GuySuCo and the burden of outside leadership

In last week’s column I urged the point of view that, the most important performance indicator for GuySuCo during the period of the Turnaround Plan, which has elapsed so far (2009 to the first crop 2012), is its annual sugar production. This has been severely disappointing, to say the least. The level of average annual output achieved during 2009-2011 has been the lowest for the 2000s. Further, the first crop’s sugar output for 2012 has been one of the worst in living memory.

However, continuing last week’s comments on GuySuCco’s Turnaround Plan it is important for readers to note that, a turnaround plan has a precise meaning in the field of economics and business. The activities of turnaround planning and management have definite connotations to them and refer to areas of specialisation directed at restoring enterprises to solvency, profitability, and sustained commercial operation. Indeed independent experts operating in these fields would normally not only prepare the enterprise’s turnaround plan, but would also be recruited to manage it during the initial phases of plan implementation (normally, to the point where the enterprise becomes solvent).

As events reveal GuySuCo did not pursue this course. Perhaps because, as it was pointed out last week, the plan is termed a Strategic Blueprint for Success. The phrase Turnaround Plan was adopted subsequently in media descriptions of it. Firms specializing in turnaround management frequently offer credit to cover the preparatory phases of the enterprise’s restructuring plan and the immediate implementation of the recommended first stage strategic measures.

In discussion with colleagues as to why GuySuCo did not pursue such a model two views have been offered to account for this. One is that, given the state of GuySuCo, the authorities would not have found a firm willing to undertake this task! The other is that, given the past history of GuySuCo (and particularly the period of the Tate and Lyle management and the acrimonious contract termination which resulted), would have deterred the authorities from recruiting outside expertise.

Other features
To wrap up my comments on the Turnaround Plan, let me draw brief attention at this stage to a few other features of it, which readers should ponder.

One is the plan targets an annual reduction of GuySuCo’s labour force by about ten per cent per year to 2015. This measure is specifically aimed at structurally reducing GuySuCo’s dependence on a dwindling and industrially unreliable workforce. This policy suits GuySuCo’s plans to mechanize and privatize much of its sugar cane cultivation activities.

A second feature of the plan is its rejection of the colonial tradition of large enterprises in Guyana offering welfare services to their employees (those which the colonial state did not adequately provide for, as has been the case for both sugar and bauxite). When commercial developments squeeze profitability these enterprises have shed these “non-wage benefits” paid to their workforces. Predictably therefore, the plan envisages that GuySuCo’s health and community services would be passed over to the state.

Thirdly, the plan also envisages GuySuCo’s human resources management would be radically re-organized and in the end become completely computerized.

Finally, there are a number of plan measures directed at improving both factory and agricultural operations. The latter includes improved management of pests, diseases, cane harvesting, planting, transportation and sugar quality. Details pertaining to these features will be addressed under the next heading, under which as I indicated before I propose to evaluate the Minister of Agriculture’s 2010 assertion (cited in last week column) that GuySuCo was “robust, and strong and firm-footed.”

When I appraised GuySuCo’s management in previous columns I had made three introductory observations which I believe are sufficiently important to repeat here. First and foremost is that, given the political constituency of those making their livelihoods from sugar in Guyana under a state-owned corporation, the PPP/C administration has demonstrated since 1992 a strong and un-relenting burden of outside leadership in running the affairs of the corporation. This burden has tended to 1) de-emphasize the primacy of commercial calculations in the industry’s operation; 2) emphasize contrarily, political considerations in the industry’s day-to-day operations; and 3) tilt the balance in favour of heightened roles of social and political externalities and against an economic (opportunity cost/benefit) calculus.

The second observation has pointedly observed that GuySuCo is not an innocent bystander (or victim) in the evolution of this process. A close reading of GuySuCo-PPP/C administration relations since 1992 suggest that GuySuCo, instead of focusing on promoting “commercial space” or the functional autonomy of the corporation as a business enterprise has played politics with the government, no doubt expecting to win from these exchanges. This observation remains true for both Tate and Lyle during its management contract and the present localised management.

The third observation was that the disappointing outcome of these manoeuvres, is clearly revealed. By the most important metric of all — annual production performance, GuySuCo’s implementation of the Skeldon Sugar Modernisation Plan (SSMP) has been an abysmal disappointment.

Unfortunately for Guyana, this outcome has been marked by colossal waste, inefficiency, corruption, and above all, the emergence of an environment in which style or ‘spin’ is reflexively substituted for the substance of hard data on GuySuCo’s actual performance.

I shall continue to show next week that the statements attributed to the present and immediate past Minister of Agriculture on GuySuCo over the past three years fit into a long tradition of misrepresentation, manipulation, and data massaging, which GuySuCo itself has played a major role in fostering.


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