The Tribune

• Urges renewed protection for firms that ‘warrant it’

• Can ‘easily expand’ by 25% for 3 years with tariffs

• Argues best way to cut imports, $3.5bn trade deficit

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government was yesterday urged to review tariff protection for “true Bahamian manufacturers” after one revealed their removal cost 40 percent of its business, saying: “They’ve kicked us out of the ball park.”

Andrew Rogers, Bahamas Aluminum Manufacturing’s principal, told Tribune Business that safeguarding local producers and manufacturers who “warrant it” was among the easiest - and quickest - ways through which this nation can seek to slash a trade deficit that hit a six-year high of nearly $3.5bn in 2023.

Suggesting that the drive to increase goods exports will take longer to bear fruit, given the difficulties Bahamian companies will encounter in trying to compete with the likes of US and Canadian rivals who enjoy greater economies of scale and lower operating costs, he argued that the Government’s strategy should focus on slashing imports by boosting the ability of local manufacturers to supply the domestic market.

Mr Rogers told this newspaper that, by providing an enabling framework for Bahamian firms to increasingly substitute for imports with their own products, the Government would keep more of the country’s foreign exchange earnings circulating within the domestic economy as well as facilitating increased job creation and diversification.

Disclosing that elimination of import duties on PVC/vinyl windows has produced a surge of cheap imports, hitting his aluminum window business hard, he added that the reintroduction of such protection would enable his firm “to easily expand by 25 percent year-over-year for the next two to three years”.

Mr Rogers, calling for the Government to better co-ordinate its tariff policies with Bahamian manufacturers and the national trade strategy said of the decision taken four years ago to slash tariffs on imported PBC/vinyl windows from 25 percent to zero: “They’ve kicked us out of the ball park. It really has taken a massive amount of our business. I would say 40 percent.

“They have not really handled the duties properly at all. They made no effort at all.” Describing the whole issue of tariff protection, and support for Bahamian manufacturers, as “a nightmare”, Mr Rogers recalled how he founded Bahamas Aluminum Manufacturing some 22 years ago via a $1.25m investment eager to exploit the various tax breaks and incentives offered to local firms.

With the Tariff Act and Light Industries Encouragement Act enabling manufacturers to import essential raw materials duty-free, and tariffs of 45 percent in place on all window and door imports, the entrepreneur said he was then confident he would be able to maintain price competitiveness with foreign imports.

Describing the duty protection as “critical and essential” to his business model, Mr Rogers lamented the lack of consistency - and frequent changes - in government tariff policy that make it extremely difficult for companies such as his to plan. Within seven years of starting Bahamas Aluminum, the duty on door imports was eliminated and he was “forced to cancel a sliding door line” that would have employed more Bahamians.

“I was surprised that, five years later, the duty on windows was reduced to 25 percent,” Mr Rogers recalled. “I again made it clear to all in government the importance of these tariffs being in place for local manufacturers, necessary for us to be competitive with imports.

“Again, four years later, the Government struck again. This time the 25 percent import duty that was in place for all windows was left as is for aluminum manufactured windows, but reduced to zero duty to import PVC/Vinyl windows.”

The latter tariff elimination, Mr Rogers said, has resulted in the Bahamian market being inundated with lower-quality, cut- price windows sourced from China and elsewhere at costs that make it impossible for his firm and other local businesses to compete. He voiced fears that once the Bahamian firms are forced out of business then import prices will be raised on local consumers.

Revealing that the decline in business has hit his staffing levels, Mr Rogers said: “At Bahamas Aluminum, we manufacture and I mean manufacture - not assemble products prepared in another country and sent to us to assemble - five types of windows, two impact and three non-impact, four types of doors, both impact and non and Bahama and Colonial shutters. We have employed up to 18 staff, now down to 14.”

The Bahamas Aluminum chief said one local PVC/ vinyl window maker had been forced to convert its business model to that of a retailer/wholesaler, importing and representing ten of the largest US window manufacturers, “because it cannot compete any more”.

While his business was able to compete with US imports “until two years ago”, Mr Rogers said rival imports are selling at “less than $300” while one of Bahamas Aluminum’s windows is priced at $600 in comparison.

“I wrote to the Government, the Prime Minister’s Office, early last week on how detrimental these direct imports are, impacting Bahamas Aluminum Manufacturing, and if something is not done quickly such as re-implementing protective tariffs, all local window and door manufacturers could be closing their doors,” he added. “I said we cannot compete with that.”

However, with yesterday’s Tribune Business revelation of the expanded $3.5bn trade deficit for 2023, Mr Rogers suggested there was now good cause for the Government to meet with industry and develop a policy strategy that “can really be very beneficial to local manufacturers, the consumer and stop a lot of imports”.

“I think it’s an excellent opportunity to bring aware- ness to the Government that they are overlooking local industries,” he added. “The important point is that the Government has got to look seriously at local manufacturing, local proper manufacturers, true manufacturers with the objective of supplying local consumers.”

Mr Rogers was quick to emphasise that tariff protection should only be extended to deserving Bahamian businesses and not be a ‘blanket’ approach for all. “I think the Government can very easily look at a company and make sure the product manufactured is a good product at good price,” he added.

“The Government always said they don’t want to give a protective tariff if the product you make is bad and you price gauge, and the local consumer suffers. I agree with that.” He pointed out that water and mattress producers, two sectors that have consistent tariff protection, still struggle to match imported rivals that benefit from economies of scale and lower production and operating costs.

“When they took away the duty from someone like me with windows and doors, it became virtually impossible,” Mr Rogers told Tribune Business. “The Government really needs

to consider reimplementing protective tariffs for companies that warrant it.... if the company is manufacturing a high-quality product and employing Bahamians and has a good market locally or can develop one.

“I could easily expand my business by 25 percent year- over-year for the next two to three years with protective tariffs. Easily. I don’t manufacture patio sliding doors because we cannot compete. Everyone is bring- ing them in duty-free. As long as others are allowed to bring in a product and dump them here, it could affect any company with the unfortunate result that it eventually pushes you out of business.”

Referring to Philip Galanis, the Bahamas Trade Commission’s chair, Mr Rogers said: “I take my hat off to Mr Galanis and our government for realising the importance of local manufacturing with the objective of closing this massive gap between imports and exports. I would suggest for starters they look at all existing local manufacturers and see how they can help them expand and start to close this gap quickly....

“My advice to Mr Galanis and our government is to look at all local manufacturers first and see what help they need to expand, employing more Bahamians and closing this critical gap between imports and exports, keeping voluble US dollars in our country.

“I would be happy to start this dialogue with the Government, working with local industries with the objective of discussing what we need to expand, hiring more Bahamians, keeping valuable US dollars in our country and start to close this very critical gap of less imports and more local manufacturing.”