The Manufacturer’s Dilemma (Part 2)
“Globalisation has powered economic growth in developing countries such as China. Global logistics, low domestic production costs, and strong consumer demand have let the country develop strong export-based manufacturing, making the country the workshop of the world”.
The above quote which is attributed to Ma Jun, the Chinese environmentalist is a good enough statement to draw attention to the fact that, manufacturing is arguably an activity that propels a nation on to the world stage. This can be achieved when the enabling environment is created that drives production costs down and eventually make manufacturing companies competitive on the global market. We must learn to deliberately take advantage of the market the world provides.
A few days ago, I made a trip using the Lake Road which links the city of Kumasi to Lake Bosomtwe which is a popular tourist site and I was gripped with the reality of how deep we’ve sunk as a nation in providing the needed road infrastructure to support the various activities we undertake as business people.
The stretch between Atonsu-Agogo and Jachie Pramso is a nightmare and a microcosm of what the entire road network across the country looks like in general. If for nothing at all, Premium Foods, which is a manufacturing facility employing scores of Ghanaians and a major supplier of semi-finished products to huge manufacturing companies in Ghana is situated on that stretch.
Indeed, there are several other economic activities on that stretch and to top it all, it is the main road that leads to Lake Bosomtwe, a key tourist attraction with so much history.
Our foreign guest on the trip said, she could feel her organs move whilst we entered the potholes and came out in what can be described as a roller coaster. How many more entrepreneurs would want to set up businesses in such areas is anybody’s guess. Without sounding political, and I don’t want to sound political, do we really have people in authority to ensure these issues are fixed? This is just one example of many such situations across the country.
Yet we have a string of people appointed to take care of such pertinent issues that affect the economy; Sector Ministers, Chief Directors, Regional Ministers, MCEs, DCEs etc. This is one of the biggest roadblocks to manufacturing setups in any economy.
The effect of such bad road network on the transportation of raw materials and finished products to and from a factory respectively is anything but good. It is enough a disincentive for any serious industrialist to invest in such an unfriendly environment.
Education is a shared responsibility between the state and the citizenry. Manufacturing is a set of processes that is interrelated. Different kinds of skill are needed to and hence human resource is key. Indeed, machines play a major role especially in fully or semi-automated factories but of course there is always a human being behind the controls. My interaction with most manufacturers reveals a low appetite for recruitment of a highly-skilled workforce.
The excuse has always been the cost of labour; keep it as low as possible. It may appear that, industries in this category may upgrade the skills of employees recruited with low skill levels, but again they complain about the seeming high cost of training. It is therefore not surprising why competing on the world market is such a herculean task.
Creating a conducive environment for businesses to grow lies largely at the doorstep of government and cannot be overemphasized, but with the current narrative, manufacturers should take the few opportunities available to strengthen their structures to favourably compete with their peers. Recruiting the right caliber of staff and training them on the job consistently drives productivity and eventually profits.
Playing a Global Game
The world cup is arguably the single most patronized sports event in the world. It attracts both lovers of soccer and non-soccer lovers alike. As much as players would want to play with passion and make their nations proud, there are rules. Whenever the rules are reviewed, players and all other related persons must understand and play by them. The VAR introduced in the just ended 2018 world cup was an eye opener.
Some soccer fans did not like the idea, but once it was accepted widely by the organizers of the game, it had to apply. The same principle applies to competing on the world market with manufactured products; there are rules, principles and practices. It is refreshing to note that, many manufacturers are talking about export. It is a good first step to starting a journey that has the potential to bring huge returns in the future.
It is also true that, action speaks louder than words and hence the tangible steps to make it happen must be pursued with intentionality. Research has shown that learning and acquiring local market knowledge from foreign distributors are key to a manufacturer’s export performance.
In a paper submitted by Fan Wu & Co on ‘Overcoming export manufacturer’s dilemma in international expansion’ they proposed that manufacturers need to develop stronger local market competence while simultaneously minimising the costs of distributor opportunism in order to compete successfully in the export market.
Technology and Product Innovation
In this era of fast food, fast cars, fast internet, fast everything, manufacturers need to stay wide awake and do things differently to remain relevant. The blistering pace of technology and product innovation demand a constant touch with the trends and even a more challenging task in staying two steps ahead of the pack.
Comparing your manufacturing facility to the best in Ghana may be the worst thing to do, since the international market is awash with products from some of the best facilities in the world. You will end up dying if you don’t look at world class manufacturing.
The global market, is not a place but a system that transcends geographical barriers. Walk to any supermarket and there, before your very eyes is an array of products from China, the United States, Europe, South Africa etc. So that in your own backyard, the players are global. The lack of technology infusion in manufacturing must be a headache to manufacturers and steps must be taken to catch up with the rest of the world.
There is no debate about the fact that, the manufacturing sector is capable of employing a huge numbers of employees from diverse professional backgrounds. It behoves government to clear the bottlenecks that impede entrepreneurs who’ve invested heavily in this sector.
The needed infrastructure and policy framework to enhance manufacturing should be worked on tirelessly to make it possible for industries to grow. Whilst at it, entrepreneurs in the manufacturing sector must understand the bouquet of requirements needed to make their investments fruitful. The combined effort of government and the private sector is key in driving manufacturing and invariably strengthening the economy.
[divider]Johnson Opoku-Boateng is the Chief Executive & Lead Consultant, QA CONSULT (Consultants and Trainers in Quality Assurance, Health & Safety, Environmental Management systems, Manufacturing Excellence and Food Safety). He is also a consumer safety advocate and helps businesses with regulatory affairs. He can be reached on +233209996002, email: email@example.com.
BY: Johnson Opoku-Boateng