Manufacturing

 

	Box 2.9: Denmor Garment Manufacturers: Competing in the Global Garment Industry
	While Guyana is not known for having an apparel industry, its premier garment manufacturer has shown that companies can succeed amid global competition from leading manufacturers in locations such as China or Latin America. Since it began production in 1997, Denmor Garment Manufacturers has enjoyed dynamic growth, expanding from 300 employees to 1,000 (97 percent of whom are women). Denmor has the capacity to respond to orders of up to 50,000 dozens of garments per month, and can produce up to 15 different styles at the same time. Approximately 75 percent of Denmor’s activities involve full production (where the manufacturer manages all aspects except design), demonstrating an ability to carry out value-added manufacturing activities and supply-chain management. 100 percent of its products are exported, with its customers including some of the world’s leading brands and department stores, including Russell Athletic, Victoria’s Secret, Paris Accessories, Van Heusen, JC Penny and Wal-Mart.
	How has Denmor been able to grow at a time when many countries are seeing apparel business lost to low cost producers in Asia? The answer is linked to both Denmor’s management style and the advantages of doing business in Guyana. First, Guyana benefits from duty-free access to the U.S. under the Caribbean Basin Initiative (CBI). More importantly, Denmor has developed a reputation as a top quality provider. It has received awards from its buyers for achieving a 0.6 Acceptable Quality Level (AQL), which means that only 0.6 percent of its products are considered defective. Denmor’s quality is due, in part, to a 100 percent trained workforce able to shift rapidly between production forms and materials. Denmor spends over US$250,000 a year on training. The workforce is also highly motivated, benefiting from a pleasant working environment, productivity incentives, and generous fringe benefits, which include two-paid weeks of leave during Christmas and daily bus transport to and from work. Worker retention is high. Denmor’s high labor standards not only contribute to a productive workforce, but also have helped the company meet the demands of global clients who are placing an increased emphasis on human resource management practices.
	Denmor also benefits from its proximity to the U.S. market. Coupled with efficient production systems, this proximity allows Denmor to provide clients with a 6 – 8 week turn around time. With Guyana’s sea freight service, it takes about 10 days for Denmor’s products to reach U.S. markets. This allows Denmor to respond to small or rushed orders without sacrificing quality, something manufacturers in Asia are less able to handle.
	Guyana’s incentive regime also provides a number of advantages. This includes a tax rebate on profits from exports, no duties on imported inputs and no complex duty-drawback scheme, and a waiver of consumption tax for locally manufactured goods in the local market. Denmor continues to grow, currently investing in a new factory in Berbice. The facility will initially contain 25,000 square feet of production space, and will eventually expand to 100,000 square feet. A starting workforce of 300 is expected to grow to 500. In time, Denmor is expected to be able to manufacture 30,000 dozens of garments per month at the Berbice facility in 5 years, doubling the company’s overall production capacity.

Guyana’s manufacturing industry contributes about 10 percent towards the country’s GDP and employs approximately 12 percent of the population. Traditionally, the manufacturing sector has been dedicated to the processing of traditional agricultural products (e.g. sugar, rice), forest products and minerals (bauxite, gold and diamonds), basic consumer items, food and beverages, and pharmaceuticals for local consumption. While these traditional manufacturing activities remain important, there is a growing interest to expand value-added, export-oriented manufacturing industries such as:

• Garments and apparel manufacturing
• Value-added/manufactured forest products – furniture, flooring, doors, plywood, veneer, etc.
• Agro industries – processing, canning and bottling of agricultural produce; fertilizers and insecticides
• Packaging – manufacture of packaging materials and containers for transport of finished products
• Leather craft – manufacture of leather products and souvenirs
• Ceramics – manufacture of articles constructed of clay, kaolin and silica sand
• Construction Materials – stone, cement, clay blocks, tiles, and glass

There is a particular interest in expanding Guyana’s garments and apparel sector to build upon recent successes (see Box 2.9) and to take advantage of preferential access to foreign apparel markets under preferential trade agreements with the U.S., E.U., Canada, CARICOM and other bilateral trading partners.

In addition to favorable market access for most manufactured products, Guyana provides a number of advantages to investors interested in establishing or expanding manufacturing operations:

• Competitive cost of labor – Guyana has one of the lowest manufacturing wage rates in the Caribbean and Central America (see Human Resources in Operating Environment section). The workforce is highly literate and trainable.
• Low ‘time to market’ / lead-time – Guyana’s close proximity to the U.S. market gives it a shorter time-to-market vis-à-vis countries such as China and India. This lead-time advantage is useful for companies wishing to find suppliers to meet their just-in-time delivery requirements.
• Access to local inputs – Guyana’s natural resources provide manufacturers in specific sectors with an abundance of locally available and affordable inputs for the food processing, value-added forest products and construction materials sectors.
• Availability of industrial parks – In an effort to attract manufacturing investments, the Government of Guyana has invested in a number of industrial parks with installed infrastructure available at G$1.00/US$0.005 per square foot per annum and investment concessions for materials, vehicles, plant and machinery (see Locating in Regulatory Environment Section).

Organizational Support
The Industry Department of the Ministry for Tourism, Industry and Commerce (MinTIC) is responsible for promoting industrial development and the management of industrial estates with the overall aim of helping local and foreign investors to stimulate growth in the economy. The GMSA, a private organization that supports policy advocacy, marketing, and technical assistance, represents manufacturers and services providers operating in Guyana. The GMSA includes a number of sub-sector committees that discuss issues related to agro-processing, textiles and sewn goods, printing and packaging, construction and engineering, chemicals and pharmaceuticals, forestry and wood products and services.