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.

Diversification of Jamaica’s Energy Mix Must Not Be Delayed

In an article in Jamaica’s Sunday Gleaner dated 21 April 2013 titled: “More Lessons from the Past – Missed EnergyOpportunities”, William Saunders, Energy Consultant, outlined Jamaica’s failure to act upon initiates to diversify its energy mix from 1978, when Jamaica formulated its first energy plan. 

In a much earlier article in Jamaica’s Sunday Gleaner dated 30 March 2008 titled: “Jamaica’s Energy Challenge – part III”, Zia Mian, a retired senior World Bank official and international energy consultant, stated that: “Jamaica’s economy is relatively energy intensive”. 

Jamaica has one of the highest rates of energy consumption in Latin America and the Caribbean region.  This is mainly due to heavy usage by the bauxite/alumina sector.  The oil consumption per sector from 2004-2011 is shown in table 1.

Table 1: Jamaica's Oil Consumption per Sector (‘000BBLS)
SECTOR:	2004	2005	2006	2007	2008	2009	2010	2011
Transport	6,076	6,248	6,373	6,080	5,835	6,403	5,648	6,012
Electricity	6,226	6,555	6,390	6,654	6,275	6,662	6,578	6,529
Bauxite/Alumina	9,444	9,799	9,552	8,808	9,392	3,494	2,885	3,753
Shipping/Aviation	2,161	3,203	5,224	5,904	4,404	3,882	3,768	3,514
Other	1,629	1,521	1,625	1,281	1,212	1,157	1,139	1,195
TOTAL =	25,536	27,326	29,164	28,727	27,118	21,598	20,019	21,003

Source: Data derived from Ministry of Science, Technology, Energy and Mining (click here)

in an article titled: “Energy Cost and our Economic Future – Future of Alumina Sector Hinges on Energy Cost”, in the Mona School of Business Nov/Dec 2011 issue, Carlton Davis, former Cabinet Secretary and chairman of the Jamaica Bauxite Institute, stated, that:

 “Given the importance of the cost of energy in the production of alumina and the consensus that oil will be more expensive over the long-term than natural gas or coal it is incumbent that oil is replaced by one of these two fuels... (and) Government has a lead role in affecting this transformation.”

The cost to import fuel into Jamaica from 2008-2011 is shown in table 2.  Fuel is by far the largest expenditure on imported goods.  With the exception of 2009 and 2010, the cost of importing fuels was greater than half of the returns from exports.

Table 2: Trade in Goods  & Services [J$’000]
Year:	2008	2009	2010	2011
Exports:	418,360,800	367,316,800	361,232,600	383,865,600
Goods	180,630,391	116,355,584	116,449,101	139,533,852
Services	237,730,409	250,961,216	244,783,499	244,331,748
Imports:	714,509,600	558,285,200	571,607,900	668,087,200
Fuels	226,802,098	124,996,495	147,081,190	209,816,388
Other Goods	361,461,471	161,141,521	174,444,804	312,036,055
Services	126,246,031	272,147,184	250,081,906	146,234,757

Source: Data derived from the Statistical Institute of Jamaica

Jamaica has a serious trade deficit, and oil is a major contributor.  Devaluation normally boosts exports, but not in Jamaica. An assessment of Jamaica’s exchange rate policy from 1962 onward appears in an academic paper by Dr. Michael Witter’s titled: “Exchange Rate Policy in Jamaica: A Critical Assessment”. 

He concluded that devaluation had the effect of inflating the value of imports significantly over that of exports. Cheap oil imports which prevailed in the 1950s through to the OPEC action in 1973 factored in Jamaica’s economic growth.  But, oil prices are projected to reach US$150 – US$200 in the near future. 

Prior to the global recession in 2008, consumption in the shipping/aviation sector has also risen. As the global economy recovers and Jamaica completes its logistical hub, in preparation for the widening of the Panama Canal, this sector could easily overtake the electricity sector in its use of energy.

Promising signs on the horizon need to produce tangible results. Construction of the 381 MW, LNG-fired power plant is one of them. The Private Sector Organization of Jamaica (PSOJ) needs to consider Jamaica’s history of missed opportunity and reconsider their involvement in this project.



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.

Related article/s:
Solar Energy can improve the Caribbean's Economic Future with ConservationNation Burned while Government played the Fool  

Choose your Architect/Engineer Team to suit your Project – Strategic Facility Planning for SMEs

In "To Build, or not to Build", I dealt with the feasibility of undertaking a construction project. I assume you have completed that activity, and decided to proceed with the project. Now, you need an architect/engineer team. A building project actually involves four phases: commencing with planning, through to design, construction, and terminating at the operation and maintenance phase.

On large jobs, separate teams may undertake the planning and design phases, especially where planning requires highly specialised expertise.However, a single architect/engineer team generally undertakes both stages in smaller jobs. Even though you may not be billed for planning, do not assume the stage does not exist: design cannot commence without first having determined the project requirements.

In "Consider Image Carefully", I recommended that you be intimately involved in this planning process. This is especially true if the project is to be particularly complex or innovative.As the owner, you should initiate the process because there is a better likelihood that you will determine the criteria to judge the selection of an architect/engineer team appropriate for your job.It is not uncommon for an architect/engineer team to be changed even during the construction stage, so having a firm grasp of what is required from this team will facilitate an appropriate selection, though this is not guaranteed.

At the very least, you should determine the nature of the project - whether innovative, complex, or routine - and your priorities with regard to cost, time frame and quality of the work. The reasons will be apparent in shortly. The selection of an architect/engineer team generally takes two forms: either direct negotiation with a specific team or a process involving the pre-selection of a number of teams, creating a short-list, and then selecting the most appropriate team. The latter is typically used for large projects, so we assume the former is used: though the selection process to be outlined will be instructive to both.

The Coxe Group Management Consultants (Seattle) surveyed 100 design firms of varying sizes, markets and organizational formats. They classified these firms by their "technology" - what they do best - and, their "values" - the goals of the firm.

With regard to the former, the Coxe Group identified three categories of firm technologies: the "strong-idea", "strong-service", and "strong-delivery" firms. A "strong-idea" firm delivers expertise or innovation to unique projects. It adapts to any project and typically depends on a few outstanding individuals. A "strong-service" firm delivers experience and reliability particularly on complex projects. They provide comprehensive service to clients that are actively involved in the process. A "strong-delivery" firm provides efficient service on similar or routine projects to clients seeking a product, rather than a service. It repeats successful solutions for technical cost and schedule compliance.

In this case, the nature of the project will indicate the appropriate team. You need to determine if the project is to be unique, complex, or routine. Having made this decision, the short-list of technology-oriented firms will be self evident. Knowledge of the projects undertaken, or physical inspection of these, will be instructive.

Within these technology sets, the Coxe Group determined that the firms have values that are either "practice-centred" or "business-centred". The "practice-centred" firms emphasize quality: serving their clientele and satisfactorily representing their discipline. "Business-centred" firms are profit oriented. Therefore, cost and time are emphasized.

If you prioritize your needs based on quality, cost and time, you can eliminate firms with inappropriate values. "Practice-centred" firms can also be judged on knowledge of their previous projects, or physical inspection of these. "Business-centred" firms can be judged on their performance on the above. Discussion with previous project owners will likely be needed for due diligence. In the case of new firms, this evaluation will have to be done on previous projects by the principals and team members, prior to founding/joining the firm being considered.

You may intuitively realize that "strong-ideas" firms will gravitate towards "practice-centred" values, while "strong-delivery" firms gravitate to "business-centred" values. But, especially small firms may lack focus and not be easily classified; while, highly focused firms will most likely disqualify themselves from discussing your project if it is not compatible. Nevertheless, this procedure will serve to guide your selection of an appropriate architect/engineer team for your project.

Other than routine projects, the projects evaluated need not be the same but should be similar in nature contemplated: that is, uniqueness and complexity. The teams' respective performances on the projects evaluated with regard to quality, price and time should then be compatible with the manner you expect your project to be handled. It should now be apparent that when you choose particularly an architect based solely on work you may have seen, without thought to the performance on that job, you will likely end up with a "practice-centred", "strong-ideas" firm, which may not be suitable for your project. So, you need to consider both, and choose an architect/engineer team to suit your project.


Related Articles:

Taking Note of the Business Environment and Learning from Mistakes

To Build, or not to Build? – Strategic Facility Planning for SMEs

As I pondered upon my next blog post, I realized that I had not dealt with a fundamental question: whether to build, or not to build.  The first two posts dealt with the issue of image: the first warns about improper motives to build, and the second on creating an image that suits your business.  But, do you really need to build at all?  That is the question.

As has become customary, two cases are presented; one good, and one bad.  Both preceed the turn of the century: a very trying time in Jamaica.  In his book Jamaica Meltdown: Indigeneous Financial Sector Crash 1996, Wilbern Persaud stated that “Jamaica’s indigeneous financial sector crash was, to date, … estimated by the World Bank review of forty-two banking crises to be third”.  Our first blog post, “Consider Image Carefully – Strategic Facility Planning for Small and Medium-Sized Businesses”, described one failed financial entity as an example of poor strategic facility planning.  In this post, we examine one of its subsidiaries, a banking group, as  a good example in deciding not to build.

But we shall start with a case from Persaud’s book, another banking group, as the poor example which decided to build.  As Persaud states: “… at the height of the euphoric credit and real estate boom” this group “embarked on construction of a set of luxury apartments“ in an upscale community billed as “Kingston’s soon-to-be most prestigious address”.  The venture generated much interest, but the boom and accompanying inflation led to ever escalating costs.  To salvage the project, it was redesigned to become a hotel: thus taking advantage of the government’s tax incentive to the tourism sector, at the time.  As a business-type hotel, the venture was doomed to failure: it was too far from Kingston’s business district, too far from other facilities associated with the tourist trade, and in a local plagued with traffic congestion.  So after a relatively short period, the hotel did fail and was subsequently converted to apartments, under different owners.

By comparison, our other banking group owned a multistory building that was originally designed and constructed as apartments but later converted to government offices: though little refurbishing works seem to have been done.  This group also considered converting their building to a hotel.  But, it had all the advantages the former lacked.  It was in the heart of Kingston’s business district, between three successful hotels.  It was anticipated that at the very least the hotel could take referrals from the adjacent hotels.  So, a feasibility study was commissioned.

The consultants of the parent company were commissioned to undertake this feasibility study.  It was fortuitous that the same consultants had also been responsible for the construction of the building they were to examine.  After careful study of the cost for the conversion, against demolition and rebuilding the building, the banking group wisely decided to sell it.  It was sold to another established hotel also located in the area, though some distance from the site.  They were the ones to refurbish the building.  They sold their original premises and relocated to this new location and continue to operate from the location today.

The building was not in the core competence of the banking group.  It was in the core competence of its new owners.  It is not certain whether the new owners did any studies of their own, but the bank would have pitched it to them as being appropriate for a hotel.  Whenever a building project is contemplated, this should always be considered as any other investment: the options need to be considered, evaluated, and compared to determine the likely outcomes.  If this banking group can be criticized on any aspect of the sale, it would be that they failed to consider what could have happened when the hotel relocated.  The original hotel was located opposite one of the bank’s major branches.  When they relocated, a major competitor bought the land, demolished the hotel, and constructed a new facility on the site.  This competitor was previously engaged in putting up a new branch in the resort city of Montego Bay, but when the opportunity presented itself, they suspended the design of that building and seemed to have concentrated their effort on this new venture.  Who could have envisioned such a scenario?  

Image that matters - Strategic Facility Planning for SMEs

While studying at the University of California, Berkeley, we as architecture undergrads would jokingly remark that "there's no place ‘worster' than Wurster".  We were referring to the building in which our school was located: which was called Wurster Hall.  This should not be inferred that the building was poorly designed.  On the contrary, I recall the lecturers expounding on its design and construction attributes.  We just did not like the image.  We did not like being trained in a building we considered the ugliest on campus.  It was bad for our image.  But, one lecturer explained that the building was specifically designed not to influence our creativity.

Recently, I came across an article in The Globe and Mail entitled "For Google, the Office is Key to Worker Success".  In the article, Canadian-born Google executive, David Radcliffe, was interviewed regarding his role of locating urban spaces that would become "hip headquarters and design them to spark creativity, play and collaboration".  He described this as "Googlïness" - creating environments that support culture, transparency and collaboration: facilities which allow staff to excel.  In other words, Google wants their building to stimulate creativity.

So, which of the two seemingly contrasting philosophies is correct?  It should be realized that the administration of the School of Environmental Design also wanted their staff and students to excel: they just did not want the building influencing their designs.  They did not want any aspect of the building's design reproduced or be held as the standard to which others would be judged.  This is understandable.  So, the appropriate image for any organization really depends on the objectives it seeks to achieve.

Strategic facility planning involves four steps: understanding the values and goals of an organization, analyzing its long-term objectives, planning for its long-term needs, and acting on the plans.  The mission, vision, firm culture, and possibly balanced scorecard, of an organization first need to be understood.  Organizations in creative industries, for example, prefer flexible organization structures, such as organic or matrix organization structures.  So, an institutional look and feel, as well as heavily enclosed office spaces would be inappropriate.  But, the needs of all stakeholders should be understood.  The need of architecture students to have a building they are proud of and one which impacts positively on their self-image is also important.  Our choice of motor vehicles is not only for their functionality but also intangibles, as prestige and ‘sex-appeal'.  Why should we expect any difference in our choice of buildings?

Analysis can utilize SWOT analysis, scenario planning, brainstorming, etc.  An organization's mission or vision may span over the five year limit of a strategic facility plan.  And, it is unwise to create unrealistic expectations in our stakeholders.  So, long-term objectives need to be SMART.  At this point, it will be apparent whether the organization's image needs to be addressed at all.  In the service industry, for example, an organization's tangible assets are used to assess the quality of its service.  Image could be critical, especially if their building is inferior to their competitors'. 

The selection of an appropriate architect and/or interior designer will be critical in establishing a design team to execute the plans.   Vision likely translates to a marketing plan which will guide the selection of an image.  Marketing plans will, no doubt, be innovative, imaginative and resourceful.  They will detail the use of an organization's effort and resources towards a desired end.  Do not entrust your image to a team you have not communicated your vision.  It has been my experience in the Caribbean that only banks, embassies, hotels and hospitals provide this guidance.  I assume the design team creates the image for the others, and I doubt they are carefully selected to deliver on the required objectives either.  The image presented by an organization will be present for decades, it should not be left to the discretion of anyone who may not understand their client, nor follow any rigor in analyzing their objectives and plan for their long-term needs.    Where image matters, it should not be left to chance.

Chinese Initiative a Game Changer for Jamaica’s Logistics Hub

To date, I have written three articles about different aspects of Jamaica’s Logistics Hub. This makes my fourth. Frequent readers of the Caribbean Journal may only be aware of three, counting this one. The first, “The Logistics Hub Project and Jamaica’s Development” explained the opportunity the logistics hub presents for Jamaica’s development. The second “What History means for the Jamaica Logistics Hub” illustrated Jamaica’s established strength in such maritime endeavours. By now, some may have already realised that these articles were not arbitrary, but part of what is known as a SWOT analysis: SWOT being an acronym for Strength, Weakness, Opportunity and Threat.

The third article “Preparing for Competition – Strategic Facility Planning for Small and Medium-Sized Businesses” is posted on my blog, and uses the logistics hub as an example in assessing threats: the threat in this instance being the Panama Logistics Hub. So, the astute will now realise I have to date not touched on the hub’s weakness, at least not directly, nor had I intended of do so at this time. But, recent events have prompted me to conclude this series, even though details of the initiative have yet to be made public. Recent pronunciations particularly by public officials have shown a glaring ignorance of the precarious nature of this project, and acting on such ignorance could jeopardize the initiative.

Following my first article, Sheldon Rose – Supply-Chain and International Logistics Professional – pointed out a number of these weaknesses to me. I had mentioned that the logistics hub initiative would be constructed across four of Jamaica’s south-coast parishes. Sheldon pointed out that legally these nodes could not be separate from each other: legislative changes are required to facilitate the transportation of in-bond goods between the respective nodes of the hub, especially without the direct supervision of the customs department. Equipment for transhipment ports have to be custom-built and take years to fabricate. Provision needs to be made for handling hazardous materials, including oil-spills. Also, the hub would significantly impact the bio-diversity of its surroundings, so hydrological and environmental studies were needed to analyze the environmental impact.

The Logistics Hub involves the parishes of Kingston, St. Thomas, Clarendon and St. Catherine.  Starting next year, the Kingston Harbour is to be dredged, and additional berths installed west of the existing piers at the Port of Kingston to accommodate the super-sized vessels that will start coming through the expanded Panama Canal in 2015. Next, a bunkering and commodity transhipment port will be built in St. Thomas; and a dry-dock port, along with cargo and passenger airport built in Clarendon.  However, an industrial park – the Caymanas Economic Zone (CEZ) - is also proposed to be built in St. Catherine in the initial stage: only 200 acres being allocated for the park in the first instance but intended to be expanded to 1,000 acres after subsequent developments.

The expansion of the Port of Kingston later incorporated Fort Augusta, in St. Catherine. Minister Anthony Hylton had initially pitched the merger of the port expansion and CEZ to China Harbour Engineering Company (CHEC).  But, Prime Minister Portia Simpson later disclosed in her contribution to the 2013 budget debate that lands at Fort Augusta were insufficient for CHEC plans. Then, Ronald Mason’s article in the Sunday Gleaner of 18 August 2013 titled “Environment vs. Job, Economic Development” made mention of a US $1.5 billion investment by the Chinese into a development of which Liu Qitao – president of the CHEC parent company, China Communication Construction Company (CCCC) - referred to as the Portland Bight Industrial Park.

The location in question, the Great and Little Goat Islands, are located off the coast of St. Catherine. They are the second and third largest islands in the Jamaican archipelago: being 600 and 300 acres respectively in area. Peter Espeut explains in his Gleaner article “Selling our Birthright”, dated 23 August 2013, that the Goat Islands are connected to each other and to the mainland by mangrove wetlands. The mainland itself is “fringed with hundreds of acres of mangroves” and forms the Galleon Harbour with the Goat Islands.  This area has been declared a fish and game sanctuary by the government: being “one of the most fecund fish nurseries” in Jamaica, and a “habitat to thousands of birds”.

Construction is proposed to commence in 2014. The 100 m high hill on the Great Goat Island is to be “pushed into the sea to cover the wetlands” and create a huge peninsula on which the logistics centre will be built. A further 2,000 acres of land on the mainland is also to be developed, and the seabed dredged to accommodate the super-sized vessels: thus removing coral reefs and shoals in the process. This Chinese initiative consolidates the industrial park and port facilities, so in-bond goods initially will not have to be transported outside the area. As a matter of fact, this new port is now closer to the prospective cargo airport than was previously envisioned; but, having a toll highway to presently connect the various nodes of the Logistics Hub is not satisfactory. Rather than focus only on the ecological concerns though, it should also be appreciated that this Chinese initiative offers the logistics hub benefits it never had, including increased size, and should not be taken glibly, especially in the context of Panama’s offerings.

Panama also has ambitions to be the fourth global logistical hub, and it is far advanced in this regard. The Panama Pacifico Project, which has a duration of forty years, has allocated 3,500 acres of land for its industrial park. Panama’s Colon Free Trade Zone (CFTZ) has been operational since 1947 and now comprises three major ports and an airport, all linked by highway and railway: not to mention the 154 companies that already reside in this logistics park. Panama has two different organizations managing its ports and has made provision for a third: the operator of Singapore’s Logistics Hub. The Goat Islands alone is no match for this. The original hub initiative alone is no match for this. They complement each other. If not the Goat Islands, what alternate green field site does Jamaica have to offer the Chinese?

But, let me not leave my readers despondent: thinking the initiative is a lost cause. It is good that Jamaica realise that Panama’s Logistics Hub is a threat to its becoming the fourth global logistics hub, but it should also be realised that the Nicaraguan Canal is also a threat to the Panama Canal. Jamaica’s strength is in its central geographical location and it is the only hub that can consolidate freight for both canals, as well as tranship freight from either of these canals.  The Chinese initiative cannot be easily dispensed with. It is critical for the success of Jamaica’s logistics aspirations. Jamaica is off to a late start, it cannot afford to drop the baton now. It must decide whether it wants to enter the arena of global trade or be ever satisfied with its meagre tourism, bauxite, and remittance earnings.