Taking Note of the Business Environment and Learning from Mistakes - Strategic Facility Planning for SMEs

On 3 August 2011, The Jamaica Gleaner published an article titled: "Completed Montego Bay Convention Centre Raises Expectations for Tourism Sector".  It described the Montego Bay Convention Centre [MBCC] as:

"...the first of its kind in the English-speaking Caribbean and second in the region behind Puerto Rico, (as it) has joined a host of regions, including Asia, Europe and United States, with its convention offering."

MBCC has an approximate floor area of 21,500 m², and is capable of hosting 7,000 persons.  It was executed by the Urban Development Corporation [UDC], a government-owned entity.    The UDC website carries a page titled: "Montego Bay Convention Centre Retains Coveted Leading Meeting and Conference Title" which boasts of the facility being awarded the ‘Caribbean's Leading Meeting and Conference Centre' at the World Travel Awards 2012, for the second year in a row.

On the face of things, the facility would seem to have been a success.  Yet, another article published in the Gleaner on 12 February 2013 reads: "Fire Them! - Shaw Calls for Marketing Firm to be Relieved of Mobay Convention Centre".  In it, the opposition Spokesman of Finance called for the termination of the services of the US property and convention centre managers marketing the facility since July 2011.  This was in response to the facility's high maintenance costs and that 99% of events hosted were local.  Are the managers really to be blamed, or are they mere scapegoats?

Even though the Gleaner described MBCC as being "first of its kind in the English-speaking Caribbean", it really was not even first in Jamaica.  Another page on the UDC website reads: "Jamaica Conference Centre Wins World Travel Awards".  This referred to the same award MBCC had won, the year before it was completed.  In fact, the Jamaica Conference Centre [JCC] had previously copped the award in 2001, 2002 and 2007.  This facility was not only executed, but also managed by UDC.  It was completed in 1983 as the headquarters of the United Nations [UN] International Seabed Authority and venue for the organization's meetings.  It is roughly the same size as MBCC, when including the secretarial building.

In 1982, the UN convention on the Law of the Sea was actually signed in Montego Bay and the town expected that the Conference Centre would have been built there.  Instead it was built in the capital city Kingston.  Thus began the lobby effort by the Montego Bay Chamber of Commerce and Industry, and the Montego Bay chapter of the Jamaica Hotel and Tourism Association [JHTA].  Ground was broken for MBCC on 14 February 2009, in the midst of an international recession.  In fact, there was an apparent lack of maintenance of JCC as early as 1993 and the facility was closed for maintenance from April to December 2008.  Even though JCC was the venue for meetings of the International Seabed Authority, it had consistently experienced low demand and high maintenance costs, even without an international recession.  Why then was the risk of low demand and high maintenance costs not flagged?

In October 2007, construction of MBCC was actually postponed until April 2008, but this was because UDC questioned whether the facility was large enough for the Caribbean Marketplace event then scheduled for 2009.  The JHTA welcomed the delay, as long as the venture was not cancelled, and stated that the organization was not consulted by the ruling government about it.  According to the "International Association Meeting Markets 2002 - 2011" published by the International Congress and Convention Association, Hotels became the leading convention venues as early as 2005.  In 2013, the former tourism minister, who was in office when construction started on MBCC, admitted that globally convention centres are typically not profitable, but catalysts for growth in other sectors.  Yet, MBCC was projected to earn US$ 10 million annually when complete.  Not only were lessons not learnt from previous experience, but there was also a failure to recognize the trend away from convention centres and the economic environment at the time.

For 26 years, Montego Bay had lived in anticipation of having its own convention centre.  So much so that, no one questioned whether it was appropriate to build it or not, when the opportunity presented itself.  Certainly, it should have been obvious before construction that the economic environment was not conducive for this development, and it was highly likely there would be sufficient demand to maintain the facility.  But, a major event had been scheduled for the facility, one that promised to showcase Montego Bay in all its glory; and, a lot of work would have already been invested in the design and gaining the necessary regulatory approvals.  Who cared about the facility's future?  "If you build it, they will come" is not a sustainable facility planning strategy.  The maintenance expenses would have been known.  So, the risk of demand being insufficient to cover the maintenance expenses could have been quantified.  In hindsight, it would have been better if the construction had been delayed and previous investment treated as sunken funds.  When any venture is a first mover, mistakes will be made. If you fail to learn from them, your competition will.

Highway 2000 to South-East Coast

Dear Editor:

Your article “PM Outlines Plans for South Coast Roadway” published on Thursday, June 16, 2016 states that current administration will not construct the south coast highway as previously planned for south-eastern Jamaica.

It would seem the Government has forgotten that the Logistics Hub facility stretches across four parishes: Clarendon, St. Catherine, Kingston and St. Thomas. In fact, a bunkering and commodity transhipment port is proposed to be built in St. Thomas, and highway 2000 links it with the remaining parts of the hub.

This alone is justification for the project. Or, has this component of the Logistics Hub also been scrapped? I hope not, especially considering that the proposed location of the port at Cow Bay (Old Bowden Wharf), near Yallas, has a naturally deep draught capable of berthing the largest of vessels.

If these plans are still active though, it should be realised that companies are spending billions of dollars to construct facilities in St. Catherine because they are expecting, in the words of Nestle Jamaica’s Country manager Jurg Blaser, “... a logistic footprint closer to the port and the major consumption centre of the corporate area ...”.

If the government is being pressured by tourism interests, it may be wise to consider that the future success of the Logistic Hub Initiative lies in the balance. What we need are policy decisions made in the national rather than sectoral interest. The widened Panama Canal is to be officially inaugurated on Sunday June 26, 2017 and we are ill-prepared for it.

Paul Hay is a Jamaican national, founder of PAUL HAY Capital Projects: a consultancy, based in Kingston Jamaica, with a vision of providing strategic planning and implementation services to organizations for non-residential facilities in the Caribbean.

Boost to Jamaica's Energy Efficiency Possible

Dear Editor, 

In the September 23, 2005 edition of your Financial Gleaner, Raymond Forrest's article 'We need to boost our Energy Efficiency' concludes with the statement: "... we have a major problem that requires conservation measures and change in current behaviour".  I am in full agreement.  We need to appreciate that oil is a non-renewable resource and needs to be treated accordingly.

But, changes are not only limited to transportation.  In the article 'Jamaica on the wrong side of the Energy Spectrum: Directions for the Future, part I', published in the January 27, 2005 edition of the Gleaner, Dr. Cezley Sampson noted the 23.5 percent of Jamaica's oil imports is used for transportation, but 25 percent is used in the generation of electricity, as Jamaica's energy demand is almost totally supplied by imported fuel.

Change in the design and operation of our buildings can therefore make significant contributions toward boosting energy efficiency.  Over 10 years go, a study undertaken in Thialand revealed that annual consumption of energy in stores and hotels could be reduced by up to 56 and 51 percent respectively.

The implementation of the conservation measures would even pay for themselves within one or two years.  A comparable local study revealed that annual consumption in our typical offices could be reduced by 30 - 36 percent, if these buildings complied with the Energy Efficiency Building Code (EEBC-94), in which case, the payback period was between 1.2 and 2.6 years.

Towards this end, the Jamaican Institute of Engineers is to be commended for including energy-efficiency as one aspect of their effort to revise the National Building Code.  Policymakers, design professionals, real estate developers, building owners and operators therefore need to take stock, and effect changes for the good of the nation and to improve returns on their investments.

Paul Hay is a Jamaican national, founder of PAUL HAY Capital Projects: a consultancy, based in Kingston Jamaica, with a vision of providing strategic planning and implementation services to organizations for non-residential facilities in the Caribbean.

Let NWC Champion Generation of Hydroelectric Power

Please allow me this opportunity to propose to the government that it directs the National Water Commission [NWC] to champion the development of hydro-electric power generation in Jamaica.  

With exception of our bauxite companies, NWC is likely the largest consumer of electricity in the nation, but definitely so within the government.  Initially, this could take the form of self-generation to provide power to operate its pumping network, but need not be limited to this in the future.

In a recent study involving Dominica, St. Vincent and the Grenadines, it was concluded that potential hydro-power capacity was more than double that being used, though only marginal hydro-power plants were planned for the near future.  I would suspect the same for Jamaica, but who else is better able to evaluate our potential and advise us than NWC?

Most of us think hydro-electric plants need to be large facilities, like the 306 MW plant planned for Cost Rica or the 165 MW plant to be constructed on Guyana’s Amalia Falls.  But, low-head hydro-electric generators are available with capacities from 6kW to 5MW.  

Riva Riddim ecotourism-park, proposed for the White River Valley, just outside Ocho Rios, is designed to use three 6kW hydro power generators to provide a significant portion of its energy needs. With implementation, this proposal will reduce NWC’s dependence on JPS for power.  

Its pumping facilities could be located outside the grid, in remote areas, where it could better serve its customers and reduce the risk of being connecting to a grid exposed to storm-force winds.  

Their operating costs would fall with use of more efficient plants that do not require importation of expensive oil.  And, the country would benefit from more efficient service, improvement in our balance of payment, and reduced liability under the Petro-Caribe Agreement.

Paul Hay is a Jamaican national, founder of PAUL HAY Capital Projects: a consultancy, based in Kingston Jamaica, with a vision of providing strategic planning and implementation services to organizations for non-residential facilities in the Caribbean.

Who Should Take Responsibility for Cornwall Regional Hospital?

In Lloyd B. Smith’s column titled “To Resign or not Resign” was published in the Jamaica Observer of Friday, 13 May 2018. Though I agree with the principle of a leader taking responsibility for his actions, I believe calls for the health minister, Dr. Christopher Tufton, to resign “in the wake of the Cornwall Regional Hospital debacle” are unfounded.

For instance, calls by the opposition’s spokesman on health, Dr. Dayton Campbell, focus solely on Dr. Tufton’s decision not to close Cornwall Regional Hospital (CRH). But, has he or any other asked how CRH – one of the most modern of public health facilities in the island – come to be in a state that would require it to be closed?

Clearly maintenance, or rather the lack thereof, is at fault. But, it may also be argued that the lack of user fees has contributed to the ineffective maintenance of this building. This would again cast blame squarely at Dr. Tufton, if it could be proved that this did not exist before. I contend that Dr. Tufton’s predecessors are equally to blame.

In the late 1980’s – approximately 30 years ago – I was part of a team involving the Ministry of Construction (Works) and Pan-American Health Organization (PAHO) which inspected hospitals islandwide, including CRH, to evaluate the state of the nation’s primary healthcare facilities. The finding was that poor maintenance was the main problem.

This finding was presented to the Ministry of Health at the time, which was prior to their commencement of the Hospital Restoration Programme (HRP). The study singled out poorly trained maintenance personnel and inadequate resources being allocated to maintenance. The records should indicate what was done with this information.

The present circumstance would seem to indicate that whatever may have been done was still inadequate. So rather than a “Culture of Ethics” being a problem, what needs to be addressed is a culture of poor maintenance. The older hospitals were designed to be naturally ventilated, not CRH. So, maintenance of this facility is more critical.

A number of floors were renovated at CRH under the HRP. Of all Dr. Tufton’s predecessors at time, who can wash their hands of any responsibility regarding maintenance of this facility, and maintenance of the island’s healthcare facilities in general? The opportunity now exists for Dr. Tufton to make sure this situation is not repeated at any other facility.

Roadworks and the Disabled

In Brian Bonith’s article “Barbican Blues” published in the Jamaica Observer on 1 June 2018, it was reported that the Executive Director of the Jamaica Council for Persons with Disabilities – Dr. Christine Hendericks – had written to the National Works Agency (NWA) on the previous month “ to express her organization’s concern that “the needs of people with disabilities were not taken into consideration” with regard to the Barbican Road Improvement Project.

In response, NWA’s Communication and Customer Services Manager - Steven Shaw – had refuted their concerns stating that “the disabled community’s concerns were taken into consideration before construction” and invited the Jamaica Council for Persons with Disabilities to meet with them on the matter. I have been unable to find any reports whether such a meeting took place and, if it did, whether a resolution was reached.

Nevertheless, these concerns remain relevant as roadworks, such as Constant Springs Road, seem to replicate the same design. Dr. Hendericks was specifically concerned that (i) the median was a challenge to the visually-impaired, and (ii) lips of the sidewalks were too high. Constant Springs roadworks have not progressed to construction of the latter yet, but her observation regarding the medians is still relevant.

Mr. Shaw had responded that crossing Barbican Road would be facilitated at signalized points. However, such points are few on Constant Springs compared to Barbican Road, not to mention the greater number of schools, apartment blocks, public and retail establishments that are located along Constant Springs Road. So, it would seem the matter is even more critical there.

It was Dr. Hendericks’ expressed desire that corrective measures be taken rather than have offending works continue “and then have to knock it down”. It would also be expected that NWA would see this as an opportunity to implement the 2014 Disabilities Act and display the government’s willingness and readiness to be compliant and, in so doing, provide the infrastructure needed for buildings along the roadway to become compliant.

Singapore: Lesson to Jamaica

Singapore is an island city-state in Southeast Asia. It was founded by Britain as a trading colony in 1819. Lee Kuan Yew became its first Prime Minister in 1959. Four years later, Singapore joined the Malaysian Federation, but was asked to leave in 1965.

After separation from the Malaysian Federation, it became a sovereign republic. Without a regional alliance, facing hostile neighbours and the imminent departure of the British armed forces, its very existence was in jeopardy.

Lee Kuan Yew concluded that: “...we had to make extraordinary effort to ...do things better and cheaper than our neighbours, because they wanted to bypass us and render obsolete our role as entrepôt and middleman for the trade of the region.”

In the Competitiveness of Small Nations: What Matters? , authors Densil Williams and Beverly Morgan note that Caribbean islands have economic structures, history, and institutions similar to Singapore in the 1960’s. Singapore subsequently surpassed their development.

With respect to Jamaica, Singapore is presently one of the three global logistics hubs: the others being Dubai and Rotterdam. Jamaica plans to become the fourth global logistics hub: serving Latin America and the Caribbean, as well as the U.S. Gulf and east coasts.

In the Logistics and Supply Chain Management page of the current website of Singapore’s Economic Development Board (EDB), Changi Airport is featured prominently for global connectivity. The story behind the development of this airport could prove instructive to Jamaica’s Logistics effort.

Changi International Airport was formerly the Royal Air Force Changi Airbase. On departure of British forces, abandoned airfields would typically be used for light industry or agriculture. But, Lee Kuan Yew thought neither use suited Singapore. Instead, he negotiated the early access of EDB to this airbase.

Nevertheless, the airport was almost never built. An airport at Paya Lebar was in use prior to the oil crisis in 1973, but it was considered inadequate for the future growth of Singapore’s aviation sector without significant expansion.

A British aviation consultant had recommended that a second runway should be built at the Paya Lebar Airport, and completed by 1978. This they concluded “would entail the lowest land acquisition costs and require the least resettlement”. But, the Serangoon River would have to be diverted.

After the oil crisis, a second study was commissioned: this time by U.S. consultants, who concurred with the British consultants that a second runway should be built at the Paya Lebar Airport. They also warned that construction of two runways at Changi Airbase could not be completed by 1978.

Lee Kuan Yew was unconvinced.  He constituted a committee to reconsider the Changi relocation. This committee also supported the recommendation of the aviation consultants that the airport should not be relocated to Changi, an additional runway should be built at the Paya Lebar Airport.

Finally, Lee Kuan Yew asked the Chairman of the Port of Singapore to chair a second committee to re-examine the Changi relocation. Their conclusion was that an additional runway at Paya Lebar could not be completed before 1984, because allowance was needed for the proper compaction of the river bed.

The first runway of the Changi International Airport was completed and opened in 1981. The second runway was completed in1984. When completed, it was Asia’s largest airport. Three decades later, it is still one of Asia’s largest cargo airports.

In the words of Lee Kuan Yew, Changi Airport “helped Singapore become the hub airport of the region”. It involved resettlement and demolition of hundreds of buildings, exhuming graves, clearing swamps and reclaiming land from the sea.

Currently, one of its three terminals is being expanded. The construction of this 134,000 square meter building dubbed the “Jewel Airport Expansion”, which will also be connected to the two other terminals, is scheduled for completion in 2018.

In Jamaica, circumstances are similar to what existed prior to the Changi relocation. Kingston’s Norman Manley International Airport (NMIA), originally called the Palidoes Airport, was built in 1948. But, its expansion is confined by the narrow Palisadoes peninsular on which it is located.

Though located close to the Port of Kingston, the Government of Jamaica has designated the former Vernamfield Airbase as the next cargo airport. Vernamfield is a 55 km flight distance from NMIA. The property is located at Portland Bight in Southern Clarendon.

During World War II, Britain leased Vernamfield and the Goat Islands to the United States. An airbase was constructed at Vernamfield and a Naval base at Goat Islands by 1941. Vernam Field Air Force Base, as it was called, had three runways.

The base was reduced to caretaker status towards the end of 1944, and the U.S. closed both bases in 1949, when military engagement shifted from Europe to the Pacific. This involved the removal or demolition of all of its structures.

The area has been derelict from that time. But in March 2014, the Honourable Anthony Hilton – Minister of Industry and Investment – speaking at the Northern Caribbean University, is reported as saying it is to become an “international air and sea cargo hub”.

The 1,174 hectare Vernamfield property is proposed to be a major economic driver in ”the country’s logistics revolution”. The Port of Kingston and Caymanas Special Economic Zone (CSEZ) are also proposed to be linked to Vernamfield by railway and Highway 2000.

So, major development is proposed for the area. However, the larger Portland Bight Area, which is spread over an area of 187,600 hectares, was designated a protected area by the Jamaican Government in 1999 to protect both its terrestrial and marine area.

In the Summaryof the Environmental Management Scoping of the Portland Bight Area, Inclusiveof the Goat Islands, it is noted that the area “is not exclusively an environmental conservatory” but is recognised as a “multi-use National Park”.

The Portland Bight Protected Area (PBPA) is actually home to a chemical lime quarry, an Ethanol Plant, the island’s main power station, power barges, and Rocky Point Port. The area has three designated fish sanctuaries, of which the Goat Islands is not included.

Unlike Singapore, Jamaica does not have hostile neighbours. But, Jamaica’s neighbours are equally intent on bypassing it as a logistics hub. Chief of which is Panama itself. It has been constructing its logistics infrastructure and operating it in advance of completing the widening of its Canal.

That strategic advantage is to be challenged by the construction of the proposed Nicaragua Canal, which would give Jamaica the advantage of having ports with direct access to both canals.  Jamaica’s central geographical location also makes it equally accessible by air.

Lee Kuan Yew himself epitomised development-centred leadership: first in recognising Changi’s potential, giving EDB early access to the airfield, choosing the chairman of the Port of Singapore Authority (PSA) to manage the project, and ensuring the continued improvement of the facility.

In contrast, closure of the Vernamfield and Goat Islands bases predate Changi by decades, but no one managed their transition into civilian use. Instead, the facilities were demolished and allowed to go to ruins. In fact, NMIA was being built when Vernamfield was being shut down.

Selecting PSA’s chairman to manage the relocation to Changi allowed for a multi-modal solution to the problem. This may also be beneficial to Jamaica if it follows suit, or at least manage the Vernamfield/Goat Islands project as a single initiative.

Some may say Lee Kuan Yew simply disregarded all studies until he found one that suited him. But, Changi stands as proof of his visionary stewardship and legacy for Singapore’s continued pre-eminence as a global logistics hub.

Previous studies by the aviation consultants cited two problems with relocation to Changi: its higher cost and longer construction period. The latter was proven false and the former would have been more expensive in the long run, as Paya Lebar Airport could not have accommodated subsequent expansions.

With the exception of a report recommending relocation the Goat Islands Port, Jamaica has had no objection to the building of the Vernamfield Airport, although both facilities are proposed to be built in the PBPA and will be interconnected.

The report, titled “Economic Comparison of Alternatives to Building a Port on Goat Islands:Does Jamaica need to Sacrifice a World Class Conservation Site in Order to Build a World Class Port?”, concluded that Macarry Bay located outside PBPA would be a superior location to Goat Islands.

This report was undertaken by the Conservation Strategy Fund, Conservation Agreement Fund, and Niras Fraenkel Limited. It states that construction of the port at Macarry Bay was estimated to cost US$200-million less than at Goat Islands.

Macarry Bay was considered superior to Goat Islands “except with respect to its access to the road network and Kingston...”. This cost advantage is therefore questionable. The port is not meant to be a stand-alone facility but part of a multi-modal logistics hub.

Also, construction costs typically dwarf in comparison to operating expenses anyway. So, locating the port outside the PBPA simply to transport freight back and forth from the Vernamfield Airport, located within the PBPA, makes little sense and is unlikely to be cost-effective.

Like Singapore’s initial studies, this report by conservation special interest groups and a port and marine-engineering consultancy does not seem to consider the wider picture of building a world class logistics hub, not just a “World Class Port”.

A consortium of Chinese investors was once interested in developing the Caymanas Special Economic Zone (CSEZ), but required an airport. The previous government-administration was only able to propose relocation of the Tinson Pen Airfield, then adjacent to the Port of Kingston, to CSEZ.

The Vernamfield/Goat Islands initiative offers a multi-modal solution to kick-start the Jamaica Logistics Hub. Understandably, a life-cycle analysis needs to be conducted to examine all environmental and operational concerns and guide the present administration’s deliberation on this project.

For Singapore, developing Changi presented a greater environmental impact compared to Paya Lebar. Hundreds of buildings had to be demolished and occupants resettled, graves had to be exhumed, swamps cleared, and land reclaimed. But in the final analysis, Changi proved the better choice.

The truth be told, no other suitable alternative has been forthcoming outside PBPA. No one is even knocking at the door to develop a world-class eco-tourism facility in the area. So, the question is: does Jamaica really want to be the fourth global logistics hub, or not?


Related article/s:
Could the ‘Singapore Experience’ have started in Trinidad?
Singapore: Example to the Caribbean in Doing Business


Paul Hay is a Jamaican national, founder of PAUL HAY Capital Projects: a consultancy, based in Kingston Jamaica, with a vision of providing strategic planning and implementation services to organizations for non-residential facilities in the Caribbean.