TTMA president Paul Quesnel, right, greets outgoing president
Anthony Aboud at the TTMAs AGM on Tuesday.
get the impression that many of our manufacturers are not
being as aggressive in reinvesting profits in their companies
as they have been in the past and as they should be.
This is an observation that has been arrived at not as a result
of a some study from the Institute of Business but from talking
to business leaders over the last year.
Instead of reinvesting profits in seeking to expand their
companies, many manufacturers are taking their profits and
ploughing it into local real estate developments or speculating
on risky shares in both the local and foreign markets.
Manufacturers are also taking profits from the production
of goods and putting it into the entertainment /restaurant
sectors or are also looking to convert their TT dollar profits
into US dollars.
There are likely to be several factors responsible for this
On a world scale, the fact that China is producing almost
everything in the world at prices substantially lower than
anywhere else in the world may be scaring off some manufacturers
from reinvesting in their businesses.
Some local manufacturers may be put off by the higher cost
of inputs and the increases in the minimum wage which may
pushing up their cost of production to a point that cuts into
Some may also be hedging their bets in terms of the political
and crime situation.
There are, of course, a few notable exceptions to the observation
TCL, the Claxton Bay-based cement company, is pressing ahead
with plans to spend a reported US$132 million ($831 million)
to expand and modernise its Carib Cement plant in Jamaica.
TCLs decision to proceed with this three-year investment
plan comes in the wake of the decision by the Jamaican government
to impose tariff protection on the importation of cement into
Ansa McAl is investing close to $500 million this year in
capital expenditure, following substantial capital expenditure
in the previous three years.
The commitment of the TCL and Ansa McAl leaders to reinvest
in their companies means that these companies will have a
substantial advantage over their local peers.
It is also one of the reasons why Subhas Ramkhelawan was wrong
when he advised his readers on Monday to sell Ansa McAl.
I put the question of manufacturers reinvesting their profits
to new TTMA president Paul Quesnel on Tuesday and his response
was that the reinvestment of profits will become less
and less attractive due to the continued weakening of our
According to Quesnels e-mail response, many factors
contribute to T&T's decreasing competitiveness such as:
Escalating cost of shipping, both inward and outward due to
inadequate physical infrastructure;
Delays in receipt of raw materials and other inputs
Inability to service customers locally and exportdecrease
in market share;
Unlevel playing field in so far as foreign competition will
have easier access to our market and not necessarily ours
to theirs. This due primarily to our weak regulatory bodies.
Crime and quality of life
Quesnel said the TTMA is striving to work closely with labour
and government for the improvement or even sustenance of our
need these specific areas addressed so that continued growth
and reinvestment of this sustainable employment sector can
again be attractive, he said, adding that the problems
in manufacturing may cause some industries to exit,
but we hope for transit and not full exit as this will not
be in the best interest of T&T.
Enforcing the take-over code
On Monday, the T&T Securities and Exchange Commission
(SEC) published a small notice in one newspaper advising the
public that take-over bylaws had been published in the Gazette
on March 17.
Subject to correction, it is my understanding that once the
bylaws have been gazetted, it becomes law.
So the question is will the SEC enforce the take-over code
on Arthur Lok Jack and the Ahamad family who bought nine million
Guardian Holdings shares worth nearly $400 million in a transaction
that began with a put-through on April 1?
According to Guardian Holdings chief executive Peter Ganteaume,
the transaction, which was equivalent to five per cent of
the financial services group, took the joint holdings of the
Lok Jack and Ahamad families to 32 per cent.
By deduction, and assuming that Mr Ganteaume was correct in
his arithmetic, this means that the combined holdings of Lok
Jack/Ahamad before the transaction was 27 per cent.
As far as I am aware, the threshold for the activation of
the take-over code is 29.9 per centwhich means that
the SEC might feel that it can direct Lok Jack/Ahamad to make
an offer to all of the Guardian Holdings shareholders.
Such action from the SEC would have the effect of making Guardian
Holdings, which is now a publicly-listed company, a private
company under the control of the Lok Jack and Ahamad families.
I am told that there is a point of view that because the publication
of the take-over bylaws was only made public on April 18,
that it might be difficult for the SEC to enforce a take-over
of Guardian Holdings by Lok Jack/Ahamadeven though the
bylaws were deemed to have been published on March 17.
I am also told that this issue is an interesting
legal point which may benefit from clarification from some
of our finer legal minds. If there are any such minds out
there who would like to clarify this issue, please shoot me
a quick e-mail at [email protected]