COUNTRY MAPPING EXERCISE: GUYANA BASED ON CCFC WORKSHOP, JULY 9- 13, 2012 INSTITUTE OF CRITICAL...

COUNTRY MAPPING EXERCISE: GUYANA

BASED ON CCFC WORKSHOP, JULY 9- 13, 2012INSTITUTE OF CRITICAL THINKING, UWI, ST. AUGUSTINE, TRINIDAD AND TOBAGO

Dianna DaSilva-Glasgow

Social Science Research SeminarOctober 17, 2012

WHAT ARE CLUSTERS?

“Clusters are geographically close groups of interconnected companies and associated institutions in a particular field, linked by common technologies and skills. They normally

exist within a geographic area where ease of communication, logistics and personal interaction is

possible. Clusters are normally concentrated in regions and sometimes in a single town”. (Michael Porter)

7/13/2012CCFC Workshop, July 9-13, Institute of Critical Thinking,

UWI, St. Augustine 2

WHAT ARE CLUSTERS?• Key aspects of Definition: • “Clusters are groups of independent companies and

associated institutions that are: • Collaborating and competing; • Geographically concentrated in one or several regions, even

though the cluster may have global extensions; • Specialised in a particular field, linked by common technologies

and skills; • Either science-based or traditional; • Clusters can be either institutionalised (they have a proper cluster

manager) or non-institutionalised.”



Overview of Main Economic Sectors

• Agriculture; rice and sugar• Mining and quarrying; gold and diamond production• Manufacturing; food and beverages• Services; wholesale and retail distribution and

telecommunications

CCFC Workshop, July 9-13, Institute of Critical Thinking, UWI, St. Augustine

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BACKGROUND & FOCUS OF THE MAPPING EXERCISE

• The mapping process was mainly business oriented but with implications for policymaking and academic research. The focus of the exercise was informed by the following factors:


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1. Attempts at clustering in Guyana through an initiative of the USAID, Guyana Trade and Investment Support Programme (USAID/GTIS) (fisheries and aquaculture) did not produce much result. Notwithstanding this experience clusters can work. It is therefore necessary to revisit and re-convince the private sector of the benefits and likely impact of clusters.


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2. Supporting the identification of competitive, productive and profitable business opportunities in Guyana given that:

• Significant scope remains for enterprise development and investment.

• Need for diversification of the economic and productive base of the country consequent to several exogenous shocks such as the erosion of preferences for sugar, which has been an economic mainstay of Guyana for decades.


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OBJECTIVES• The exercise sought to identify clusters that can have the

following impact in the medium to long term:

i. support competitiveness and increased productivity

ii. increase employment and skills development in Guyana

iii. increase the export base of Guyana

iv. support the Diversification Programme and the Low Carbon Development Strategy of the Government of Guyana


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METHODOLOGICAL APPROACH FOR CLUSTER SCREENING IN GUYANA


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STEPS EXPECTED OUTPUT WORK PLAN DATA SOURCE

W1

W2

W3

W4

W5

W6

W7

W8

STEP 1:

Identification of businesses (operational) in Guyana

Excel database of names of businesses in Demerara-Mahaica; contact information (address, telephone, email), contact person, portfolio

Government Agency: Guyana Revenue Authority and Deeds Registry


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STEPS OUTPUT WORK PLAN DATA SOURCE

W1

W2

W3

W4

W5

W6

W7

W8

STEP 2: Definition of businesses i.Tax paying enterprises ii.Profit-driven iii.Involved in exportation

Excel database of names of legitimate businesses in Demerara-Mahaica

Government Agency: Guyana Revenue Authority and Deeds Registry


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W1 W2 W3 W4 W5 W6 W7 W8

STEP 3: Draft Analysis of the business characteristics The following characteristics were used:i.Size (Number of Employees & turnover (asset base as opposed to sales revenues)ii.Sector (Agriculture, Manufacturing, Services)iii.Activity (nature of business activity)iv.Output (specific products and services produced and customer segments)v.Clientele (Cross-sectoral relationships)

A.Summary of business characteristics in excel database with the following fields: size, sector, activity, output, research and development, clientele, corporate social responsibility

Government Agencies, Businesses: -Interviews, -Questionnaire,(email) Existing international databases; World Bank etc, FAO


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STEP 3: Draft Analysis of the business characteristics


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W1

W2

W3 W4 W5 W6 W7 W8

STEP 3B: Draft Analysis of the business characteristics Strategy) Value chain analysis (market relationships (non-product linkages of firms such as co-franchising, co-marketing, cross-licensing) and product relationships)

B. Value chain mapping of stakeholders related to the organization

Government Agencies, Businesses: -Interviews, -Questionnaire,(email) Existing international databases; World Bank etc, FAO


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STEPS EXPECTED OUTPUT WORK PLAN DATA SOURCE

W1

W2

W3

W4

W5

W6

W7

W8

STEP 4: Criteria for cluster Definition Standard criteria: i.Clear and common businessii.Complex value chainiii.Number of companies iv.Presence of support institutionsv.Geographical concentrationvi.Certain degree of specialization

Identification of potential clusters


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W1 W2

W3

W4

W5

W6

W7

W8

STEP 5: Criteria for cluster

selection: i. Potential for increased

exportsii. Can promote

infrastructural development

iii. Development of new or under-developed skills for labour

iv. Innovation potential (development of a new niche product/service)

v. Economic sustainability of the activity of the cluster based on five forces market analysis model

vi. Strong corporate and social responsibility

Cluster selection to be done

in tandem with third party.

Potential cluster initiative

International databases: UNCTAD, UNCOMTRADE etc. National databases: Bureau of Statistics, Bank of Guyana


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RESULTS



Business Database• The total number of companies within Guyana= 8888,

5465 of which are listed as companies and 3423 as individuals.

• Four sectors are examined:

1.Jewellery Manufacturing;

2.Apparel, Textile and Garment;

3. IT-enabled services

4.Furniture Manufacturing• The number of companies examined under the four

sectors came up to about 704 or 8% of the total business population in the country



Business Database



Table 1: Breakdown of number of companies in business database by sector

Number of companies in business database by sector

Sector Number of Companies

Approximate Employment

Jewellery manufacturing 204 2,389 Furniture Manufacturing 377 5,670 Clothing, Apparel and Garment Manufacturing

36 2,024

IT enabled services 87 5,332 Total 704 15,415

Business Database• The activities of businesses were broadly defined based

on International Standard Industrial Classification (ISIC) codes revision 4.

• The size of businesses was defined as the number of employees based on the following criteria was used:

• A large company is a company with >100 employees• A medium company is a company with 21-100 employees• A small company is a company with 5-20 employees



BUSINESS SEGMENTS: Furniture Manufacturing



Natural Segments Rationale for Segmentation 1. Upholstered

furniture Upholstered furniture is wooden furniture that is covered with fabric.

2. Metal Furniture Metal furniture requires the use of steel and is used primarily for recreational purposes and the furnishing of Offices.

3. Wooden Furniture

Wooden furniture is primarily furniture made from hardwood. This requires greater interaction with the forestry/logging industry.

4. Cane Furniture This is a special type of furniture that utilizes vines and forest products such as Kufa, Nibbi and Tibisiri.

5. Wooden Builder’s Joinery/fixtures

This includes mainly wooden joinery products such as windows, doors, door handles that are used either in the construction industry or by furniture manufacturers.

6. Furniture of other materials

This includes furniture utilizing mainly materials such as Medium Density Fibre and plastic which are not sourced locally.

BUSINESS SEGMENTS: IT-Enabled Services



Natural Segments Rationale for Segmentation 1. Business

Process Offshore Outsourcing Services

Back office offshore processing services use of IT to provide services related to internal business functions such as payroll, accounting and medical encryption. Front office offshore processing services are activities involving customer interaction such as customer-related services through inbound Call Centres and Public Relation Consultancy Firms.

2. Knowledge process outsourcing (KPO)

KPO services are services requiring skills support to businesses such as animation and design and research and development; business and market research; legal and medical services; training, consultancy.

3. Business Process Nearshore Services (Back Office)

There are some companies that provide business process outsourcing services to local firms only. These services typically entail managing email systems and web servers.

BUSINESS SEGMENTS: Textile, Apparel, Clothing and Garment



Natural Segments Rationale for Segmentation Garment manufacturing Garment production refers to the production of various items of

clothing using varying textile materials including wool, leather etc.

Hand-painted textile Hand-painted textile differs from garment manufacturing by the additional feature of having garment painted by hand.

Footwear This industry is no longer export-oriented but serves the local market through special contracts with some companies. Footwear produced are mainly industrial for the Sugar industry and yattin-type for other companies.

Footwear of Leather and other indigenous materials

The segment includes manufacturers and distributors of hand-crafted footwear made of leather and other materials

BUSINESS SEGMENTS: Jewellery Manufacturing



Natural Segments Rationale for Segmentation Hand-crafted gold jewellery

The segment describes jewellery that includes the use of gold and gem stones such as diamond. Hand-crafted jewellery is produced through the use of castings and moulds.

Machine-made gold jewellery

Machine made jewellery differs from hand-crafed gold jewellery as a result of the tools for production and the quality of the end product. Imported machines are used, as opposed to casting and moulds to fabricate jewellery.

Hand-crafted jewellery of other indigenous materials including rice grains and ‘buck’ beads

This type of jewellery utilizes indigenous materials such as rice grains, ‘buck’ beads, leather etc. It also requires hand-crafting and is done primarily by very small manufacturers.

VALUE CHAIN ANALYSIS: Hand-crafted gold jewellery



Gold Mining Gold Board

(Government-

Owned)

Gold Dealers

& Traders

J ewelry

Fabrication

J ewelry Design

Distribution

J ewelry chain

retailers

Department

Stores

(costume

jewelry)

Importers

(Costume

J ewelry)

J ewelry

Specialist

stores

Non-store/non-

licensed traders Laboratory

preparatory

Services

Mining machinery

J ewelry Design

tools (moulds,

casting etc)

Research/ Training Institutes

- Gemological Institute of America

- World Wildlife Fund (WWF)

- Guyana Geology and Mines

Commission

- Guyana Gold and Diamond Miners

Association (GGDMA)

J ewelry Design

tools (moulds etc)

imported (US &

China)

Pawn shop

Gold Smiths

J ewelers

VALUE CHAIN ANALYSIS: Wooden furniture manufacturing



Timber

harvesting/logging

Sawmilling/Lum

ber dealing

Furniture

Manufacturers

Distribution Wholesale to

Furniture stores

Retail Furniture

Stores

Export

Input Assembling and

Farication

Fasteners

Builder’s

Hardware

Welding

and

Fabricating

Woodworking

equipment and

supplies

Wood

treatment

(Kiln dryin)

Paints and

coatings

Glass

Welding

Equipment

and Supplies

Industrial

Equipment

and Supplies

Designing

Research/Training Institute

- Government Technical

Institute

- Guyana Industrial Training

Centre

- University of Guyana

- Guyana Forestry

Commission/ Forestry

Training Centre Inc.

- Iwokrama International

Centre for Rainforest

Conservation

- Conservation International

- Forest products

Association

- WWF

Builder’s

J oinery

International

Local

VALUE CHAIN ANALYSIS: Garment manufacturing



Textile

(Overseas)

Design

Garment

Manufacturers

Distribution Wholesale

Export

Shipping

Fabrication

Sub-

contracted

small shops

Packaging Internation

al Brand

Garments

Special tailoring

(domestically)

Whole Domestic

Distribution

Spare parts

(Overseas)

Packaging

materials

(local)

Energy:

Electricity &

Fuel

Input Assembly

(Overseas)


- Carnegie School of

Home Economics


- Government Technical

Institute

- International

Consultants

Sewing machines

(Overseas)

Cutting

based on

Design

Specs

Spare parts

(Local)

J oint Venture

(USA)

Raw materials

VALUE CHAIN ANALYSIS: BPO Services



Overseas

businesses

design service

requirements

Package

designing

BPO Firms

Front Office Service:

Customer Support Input

assembly

Importation

of high end

equipment

Back Office

Services

Service is

launched


- Companies themselves


- Other vocational

institutions offering

computer studies

Domestic Computer

Supplies and Services

Internet Service

Providers

Telecommunication

Services

Shipping

Companies

CLUSTER DEFINITION



Business Segments Criteria Hand-crafted Gold

Jewelry Manufacturing

Wooden Furniture Manufacturing

Garment Manufacturing

Business process Outsourcing

1. Clear and common business

Criteria Satisfied

Criteria Satisfied

Criteria Satisfied

Criteria Satisfied

2. Complex value chain

Criteria not satisfied

Criteria Satisfied

Criteria Satisfied Criteria not Satisfied

3. Number of companies

Criteria satisfied

Criteria satisfied

Criteria satisfied

Criteria satisfied

4. Presence of support institutions

Criteria satisfied Criteria satisfied

Criteria satisfied

Criteria satisfied.

5. Geographical concentration

Criteria satisfied

Criteria satisfied

Criteria satisfied

Criteria satisfied

6. Certain degree of specialization

Criteria satisfied

Criteria satisfied

Criteria satisfied. Criteria satisfied.

% Satisfaction 83% 100% 100% 83%

FIVE FORCES MARKET ANALYSIS: Wooden Furniture Manufacturing



Key barriers to entry include investment cost, standards and economies of scale

Balance of power is likely to lie with Buyers

Suppliers do not have much Power due to competition in the supply of inputs

Substitute goods include metal, nibbi, plastic and other furniture. Of these, metal furniture is the stronger substitute

Buyers Suppliers

Substitute Products

Industry Rivalry

Potential Entrants

FIVE FORCES MARKET ANALYSIS: Garment Manufacturing



The ability to establish business relations overseas as well as standards are the key barriers to entry in this industry

The power of suppliers is likely to be weak due to small size of the local industry and therefore the volumes of textiles that may be purchased

Balance of power is likely to lie more with buyers

There are practically no effective substitutes for garment manufacturing, perhaps with the exception of fur

Potential Entrants

Buyers Suppliers

Substitute Products

Industry Rivalry

FIVE FORCES MARKET ANALYSIS: BPO Services



Barriers to entry relate largely to the cost of telecommunications and being able to establish business relationships.

The power of suppliers is likely to be weak as there are many suppliers of computers and computer-related items

Balance of power is likely to lie with business consumer

The only possible substitute is self-provision by firms which is not feasible given the impact on cost efficiency and competitiveness

Potential Entrants

Buyers Suppliers

Substitute Products

Industry Rivalry

CLUSTER PRIORITIZATION AND SELECTION



Criteria Key Factors Actual importance of the cluster-contribution

Contribution to GDP and exports Exports Contribution to employment Size Increased use of indigenous raw materials Existence of other factors of strategic comparative advantage

Development Potential Market trend analysis Innovation and Development of new products or services Potential of adoption of new technologies Need/opportunity to change

Potential challenges New Opportunities

Change Management Issues

Existence of relation among agents (sense of belonging) Existence of SMEs (main beneficiaries) Competitive situation

Government support for sector

CLUSTER PRIORITIZATION AND SELECTION



Ranking Clusters Based on Cluster Criteria

Crtieria Garment Manufacturing

Wooden Furniture

Business Process Outsourcing

Actual importance of the cluster to the economy

3 5 5

Development Potential 3 3 5 Need/opportunity to change 4 5 4 Change Management Issues 4 4 3 Government Support for Sector 3 3 4 Total (Potential As a Cluster Initiative) (Highest possible total =30)

17 20 21

Ranking: 1 Very low 2. Low 3. Medium 4. High 5. Very High

Thank you


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COUNTRY MAPPING EXERCISE: GUYANA BASED ON CCFC WORKSHOP, JULY 9- 13, 2012 INSTITUTE OF CRITICAL...

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