I thank Mr Mahendra Roopnarine, the PRO of GuySuCo for responding in SN (‘A sugar turnaround plan has been drafted and is being implemented,’ March 4) to my original letter captioned ‘GuySuCo turnaround requires skilled strategists…’ SN, March 1).
He asked two questions that have minimal relevance to the state of GuySuCo which appear to only serve as a diversion at this point in time. However, I have chosen to answer them to clearly debunk the misconception being peddled that the weather is the principal cause of the state in which the corporation finds itself. I remain convinced that it is not only the weather which is responsible, and thus any attempt to trivialize the weakness in GuySuCo’s production chain and management must be exposed and resisted; the weather is just the fall guy.
The question asked by Mr Roopnarine related to what the primary cause of the shortfall of sugar on the world market in 2009 which has continued into 2010, really was. Why was it that in just one monsoon period the second largest sugar producer in the world, that is India, went from a net exporter to a net importer of the commodity?
The answer is that in December 2008, world sugar prices reached a price of around US10 cents per pound. The price for most of 2008 averaged around US15 cents a pound on the world market. However, most of the sugar traded globally benefited from preferential prices which were all coming down – in our case, EU prices. Such an obnoxious price for such a valuable commodity created the stimulus for hard investments to flee this industry globally. Capital expenditures in new factories were reduced, the development of new fields and the re-development of old fields were moderated, and most importantly, as a result of the decrease in the prices, corners were cut especially in India. Now, cutting fat and cutting corners are two different kettles of fish. Cutting fat means weeding out non-value added cost from the production chain; cutting corners means cutting some value-added cost like delaying the servicing of your factory and your machinery. A lot of cutting corners was done globally, especially in India. GuySuCo was also a culprit in terms of cutting corners, rather than cutting fat.
When the weather became adverse in 2009, the global sugar industry did not have enough cane in the ground or enough factory efficiency to maintain sugar production. India has a billion plus people, and with just a 5% decline in their production, they can easily convert from a net exporter to a net importer. With not enough cane in the ground in the first place and a greater number of inefficient factories, the adverse weather just impacted on an already bad situation. Can Mr Roopnarine tell us how much it cost us to restart the old Skeldon factory after it was partially mothballed as a result of poor management advice?
Mr Roopnarine’s letter was a clear case of not interrogating management at sufficient length to be able to share with the public what is happening to turn GuySuCo around. There have been all kinds of talks about this turnaround plan, but were the relevant stakeholders consulted on it – labour unions, private sector commission, principle suppliers, etc. Most importantly, were the religious leaders on the estate briefed on this turnaround plan so that they could motivate the workers to give a 100% towards this plan? The reality is that the workers do not trust the management in GuySuCo, and efforts must be made to repair this relationship on a foundation of trust and respect for each other.
In strategic management, the most difficult test is to honestly understand the factors that contributed to success and failure. Does GuySuCo understand why it is where it is today? I highlighted one issue in my previous letter – not enough of the right skills at the board and management levels, with a clear example: Ms Knights is a non-value added cost to the organisation. Have they acknowledged this and are they doing something about it? Has GuySuCo done an independent and honest review of the business where the systems are tested from start to finish identifying value-added and non value-added activities? This exercise will allow management to weed out non-value added activities and ensure the value-added activities are preserved in their most cost-efficient manner. The public is entitled to this information in a broad sense and hence the secrecy behind this turnaround plan leaves one to wonder whether it will it work, and whether it addresses the fundamental issues in the industry. Where is the transparency?
In conclusion, my innermost desire is to wish GuySuCo well. I am one of the strongest advocates of men of steel like Dr Gopaul and Mr Burrowes, but they must not be the minority in the decision-making process; they must be the majority in order for GuySuCo to turn around. My interest is to see GuySuCo succeed since it is one of the main employers of the working class and the preservation of their jobs is my cup of tea.
However, what I cannot agree with is that the workers are being made the sacrificial lamb in the industry when management in the first place contributed to this mess, and there seems to be a minimal attempt to hold them accountable. The workers got a miserly 3% salary increase in a difficult year but there is still fat to cut elsewhere in the industry. Clear case, why not divest all the company houses in the Demerara Estates and help the relevant manager access loans from NBS to buy their own houses? This will save the industry millions in maintenance costs and generate valuable revenue. In a previous letter, I highlighted some other areas for cost improvements, so there is no need to go into that again. So rather than focus on India as Mr Roopnarine has done, let us keep the focus on GuySuCo.
Yours faithfully,
Sasenarine Singh
