Mar 13, 2009 News
The Guyana Manufacturers’ and Services Association (GMSA) yesterday said it is extremely concerned about the effects of the global financial crisis on its member companies, pointing to the loss of demand for local products and the possibility of job cuts.
“We would hope that those areas where jobs may have to be cut will receive the fullest attention by the Government, the banking community and, indeed, the workers’ representatives,” the Association noted, adding “we need at this time to row the boat with several paddles, but only with one helmsman”.
The GMSA stated that “the drying-up of export orders from Europe and North America, and its consequent effects on our businesses, may require some tolerance on the part of the financiers in remembering that money is virtually useless if not put to work.”
The Association noted that two very senior private sector representatives have recently given explanations on television, and there were also reassurances coming from the insurance sector on the soundness of the local financial sector.
However, the GMSA said that, notwithstanding the overall strength of the country’s financial sector, there are some companies among its membership which are seriously affected by the crisis and would experience considerable difficulty in such areas as medical coverage for their employees’ and workers’ pension rights, unless strong Government guarantees are forthcoming.
“We can indeed become the architect of our own demise if we do not at this time ‘hold tight’, as they say in Guyanese parlance.
“While Guyana has not been affected to the level of severity, as is the case in some other countries, we nevertheless have to be sensitive to the realities on the ground, and to take all necessary precautionary measures in the interest of national economic viability,” the GMSA stated.
The Association is urging its member companies to try to minimise on operating expenses, especially in such areas as downtime and wastage, since the ultimate goal is to get products and services on a continuous basis to the consumer at the cheapest possible price and highest quality, whilst maintaining reasonable margins of profitability.
According to the GMSA, there is little that can be done with regards to the loss of traditional overseas markets “except to seek market diversification, which is difficult and time consuming”.
The Association said there can be little doubt that exporters would experience considerable shortfalls in earnings during the period of this international financial crisis, with the attendant domino effect of downsizing, layoffs and production contractions.
The GMSA wants the banking system to be more appreciative of the plight of these companies, and to demonstrate greater tolerance and understanding in their credit facilitation provided.
It is very possible that many companies would have to seek better refinancing arrangements in the interest of corporate survival, the Association stated.
However, the GMSA said it is equally aware of the fact that opportunities are also being created in this crisis for its members who show “initiative, innovation, business acumen and available liquidity to take a number of steps.
“These include: diversifying into new markets; consolidating – saving on common services and avoiding duplication; re-tooling and taking advantage of the drop in prices for capital items; repatriating overseas capital for investment in key priority sectors, such as aquaculture and mining; and minimising systemic constraints to business investments where these exist.”
In addition, the GMSA is urging its members to invite the Diaspora to participate in local investment opportunities; source capital from non-traditional places, such as the Middle East, Latin America and North Africa; and seek industrial partnerships with companies in the emerging industrial countries, such as China, India and Brazil.
The GMSA pointed out that contemporary history has shown that corporate investments made during an economic downturn could yield as much as a 30 percent greater return when compared with under-normal conditions in the long term.
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