The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian contractor yesterday warned that the Government’s decision to eliminate 20 percent duty on imported roof trusses will “put us out of business” in a segment that has kept his overall operation afloat.

Vernon Wells, principal of Grand Bahama-based Reef Construction, told Tribune Business that its Roof Truss Manufacturing Company subsidiary had kept the business going amid “the dire straits” that Freeport’s construction industry has suffered in recent years due to a lack of major investment projects.

However, he was stunned when he received Customs’ list of products set to receive import tariff slashes in the 2022-2023 Budget, and realised roof trusses were one of the targeted products. Mr Wells told this newspaper that eliminating the existing 20 percent duty, and cutting it to zero, will remove the price advantage and competitiveness he enjoys over foreign imports, placing his business and the jobs of its Bahamian staff in jeopardy.

“I looked at it last night and this morning, and couldn’t believe it,” he said of the Customs flyer, which has also been seen by Tribune Business. “The tariffs for imported roof trusses were 45 percent, and they dropped it to 20 percent in 2020. Now the tariffs have it free.”

Mr Wells said the existing duty rate is vital to enabling his business, and that of other local roof truss manufacturers, to offset the “cost of shipping” involved in importing parts to The Bahamas that can be manufactured into a finished product. Such costs, he added, typically run to $4,000-$4,500 for a 40-foot container.

“We were able to run a decent business and we have a lot of customers to deal with,” he told this newspaper. “We’ve done quite a lot in Eleuthera in the last year-and-a-half. We feel that if we do something like this, they’d [the Government] at least make us aware of this and talk to us about the way forward.

“I just think it’s kind of an oversight. It will obviously put us out of business. This is a concern. I’m not going after the Government for a bad decision. At this point I’m concerned what this will do to local Bahamians. This, of course, will affect our company of nearly 30 years to possible closure. We have at least 12-15 trained employees along with costly equipment that is essential for this type of operation.

I had asked Government over the years and, more recently, in 2020 to look into how to protect our Industry, of which there are three in Freeport and a few in Nassau. We currently supply Grand Bahama, Nassau, Abaco and Exuma with custom-designed roof trusses and will not be able to compete against imported trusses. The 20 percent is a break-even rate for us because of the shipping cost for import [parts],” Mr Wells added.

“I had also thought the Government would have at least asked us for some input as to how this may affect the local businesses before implementing this portion of the new rates. There is also the use of local shipping for the transport of trusses to the other islands for our customers, and keeping most of the funds otherwise derived from the cost of imported trusses in the Bahamian economy.

“The funds are otherwise shipped out of the country when we’re using at least 50 percent of the cost of trusses to pay for labour and electricity to run the business.” Mr Wells said that if his company and two other Grand Bahama-based roof truss manufacturers, as well as a similar number in Nassau, were forced to close because of the tariff elimination it would not just be their operations impacted but multiple companies including inter-island shipping providers.

Noting that it cost between $5,000-$6,000 to ship two containers of finished trusses to Nassau or Abaco, he added: “Everybody is affected in a small way that makes up a piece of the pie. They dropped the tariff from 45 percent to 20 percent after Dorian. I can understand that as there were some areas you couldn’t get ships into during normal times.

“It [roof truss manufacturing] was just something. In our business, we have the construction company, but we’ve not been able to do any work for the last year as there’s no business available. The trusses were the thing that was keeping us rolling at the moment. If that goes, I guess it’s time to move out of the construction business as well. All the construction work is in Nassau and Abaco. Freeport is in dire straits as far as that’s concerned.

“We lost everything in Dorian and couldn’t get insurance because we became grandfathered into the flood zone at the back of the airport,” Mr Wells continued. “I can’t get flood coverage, I can only get fire and theft. We had to replace all the equipment we had. We had to replace the electric saw, and that cost $200,000.

“We had that brought in just after Dorian, and replaced all the motors on the conveyors. We put $450,000 back into that. It’s quite an operation. We haven’t been able to tidy up the place since Dorian. We got back into operation as quickly as we could. We’ve been working with new equipment and have not been able to slow down. We’ve been busy ever since. We’ve been doing the best we can to service everyone.”

The roof truss import tariff cut again highlights the dilemma involved in protecting Bahamian producers, and ensuring the survival of a local manufacturing base against cheaper-priced imports that enjoy greater economies of scale and cheaper production costs, while balancing this with consumer choice and ensuring they get the best possible price.