Management shake-up likely as sugar crisis deepens

BY Staff
Published: December 5, 2008 in Business

$3bn earnings shortfall projected for 2008

A major management shake-up at the Guyana Sugar Corporation (GUYSUCO) could be on the cards as government battles to arrest the continual decline in the performance of the sugar industry.

President Bharrat Jagdeo

With the industry set to record another whopping shortfall in earnings at the end of this year, Agriculture Minister Robert Persaud said earlier this week that the industry will undergo organizational changes that will come into effect in January next year. It is estimated that GUYSUCO will record a $3 billion shortfall in earnings at the end of 2008.

The announcement by the Agriculture Minister that organizational changes in the industry are imminent comes in the wake of a recently concluded inquiry into the performance of the East Demerara estates triggered by President Bharrat Jagdeo’s recent public rejection of assertions by the management of GUYSUCO that production shortfalls were due to weather among other factors. In rejecting management’s analysis of the underperformance of the industry President Jagdeo had explicitly expressed his dissatisfaction with the performance of the GUYSUCO management.

Agriculture Minister Robert Persaud

In his own response to the completion of the report on the state of the industry earlier this week the Agriculture Minister declined to give details of the anticipated changes at GUYSUCO but appeared to endorse the President’s view that management deficiencies were integral to the underperformance of the industry. Persaud blamed the crisis in the industry on “neglect” among other factors, adding that the crisis in the industry suggested that there was need for a greater management presence in the field.

GUYSUCO has suffered a number of significant setbacks this year including the failure of Chinese contractors to complete the modernization of the Skeldon plant by the agreed October 2008 deadline. In the wake of the failure of the Skeldon factory to pass tests that would have allowed it to become operational on schedule President Jagdeo has sought to provide assurances that the contractors are contractually bound to correct the faults before handing over the facility. Following a recent visit to China the President also disclosed that he had held discussions with officials of the contracted firm and had sought and received assurances that the glitches would be remedied.

Sugar at the crossroads?

While up until now the government has appeared reluctant to openly blame the Chinese contractors for the Skeldon setback, this week, the Agriculture Minister declared that the delay in the commissioning of the factory was “due to the performance of the contractors” and that the tests which are expected to precede the facility coming into operation cannot now take place until early next year.
Government is pinning its hopes on the Skeldon Factory – which, when it becomes fully operational is expected to produce more than 8,000 tons of sugar per day – to strengthen GUYSUCO’s capacity to supply sugar to its critical European market.

What has not helped to improve GUYSUCO’s sugar production and, by extension, its reliability as a supplier, is a volatile industrial relations climate which has become a source of concern to both the GUYSUCO management and to government. Recently, management came under additional official criticism for “mishandling” the October strike by the Guyana Agricultural and General Workers Union (GAWU), the larger of two unions representing sugar workers to back a claim for a 14 per cent wage increase. Following protracted and ultimately fruitless talks between GAWU and the GUYSUCO management the matter was eventually taken to arbitration where the Union was awarded a 6 per cent increase.

However, government has announced that given the parlous state of the industry’s finances the payout will have to be effected by borrowing and that the payout will be spread over a period.
The management of GUYSUCO has long been critical of the industrial relations posture of GAWU accusing the union of making wage increase demands which it knows the company cannot afford and timing its industrial action to negatively affect the company’s overseas supply commitments.

Earlier this week a source close to the industry told this newspaper that the ‘real industrial relations problem” facing the management of the industry is the “political complexity” arising out of the need to negotiate with a union that can bring pressure to bear through its influence with the political hierarchy.”

One of the changes in the GUYSUCO management structure that is likely to come into effect early next year is the appointment of a Deputy Chief Executive Officer The sugar industry has had a management contract with Booker-Tate since 1991 under which a Booker-Tate official serves as GUYSUCO’s Chief Executive.

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11 Comments

LIMACOL.COM says:

December 6, 2008 at 1:28 pm

Sugar and rice are two commodities that we have comparative advantages over others in their production. However, our yield per acre is amongst the lowest in the world. People plant rice on slopes of hills, and in all sorts of adverse conditions and they enjoy higher yield per acre. Nothing there seems to succeed. Everything is a failure. Look, I recently saw a show on Guyana where the people along the coastal belt are complaining about nowhere to graze their cattle. All the grass fields were sold off by the Government as house lots. I drive all over Suriname, I drive all over Trinidad, and I have travelled to a lot of places, and I have never seen so many stay animals on the streets as there are in Guyana. Don’t these people have one bit of shame there. Why can’t they sit down and come up with policies that work for the wellbeing of the residents.
A few weeks ago I saw some pictures of water pipelines being laid out in Guyana. Pipes are still being tied up with old bicycle tubes and cement straps. The lines are so poorly connected, I doubt whether it can handle in excess of 10 psi water pressure.
RL
http://www.guyanatabloid.com

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Grace says:

December 6, 2008 at 5:51 pm

I didnt know we count in billions back home. Is the sugar Industry boys chartering Lear Jets or what? Or are our prices not competing with the international market? I know also GAWU is a power house but mngt need to take the worker aside and show them the the balance sheet just isnt balancing and there may be a salary freeze or some folks will have to go on the bread line. Have the employees vote on it.

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eloise says:

December 7, 2008 at 4:53 am

limacol
you are so right,
i am just fedup, i have to go back to bed.
we guyanies should go back home and look after
guyana.

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Romaladie says:

December 7, 2008 at 7:49 am

We can boast that our debt have been reduced, thanks to the Donor Community , yet we can’t show profitability in the sugar industry , who is at fault ?. We were quick to blame the colonial masters, but they are no more ,who is to be blamed now ,the weather, the soil, the machinery,or the workers, we must find someone or something to blame ,since it can’t be the bureaucracy, oh no, this is state owned and worker’s control in action.

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Wiggins says:

December 7, 2008 at 10:20 am

The 1st thing that should take place ,in order ,to solve the problems in the sugar industry in Guyana is that President Bharrat Jagdeo should resign , followed by the minister of argriculture , Robert Persaud . Guyana needs to free itself from the present ” Political leadership ” .

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- Bacchus says:
  
  December 9, 2008 at 7:38 pm
  
  THese companies were making billions and yet still things are the same. where did all of that money go.
parmanand dholichand says:

December 9, 2008 at 9:03 am

management shake up is needed at almost all government entities.even the cabinet needs a shake up.the pnc is fighting now so there is no opposition.the ppp will start to fight soon.Janet is keeping the ppp party together.sorry, GUYANA,time to look for new leaders,leaders that believe in GOD.

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- Jones says:
  
  December 14, 2008 at 9:10 pm
  
  well said parmanand.
Mulholland says:

December 10, 2008 at 3:28 pm

Nothing changes under this regime!!!
It’s the same old nonsense that’s dragging people and country down in the sewer. Oh, yes, the sewers are over flowing and no one cares. It’s a cesspool in GT, very putrid stench.

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Josh Ragnauth says:

December 11, 2008 at 8:26 am

We await with bated breath the management shakeup of the Sugar Industry, but must ask: Will it take place at the topmost echelons only? Or at all echelons from Board to supervisors? These are managers, after all, even though they may not carry the specific title.

Will this shakeup be simply a chastisement while leaving everyone in place? Someone recently wrote abouut the Sugar Industry having too many “square pegs in round holes”. Perhaps the shakeup might whittle away the square pegs so that they fit better in the round holes, or even that the round holes are reshaped.

One attribute possessed by NO Guysuco manager at any level is that of controlling the weather. Make no mistake about it. The Industry’s performance is heavily influenced by the weather patterns, and this has changed significantly. Very rarely does the Industry experience these days the clearcut two wet seasons and two dry seasons, the presence of adequate moisture for growth, and the absence of moisture form ripening and harvesting, generally occurring at the most propitious times. Unfavourable weather is not an excuse, but s reality in soberly assessing the Industry’s performance.

Of course, industrial strife makes matters even worse. Industrial harmony, unlike the weather can be regularised. Invariably, however, it seems, the management of Guysuco is the one blamed, yet we are told that the Industry has TWO partners. The Unions themselves have hierarchical structures, from their presidents down to the shop-stewards. How the Unions confront the shared issues besetting THEIR Industry, be it Commodity Pricing, Weather, Skills, there are elements of management involved. A decline in the Industry’s performance must also weigh heavily on the Unions’ shoulders.

Is there not a case for a management shakeup here too?

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XONTAGE 07 says:

January 1, 2009 at 4:50 pm

I agree with Eloise…. Well studied and well prepared Guyanese should all come together and go back home and take care of Guyana. I had always said that the Guyanese Government should make some sort of proposal or offers to Guyanese living abroad to go back and help build Guyana. But There has to some sort of an attractive offer in order for some people to really want to go back and invest their their hard earn money and labour in sort of form. I am up for it anytime.

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