GuySuCo’s current situation could be successfully fixed in a timely manner if both the political will and good corporate governance are undertaken.
Firstly: the bank loan backed by the corporation’s assets is questionable not only because of the uncertainty of the pension fund’s viability, but also due to the form of the financing. A physical inventory needs to be undertaken and a fiscal audit is also needed to support a clear understanding of the asset base to be used for securing financing. In addition a line of credit should be pursued with Government backing to minimize the interest payments required.
Secondly: labour concessions during the turnaround period should be negotiated in order to reduce the cost of goods in order to allow for the reopening of the closed and neglected factories. In addition an organization capabilities assessment is required to ensure there is a clear plan to improve internal processes for improved front end operations.
Thirdly: the acreage utilization needs to be optimized in order to increase field yield rates to best in class levels as seen by our successful international competitors. This will require limited investment. Factory maintenance improvement plans based on efficiency assessments will also provide clear guidance for improvement plans related to production costs and improved throughput. Such a fresh eyes audit needs to be undertaken in order to develop a clear investment plan for the industry. This should be pursued to obtain benchmarked levels.
Fourth: the pricing of goods and services provided by the corporation needs to be revised allowing for increases that reflect not only inflation rates, but also the increased demand associated with the limited supply. Market prices are currently not reflective of adjacent and competitive products. The mind set of bulk sales vs. consumer sales needs to be shifted in favour of the latter to truly capture the pricing opportunity in the market place. A clear pricing strategy going forward needs to also be outlined.
Based on my professional experience the above outlined approach will clearly walk the turnaround initiative through the P&L better identifying the financing needs and its required timing to support a successful turnaround initiative for the sugar industry. In addition it will ensure a successful undertaking of making the sugar industry profitable in the current competitive environment.