Dated: 10 August/September 2002
With so much of Jamaica’s potential for increased employment and exports pinned on high occupancy of the free zones, their consistent
low performance in recent times, now begs the question: are hopes
for their revival fading?
In the 1980s and 1990s, the three Government-established free
zones in Jamaica, the Kingston Free Zone (KFZ), Garmex Free Zone
( GARMEX, also in Kingston) and the Montego Bay Free Zone (MBFZ)
all flourished with extremely high levels of occupancy.
However, since the vast majority of tenants at the free zones
were garment factory owners largely from South Korea, Hong Kong,
and the United States, they all fled when it was no longer profitable
to remain in Jamaica. They blamed high overhead costs and the North
American Free Trade Association (NAFT) agreement for their departure.
All three facilities suffered the same fate.
The GARMEX facility, which had 540,000 sq. ft. of space was forced
to dezone, with just 92,000 sq. ft. or 17 per cent set aside for
free zone activities. That space remained fully occupied with 11
companies up until the late 1990s. Today, there are only three tenants.
The remaining 448,000 sq. ft. at GARMEX were made available to
other activities in order to generate badly needed revenue for the
self financing Government free zone.
The Kingston Free Zone also suffered. It enjoyed full occupancy
up until 1995, when it employed 10,000 persons in numerous garment
factories. Today, the normally high employment generating apparel
sector continued its slump, although the impact of the JAMPRO-administered,
Government’s Special Assistance Programme to check the downward
slide was felt. The number of factory closures declined from 34
between 1995 and 1996 to 5 in 1998.
But the closures persisted. In 1998 - 2002, KFZ and MBFZ each
lost eight tenancs, most of them were apparel companies, with two
being manufacturing companies. As a result, exports and employment
at the free zones declined sharply.
By the end of last year, exports at KFZ and MBFZ dropped by 25.4
per cent, compared with 2000. Coming from US$116.15 million in 2000,
total exports at the free zones fell by US$29.52 million to US$86.63
million in 2001 (Table i).
Whilst both free zones suffered export losses last year, they
were heavier in Montego Bay, which, fortunately for the overall
impact, exported less than Kingston. Montego Bay’s share fell
to 27.3 per cent from 35.3 per cent in 2000. By comparison, Kingston
increased its share to 72.7 per cent last year, from 64.7 per cent
in 2000.
The fall in exports at KFZ last year, was 16.15 per cent, coming
from US$75.13 million in 2000 to US$62.99 million in 2001. In Montego
Bay however, the drop in exports was nearly three times as large
at 42.4 per cent, coming from US$41.02 million in 2000 to US$23.64
million in 2001.
With data on the IT and telecommunications not available garments
is the largest contributor to total exports at the two free zones
(Garmex excluded). There are nini garment factories, six of which
are in Kingston. These exported US$ 51.42 million or 81.6 per cent
of total exports last year, compared with US$57.11 million or 76
per cent the year before.
The remaining three garment factories located in Montego Bay,
exported US$14.45 million last year compared with US$28.42 million
the year before. Last year, whilst garment exports by KFZ dropped,
its share of total (KFZ + MBFZ) exports increased. But this was
not the case for exports in Montego Bay, as garment exports there
fell both in terms of dollar value and share contribution.
Other exporting sectors for which figures are available comprise
one electronic company in Montego Bay, which exported just US$5.64
last year from US$12.43 in 2000; one ethanol processing plant in
Kingston, which exported US$10.02 million in 2000; four warehousing
companies in Kingston, which exported US$10.71 million last year
from US$4.78 million in 2000; and an “other” category,
which in Kingston, showed exports of US$0.86 million in 2001, from
US$3.22 million in 2000 and in Montego Bay, posted US$3.55 million
last year, from US$0.17 million the year before.
Currently, a total of 32 companies occupy the two free zones,
15 in Kingston and 17 in Montego Bay. IT has emerged as the dominant
sector, with 14 companies - 2 in Kingston and 12 in Montego Bay.
IT is followed by the 9 garment companies - 6 in Kingston and
3 in Montego Bay. Warehousing was next with 4 companies in Kingston
followed by 5 other companies representing Electronics and Telecommunications
located in Montego Bay, and ethanol processing, animal feed blending
and container repairs in Kingston.
Coming from the hey days when 10,000 workers gained their livelihood
at the free zones, today, employment has fallen to 6,170 persons,
of which 1,519 jobs or 24.6 per cent are in Kingston and 4,651 jobs
or 75.4 per cent are in Montego Bay.
The largest employer of labour by the two free zones combined
is IT, which employs a total of 3,256 workers or 52.8 per cent -
326 jobs in Kingston and 2,930 jobs in Montego Bay. It is followed
closely by garments with 2,510 workers or 40.7 per cent - 888 in
Kingston and 1,622 in Montego Bay.
Another category, “other”, came next with 113 workers,
of which 111 are in Kingston, whilst the number employed by ethanol
processing, animal feed blending, warehousing, telecommunications
and container repairs came last with a range of 13 - 98 persons.
Jamaica was once successful in stemming the spate of factory closures
and loss of employment and exports. The channelling of J$69 million
to the apparel sector in 1998 helped with technical assistance and
training, strengthening of security systems and obtaining audit
grants.
And despite the unfavourable market conditions and the increased
attractiveness of Mexico as a competitor for foreign investment,
Jamaica proved then, that its productivity and reputation for quality
could be a formidable competitive advantage.
During that year, two Jamaican subsidiaries of American companies,
Ocean View Glovers and Jamwear won quality awards. Ocean View, a
subsidiary of Wells Lamont won two of the five awards presented
to the group’s plants globally. They won awards for quality
and best cost savings.
Jamwear, a subsidiary of Sara Lee Hosiery, received quality award
for Sara Lee’s Offshore Manufacturing Division.
Both companies have done Jamaica proud and given hopes for the
apparel sector, as falsely these hopes may have turned out to be.
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