(This is an edited interview between the Chief Executive Officer of Massy, Gervase Warner and Stabroek News on October 29th. Warner was in Guyana for the rebranding of the Neal and Massy Group of Companies to the Massy Group of Companies and the launching of its new distribution facility at Montrose, East Coast Demerara.)
SN: So you are here for the re-branding and the launching of the distribution facility. How do you think this expanded distribution facility is going to position Massy to gain further purchase on its strategic objectives here…
GW: So, I visited the facility, the finished facility today for the first time. I have been to the facility throughout the construction phase and am very impressed. I don’t think we have a facility that is as sophisticated as that facility is, in all of our Massy businesses throughout the Caribbean. So it’s a really state-of-the-art custom built warehouse, very high ceilings, forklifts that can rack from the floor to the ceiling, sophisticated warehouse management system, the inventory management is state of the art, different types of cold rooms for refrigerated, frozen and air-conditioned types of products. The scale of it is enormous and I think that when you visit the facility, when the principals visit the facility, I think that everybody would want their products to be distributed through our operation and organization. It looks like it is just a state of the art, well-managed with deployment of technology, very efficient, secure, everything that you want in a distribution facility.
SN: Are there new lines of products you are then hoping to attract into your distribution network?
GW: Yes. Certainly.
SN: Are there some that you have already confirmed …
GW: Yes, there are some that we have been pursuing and speaking to and none that we want to discuss in a public forum like this.
SN: And you are expecting that this investment is definitely going to improve your market share in terms of the distribution?
GW: First of all it is going to make us more efficient and we currently operate six or more warehouses around the Georgetown area, trying to accommodate the volume of products we distribute. And so just in consolidating those warehouses into one operation, we are going to save a huge amount in just efficiency. We are also going to save on demurrage charges because of operating in such a tight space that there have been times when we could not take/offload shipments coming in because we just didn’t have the capacity in our warehouse so there would be huge savings there. And there are also lines that some principals would like to give to us but we just hadn’t had the space to be able to take them on. So for sure we expect some expansion from pent-up demand and based on our capacity constraints in the past.
SN: You are celebrating your 45th year here. Is there anything in particular that Massy is now looking at here in terms of new investment?
GW: Oh yes. Quite a few things. So the one that is a concrete decision has been made is in the supermarket arena. So Massy stores is coming to Guyana in 2015 or 2016 at the very latest. We should have two Massy stores supermarkets in the Georgetown area.
SN: And so that is going to be modelled after the Barbadian one, because I know that you have launched one superstore in Barbados?
GW: Very interesting. So what we have now…that is not necessarily what we call it, a Barbadian model. One of the great things about the re-branding is we are now one Massy so we don’t have a Barbadian version or a Trini version or Jamaican version, we have Massy. So we do have different formats of our stores and I think both would be Massy stores supermarkets. They would carry some amount of non-food products. But the super centres which is also really large square footage format, where we would have a significant area dedicated to non-food, It is probably not the format we would start in … Guyana. We would start with the large footprint supermarket, but not quite a supercentre.
SN: And you say two and in 2015?
GW: Yes
SN: You have any idea about the locale?
GW: Yes… one would be near to where the distribution facility is. There is a vacant lot of land that is right now scheduled to be developed by the folks from Movietown in Trinidad, so we are going to be on that facility as well. And then there’s some land closer to the cricket, the oval where you all play cricket…
SN: Bourda? Or the stadium?
GW: … the stadium, which is some land that is owned by (Ramnaresh) Sarwan and we would be developing it.
SN: So he would be a partner in this…?
GW: He would be I think the landlord …
SN: Are there any other sectors, I know a lot of people in Trinidad have prospected in agriculture and I know that is something that you looked at at some point when you were considering a pilot project which didn’t come off. I know that some people are also interested in the banking sector because they seem to think that everybody is making money in banking here. Are there any other sectors…?
GW: So, we are neither in agriculture nor in banking and we have learnt some lessons about sticking to our knitting and we are probably not going to in the immediate future target either of those industries. Although from an agriculture perspective there, there are arguments for working with small growers who do some value-chain integration into our stores.
The other area that I would say we are looking at actively and interestingly enough is in the energy area. So you know you have a couple of companies here doing some exploration activities looking for oil. We are an oil-service company, we service oil of course, and particularly if commercial quantities of oil are discovered we will definitely be setting up our service and product distribution companies to service those producers. But we are also looking at alternative energy investments here in Guyana and looking for projects that would make sense whether they be small/medium scale hydroelectric, solar, wind, probably not so relevant here but even like gas to energy, waste to energy projects. They are some of the things we looking at. We are open to hearing where there are specific needs but we do believe that with the quality hydro generation capacity that exists in Guyana there is a huge untapped opportunity for Guyana to be more independent in terms of power generation than it currently is.
SN: …but how serious is your interest? Does it extend to going to the government saying `listen we are interested in you giving us a proposal’ or discussing that? Because you might have been aware of the Amaila Hydro project which has foundered on fiscal and other issues. Are you prepared to go that far as saying we are keen on tapping into that area of potential?
GW: Yeah. But a project like the Amaila Falls project is a project of a scale that we would not be interested in being a principal investor.
SN: But micro-hydro and smaller hydro…?
GW: Smaller hydro I am thinking, particularly for remote facilities that require some power generation. You know we have with our partners … have the ability to access the technology in the engineering and we do operations and maintenance of those types of facilities, construction and management, procurement and those types of facilities are in our list of services that we already provide with our energy services companies in Trinidad.
SN: What I wanted to ask about is the jobs that Massy has here at the moment and whether or not in terms of our economy …. one of the biggest drawbacks to it is the lack of creation of new jobs for the growing younger population and people who are coming out of universities and so forth. So I wanted to ask you if you had an idea as to the number of jobs that might have been created by Massy over the last ten years here?
GW: I wouldn’t have that statistic but what I would say is that we are at a perpetual deficit for professionals and managers and leaders in our Guyana operations here. We think that we pay a lot of attention to developing our Massy employees, lot of attention to trying to retain them. One of the challenges – that is why I was kind of surprised by what you said – is that of course you are here in Guyana and like the rest of us do, but very acutely here in Guyana, suffer from an immigration brain drain as it is referred to and we have a lot of people who are doing a great job in our companies and then they get a Canadian Permanent Residence and they are gone. And so we have a huge graduate trainee programme and we are always bringing in new people into every year and they then going to the front rows and functions within our group of companies and I feel we just can’t get enough good people rather than there are not enough opportunity. But certainly as we continue to grow our footprint here in Guyana, I mean the Massy gas products business is growing very well, this distribution centre will set us up to grow I think fairly considerably in the distribution arena. When we start the Massy stores again, we will have to hire staff in a lot of different roles. So we are going to be an employment generator. I don’t have the figures in terms of the number of jobs we have created or will create but for sure I would say that the best employers here in Guyana would be the Massy Group of Companies.
SN: … in terms of jobs, one of the problems was that we are losing about 80-85% percent of our tertiary graduates and …the question is how you hold the younger cohorts that are getting into your training programme and how you find ways and means of … keeping them here …it is not only the question of the number of jobs you can create, but how many high quality jobs you are going to create and keep those people interested.
GW: Yes, so we have a corporate problem and I think Guyana has a national problem in that regard and I think we both have to work together to stem that tide. So…(it) would be that most young tertiary professional graduates would rather prefer to work in a first world country … with respect to amenities and to able to get more of a development challenge by working in the first world. So what we do is, we say – as you would have seen in our re-branding with an upgrade of our facilities – when you come to work at Massy in Guyana, you feel like you are working for a first world entity and when you go in to that distribution centre, you know that it is as comfortable as the distribution centres that I have walked through in Miami and many ways better. When you join the Massy Group of Companies, you are joining a group of companies that has now close to 11,000 employees across the region including Colombia in South America. Joining a group with multiple industries has opportunities for advancement and professional development that just don’t exist in a most other institutions. You are joining a group that is growing on a consistent basis and therefore the opportunities are professional, probably exceed that of going into to AT&T or Johnson & Johnson, one of these companies where you get pigeon-holed into a desk job. Because of the nature of the labour situation, professional situation in Guyana, young people are exposed to more management responsibilities earlier in their careers there at Massy than they would be elsewhere. We are doing our part, we think, to create attractive employment, alternative and professional development and alternatives for people in Guyana, from Guyana, and I think that what goes hand in hand with that is the investment in the country, the safety in the country, the extent to which people feel in a place that is well governed and that is growing, where infrastructures are improving, where access to first world goods and services are at their doorstep etc., etc. then few of us want to live away from home.
SN: You mentioned Colombia, so that is part of the platform services…
GW: Yes, one of the companies that we acquired – we also acquired a couple of car dealerships in Cali, Colombia. So we have more than one industry in Colombia.
SN: So you are saying that Cali has recovered from this image it had (connected to cocaine trafficking)
GW: Colombia is recovering from that image. Colombia, I think, is the fastest growing, if not, the second or third fastest growing economy in all of Latin America. Colombia is a very well organized country and they have come through a series of very strong presidents starting with Álvaro Uribe … and their big problem was the FARC and the guerillas. They are addressing, taking that issue on, head-on. When I look at us here in Guyana and I look at us in Trinidad, we make such a big deal about, you know, race-based politics and you know you got a suspended parliament because the president is from a different party and we’ve got people who are always arguing with one another, you have places around that are dealing with much bigger issues in a much more mature fashion. So, I hold out some hope for us but Colombia is a great place to be, and it is really strategic for the Massy Group.
SN: One of the other deficiencies in our economic development in last 10 to 20 years has been this total lack of any kind of light manufacturing. We have been completely consumed by the distribution sector. Quite a lot of companies have come into this region especially because they see advantages there …but there is very little value-added in terms of manufacturing, light manufacturing or the creation of higher value jobs. We are sitting right here in Ainlim where a lot of … (GW: Massy Industries!) Massy Industries, right, we used to manufacture something called the Tapir which was a very light vehicle that today, up to today is still very prevalent in parts of the Corentyne. Is that something that Massy is aware of … This economy has been deprived of significant light manufacturing opportunities and it’s been overpopulated by the distribution sector…
GW: So, it is a question?
SN: Yes
GW: What is the question?
SN: The question is, is that something Massy thinks that it should be giving back at some stage to this country in terms of the length of time they have been here and that it is something they should see as important …
GW: Why do you think that there isn’t a lot of light manufacturing in Guyana?
SN: Well, we could talk about energy because that is one of the questions I wanted to ask…the energy differential in terms of running your business between Guyana and Trinidad. What does that work out to be in terms of percentage…?
GW: Like 7-1, 5-1 something like that when I last checked.
SN: So that would be one of the reasons if you could… any kind of energy venture might lower your energy cost here (and) that would certainly enable you then to consider things like light manufacturing…
GW: Why else do you think there is not a lot of light manufacturing in Guyana… It comes back to energy and it comes back to your own market. So in Trinidad it is not much bigger but people are more…it is a higher greater prosperity, higher income per capita so you have greater consumption… In Trinidad the government put in place, back in the 1980s, a lot of incentives for manufacturers to retool factories or to go into light manufacturing and if you talk to many manufacturers in Trinidad today, many of them would say it is only because I already have a plant here that I continue to manufacture in Trinidad, because technology, scale etc., etc. has driven places that are more populous, have bigger economy of scales over their production and so transportation costs are taken into consideration. Someone can land a product into your country for your consumer at a lower cost. Then it is the benefit of the consumer, for the consumer to be given the opportunity to purchase that product at a lower price, right. So, what I love about business is that business kind of makes sense. You know, it is one of those things where if you try to peel back why something isn’t happening, there usually is a good reason that has something to do with the commercial viability or competitiveness of that. So you know, I think an economy like Guyana has to start looking at ‘what are we strong at?’ and ‘what are the things that we can really be best at?’
And so a great example is, let’s look at sugar which is a big industry in Guyana. Now we should be as good as Brazil in sugar. We have the ability to go to harvest two crops, we have all the acreage, we have all the growing conditions, we can’t get ourselves organized. So it is like a travesty…that’s a place where Guyana has a natural gift of competitiveness. And you could go on into other agricultural…
SN: Sure, like ethanol I presume …
GW: Absolutely, for sure. So the idea of looking at some other place that did well with light manufacturing and that’s what, you know, places like Taiwan and stuff that had them growing to these great industrial powerhouses may not be relevant for our local markets or our specific countries. I think we have to divorce ourselves from what other people (do), and really look to our strengths of our character and come from what we are good at, what we are strong at, what is the resources we have in abundance.
SN: In terms of employee turnover, would you say that it is highest in this part of the Caribbean than anywhere else?
GW: Yes, probably Guyana is where we would have our most acute problem in employee turnover, yes, because of the nature of personnel flight to places like Canada.
SN: As CEO, you come here I suppose quite often?
GW: A fair amount.
SN: And you are fully attuned and in touch with the political situation here?
SN: I would say carefully attuned (laughs).
GW: Is the political instability and the gridlock …
SN: It is quite stable, it’s a stable gridlock (laughs)
SN: Stable gridlock. Stable gridlock of course is stalemate and never good for a business environment, is that something that concerns you as CEO of Massy and presiding over an important component of your…
GW: You know, it is 45 years in Guyana for us and we have been in Guyana through all sorts of regimes including the Forbes Burnham years and this time is actually good compared to those times. When you couldn’t get dollars out and that sort of stuff. But the truth of the matter is we try to make sure that we are not dependent on a political environment, but clearly political environments affect all businesses. So I guess I make the point that we have seen worse and surely we would benefit if it were better. But really is it not our business to really be political commentators. We try to work with whatever regime is in power with respect to what we see as relevant policies or projects that we think we can be a part of for the benefit of the country of Guyana.
SN: There of course is one particular matter that could be a potential problem, the non-passing of the Anti-Money Laundering legislation, you have a money transfer service…
GW: It is really unfortunate for Guyana and all of us who operate in Guyana, because the international legislation around anti-money laundering and the requirements for disclosure to the United States and the FATCA and the penalties that can be enforced upon companies and directors are quite considerable. And so Guyana not signing on and becoming a blacklisted country from the anti-money laundering perspective creates a huge burden of due diligence for us in terms of interacting with the Guyana operations… it also of course creates this environment in which …the access to international capital for Guyana is very limited …You know we had some people actually try to convince us that it was not a good idea to invest in Guyana because of this blacklisting and we are about to put some significant capital into these two stores (supermarkets) …for us we have been through much worse days in Guyana …we didn’t agree (with the advice not to invest) but do recognize from that perspective there are people outside of Guyana who are looking at potential investments in Guyana and looking at this blacklisting issue and saying maybe we should not invest… that can’t be good for your country.
SN: And there is an actual transaction cost…
GW: Oh yeah. You don’t have to ask me that. You have to ask for more paperwork it is more intrusive in terms of accepting customers from Guyana or accepting transactions arising out of Guyana so you have to have more staff to process that information there is risk associated …the more information you require the more opportunity there is of non-conformances and regulators don’t like non-conformances.
