so that everyone wins. This applies as much to a sector as it does to an individual.
Through dialogue and shared initiatives with strategic partners like you at the BMA, the BEF, SBA, UWI, and others we can ignite that blue flame across Barbados, across sectors, in new businesses, existing businesses and perhaps most significantly in those who come behind us- our students, future entrepreneurs and business leaders.
In my assessment, we are not constrained by just high costs and market conditions. We are confined to modest achievements because we do not want the future we dream of bad enough. My question to you therefore, as we edge toward another national milestone, is this: "Are we willing to give this effort our very all, are we willing to give up differences, work beyond political and territorial boundaries, join hands to achieve this vision for Barbados and industry?"
We at the BIDC will endeavour to ignite that flame and propel new engines of growth. We have seen the need for the application of science and technology across all sectors as well as the need for increased investment in research and development. It has become increasingly evident that diversification, new sector and new product development are essential if Barbados is indeed to take advantage of new and emerging areas of opportunity.
Our successes of the past fifty years must give us the confidence and the assurance that we can successfully grapple with the challenges of the future as complex as they may be, to ignite flame. So as we celebrate 46 years of Independence and give thanks for the past, let us resolve to collectively take on the future - passionately, persistently and boldly.
Let's make it in Barbados...again.