President of the Pensioners Association, Lyle Donawa, said members have been negotiating with Caroni for an increase in pension and got nothing out of it. “People who retired  in the 80’s are getting the same pension today,” he said. Three months ago, the staff associations, he said, had asked for 15 percent increase on salaries “so automatically this will jack up their pensions. The Pensioners Association have asked for a three percent increase in pension for each year of retirement. The active Staff Unions have however, recommended a 10 percent across the board to all retired pensioners. “This is not not equitable because people who retired a few years ago will get very  little out of the deal,” he said. By his calculations a person who retired on $6,000 a month will get an increase of $600 while a person who retired 20 years ago will get only $200 increase in pension. “The equitable thing would be to get the two percent for each year of service,” he said.

Some members of the staff who retired years ago were given an exgratia payment by the company to make up the pension, which was funded by the company. Since Caroni has been wound up, the exgratia payment is no longer available, he said. The Pensioners Association is asking that these payment come out of the pension fund but the Staff Unions are arguing that that money should not fund these payments. “It will mean that a lot of people will lose their exgratia element,” said Donawa. Donawa said pensioners are now even more concerned. Since Caroni was wound up, it means that pensioners are in limbo over who has the final say over the pension funds.

As far back as September 18, 2002, actuarial consultants, Bacon, Woodrow & de Souza, warned Caroni Chairman Kusha Harracksingh about the “substantially increased benefits” for all current active members of the Staff Pension Fund On August 26, according to documents, Harracksingh, had shown the actuaries a set of proposals for benefit improvements in the Staff Plan that had been formulated by the Staff Unions. Those increased benefits, said partner the firm’s partner, TP Kimpton, would have “absorbed most if not all of the surplus disclosed by the actuarial valuation. The proposals suffered from major deficiencies, the actuarial firm said.

The following are their comments :
a)They were drawn up in the expectation of an imminent VSEP exercise in order to deliver enhanced VSEP pensions. However, the proposal would result in the same enhanced benefits being available for staff retained after a VSEP.  This is inefficient and expensive — a VSEP as a one-off exercice that provides enhanced benefits only to those persons leaving under VSEP so that the outgoing design of the plan remains unchanged.
b)The proposals would have produced a pension plan considerably more generous and hence expensive — than is typical in the market.
c)The proposals would have done nothing for existing pensioners who have all been on fixed pensions being eroded by inflation ever since they retired. If surplus is to be used to finance benefit improvements we would expect pension increases to be one of the first items to be considered.

But in a set of proposals submitted to the Ministry of Agriculture on August 22 by the Staff Unions, the actuaries noted that these were “substantially more generous” and the potential cost of these proposed benefit enhancements as several hundred million dollars, many times the level of surplus in the Staff Plan. The actuarial firm also noted that as far as active members are concerned, “from a purely pensions perspective the Staff Plan’s benefits are fairly good and it is probably difficult to justify any improvements other than to the ancillary benefits.

National Flour Mills Limited has announced the appointment of Mr Gregory Thomson as Chairman. He has been Executive Director, Republic Bank Limited since 2002, having joined the Republic Bank Group in 1993. He has held several senior management positions within the Group prior to his appointment as Executive Director. Mr Thomson holds a Bachelor of Science Degree in Mathematics and Physics from the University of the West Indies and a Master of Business Administration Degree from the University of Western Ontario. His experience includes Board membership in both private and public sector organisations. He currently serves as Board Member of Republic Bank Limited, Republic Finance and Merchant Bank Limited, Republic Securities Limited, Republic Nominees Company Limited, The National Commercial Bank of Grenada Limited, the Trinidad and Tobago Centralised Depository Limited and National Flour Mills Limited. Mr Gregory Thomson brings over 25 years of valuable experience in banking and finance to the post of Chairman. National Flour Mills Limited outgoing Chairman is Senator the Honourable Christine Sahadeo.

Mariners Haven, a subsidiary of the HCL Group of Companies, in keeping with its  mission to provide quality and timely services in an environment that is compliant with all health and safety and environmental objectives and other regulatory standards, has now become ISO 9001-2000 Certified. Mariners Haven is one of the leading docking facilities in the region. Located at 1st Avenue South, Western Main Road, Chaguaramas, its core business includes ship repairs, shore based and logistic support services and rental services.

At a recent  ceremony Mariners Haven received its  ISO 9001:2000 Legal Certificate of Registration from BSI Management Systems, the certifying body, based in the United States. The scope of activity for which this certificate is issued will cover processes relating to the management of vessel repairs, shore-based operations and rentals for the marine environment. ISO (International Organisation for Standardisation) is the source of the ISO 9000 and ISO 14000 families of quality and environmental standards and some 14000 International Standards for business government and society. ISO is a network of National Standards Institutes from more than 140 countries working in partnership with international organisations, governments, industry, business and consumer representatives.

Desalcott General Manager John Thompson is not too concerned over the fact that the multi-million dollar company won’t see a profit on its books until 2012, ten years from now. In the oil and gas energy sector, a profit in ten years would be unacceptable, because these companies are looking for results in two-three years. “For a utility company, the return is on a longer time scale,” he said, noting that this is acceptable because the risks are not as great. Desalcott, he said, is not subject to highly fluctuating market prices, like methanol and ammonia. And if the Water and Sewage Authority (WASA) decides to take control of the plant at the end of the 23-year contract, the US$150m plant will cost US$3m.  That, say sources, is a “steal of a deal.” At the end of that tenure, WASA has the option to renew, but sources say that there is no indication that the state-owned company will. Desalcott has yet to recoup $147 million, sources say. After facing a barrage of criticism over the setting up of the plant, Desalcott is letting its massive intake 42-inch pipes south of Point Lisas speak for themselves. After a slew of chemical processes, through mammoth anthracite filters, and cartridges the size of a massive 12-wheeler container truck and then over specially graded sand, the water albeit salty, is pure water. Only then does the reverse osmosis process remove the salt.

From the size of the clams he says he has seen, “nobody could say that the Gulf of Paria is dying.” Thompson knows the desal plant like the back of his hand, every nook and corner.  He talks about the plant as though he put every piece together himself. “The process has proven successful and although other large desalination  plants have had major problems, we have not,” he said. “This is the first plant that has made a step forward, in theory other plants could beat our price for delivered water, as yet none have achieved it,” he said. Deputy Managing Director, Republic Bank, David Dulal-Whiteway had described Desalcott during a tour of its facilities as a cash cow.  The local banking giant last month signed a deal with the desalination company for US$112.2 million in long-term financing. But Thompson would not go so far as saying that Desalcott was a cash cow. “The way that the bridge worked.”  Thompson explained, “Desalcott did not pay any interest on the loan, interest was rolled-up and capitalised. The idea, he noted, was to get the plant up and running and let the interest accumulate on the bridge loan during construction. “In the early years, there will be little capital repayment,” he said, noting that the reason why Desalcott looked like a cash cow was that in the early years sufficient cash would be generated to pay the large amount of interest on the loan and pay the running costs of the plant.

Republic had provided US$77 million bridge financing, while Desalcott’s partners put up US$20 million. Desalcott is a 60/40 joint venture between Hafeez Karamath Engineering Services Ltd and Ionics Inc, a US-based company. The plant has a 23-year contract covering five phases (step-ups) of production to supply water to WASA at $4.46 per cubic metre. Desalcott hopes to have Phase Five up and running by February 2004, thereby increasing production from the current 22 million gallons per day to 24 million gallons plus 15% additional will then be available at half the price. Desalcott is still feeling the impact of having to pay duty on goods, sources said.  Plants in Barbados and other parts of the world are exempt from paying duty.

Although Desalcott operates with a Minister’s Licence which allows it to bring in goods duty free, sources say one of the difficulties is getting the goods through customs. Sources say there is a specific list of what Desalcott is allowed to bring in, but with a plant made up of an interminable amount of pieces, it does not make sense. On Planning and Development Minister Keith Rowley’s charge that Desalcott was also on the government’s list to be investigated, Thompson was unruffled. “I understand that an investigation was carried out last year at WASA and the Ministry of Public Utilities and the Environment.  I have heard nothing further,” he said. So sure is Thompson of Desalcott’s quality of water, that if someone had the capital they could go into the bottled water business.  “I drink it all the time,” he said. WASA, he said, asked for a maximum level of dissolved impurities of 85 parts per million, Desalcott delivers 35 parts per million.  500 parts per million is the limit for drinking water according to WHO guidelines. His guess is that companies on the Point Lisas Estate are saving on the bottom line because of the purity of the water. Even so, companies in Point Lisas do further purification for their own processes. Point Lisas uses about 15 million gallons a day.

But the water that leaves Desalcott could end up anywhere in the South of the country, he says, noting that WASA has the prerogative to do so. Of the 190 million gallons per day produced by WASA, 22 million; currently comes from Desalcott, freeing up WASA’s water throughout the country for domestic use. As for concerns that Desalcott was putting out stuff that was harmful to the environment, “We have an environmentally clean conscience,” Thompson said. On a global scale, Desalcott, sources say, is giving WASA some of the cheapest water available.  One subsidised plant in Florida charges US65 cents per cubic metre; Desalcott charges WASA 70 cents per cubic metre, but other seawater desalination plants in the Caribbean charge as much as two dollars per cubic metre. On Planning and Development Minister Keith Rowley’s charge that WASA’s TT$15 million monthly bill from Desalcott was too much, Thompson said this was not so. “Half of the TT$15 million montly bill to WASA is, of course, to recover the US$150 million capital cost of the plant and the whole bill should not be compared to the operating costs alone for other facilities.”

Rhea Yaw Ching, District Manager of Coca-Cola Carib-bean, graduated from the University of the West Indies in St. Augustine and is pursuing her MBA. She is a fast rising manager in a global company and President of an all female business organisation, the  Association of Fe-male Executives of Trinidad and Tobago. When you meet her, she is serious and focused. As a young woman — just thirty-years-old — she is thoroughly enjoying life and seems to have it all: career, husband, new home. Yaw Ching forms part of the growing breed of management-educated women executives, who don’t just reach the top, but actually thrive as they bring a new perspective to their organisation. Twenty years ago women like Yaw Ching could only stare bleakly at the glass ceiling. There were once bustier tight reasons for this. Boards of Directors were composed predominantly of men  (estimated at 90%) and Chief Executive Officers as well as Managing Directors often recruited in their own image and likeness.

Two things changed. Women began storming the halls of education (there is an 80:20 female/ male ratio at the University of the West Indies) and the pool of resources that the male board of directors had to draw from became feminised.  Over the last five years, the gender changes in both the managerial and administrative levels have been obvious, particularly in the service industry,  (law, medicine, nursing and teaching), the media and finance. And women like Yaw Ching could see the cracks in the glass ceiling. It was only a matter of time before the crumbling began. “Breaking through that ceiling is quite exhausting, yet extremely fulfilling. We as women are told that we can’t do certain things but I’ve never had time to bother with people who tell me that. The fact is that I have to work smarter to get ahead, and I’m not afraid.”   But there are other reasons that allow for the success that follows Rhea. Global push factors have made it possible for a different kind of leadership — female — to emerge. Rewind twenty years or so. The other generation. Remember how passively loyal they were, how retirement nirvana meant proudly recalling the years of service one gave a company.   Historically, loyalty was a bought commodity. An employer offered a slow, albeit steady climb up the corporate ladder and in return employees gave their unwavering commitment.

Fast forward. Take a look at the new corporation. Blind loyalty is dead. Today’s employees are questioning and demanding. They are confident enough to air their concerns, grievances and aspirations. How does female leadership fit into all this? There is a chorus of experts who says that the new organisation demands a more collaborative, and less competitive, more inclusive and less elitist culture.The old notion of corporate leadership; of power concentrated in the hands of an all male managerial team; where employees snap to attention and intimidation and threats are used is no longer a relevant model. The new leader of the New Inc does not command and control. She motivates and inspires.  Call it spiritual management. Put any of the latest noveau terms to it.  The bottom line is that employees whether in large or small organisations cry out for leaders who can provide meaning in their professional lives that is not incongruent with their personal lives. They want leaders who lead by concensus, leaders who understand the importance of communications and who can create an innovative and diverse workplace where mistakes are not punished. Research supports the view that women are the leaders of the future. That future — by the sheer force of globalisation, digitisation and boundary-less competition — is here.

The statistics paint the way of change. Today in the United States women account for one out of 13 clout positions — executive vice president or higher  — in the 500 largest US companies. Eight years ago that number was 1 in 40. In Europe, the situation is bleaker but still evolving.  According to the European Commission for Equal Opportunities, women acc-ount for 35 % of middle management and administrative roles. In Trinidad and Tobago, according to Director of Personnel Management Service Diana Mahabir Wyatt, despite the fact that men still dominate the boardrooms the corridors of power and the overall earning power of males to females is in the range of 67:33, the number of women in management positions have reached critical mass and boards desperate to recruit male executives,  “have started poaching from each other, recycling the same people over and over.” Their actions point scrooge like fingers to the fact that firms who remain bogged down in issues of gender, of recruiting those who look, act and lead like the crowd of old, will slip deeper into the quagmire. They will encounter serious problems when the competition races ahead. Intelligence. Leadership.  Both are normally distributed. Yaw Ching and the presence of several women in management positions and in the Boardroom, who continuously keep chipping away at the glass ceiling, are here to remind us just that.

Judette Coward is a former Board Member of the Association of Female Executives of Trinidad and Tobago. She is a communications consultant.
The views expressed in this column are not necessarily those of Guardian Life. You are invited to send your comments to guardianlife@ghl.co.tt

Q. Your responses to readers seem to give the impression that investing money is the answer to almost everything. But what about the risks involved?

Nicole, Trincity

A: You are quite correct. One cannot speak about the return on an investment without considering the risks involved. Risk and return are two sides of the same coin. In fact, the higher the potential return on an investment the higher the risk involved. Last week we explored the possibility of putting money in the stock market rather than opening a new business. Of course, the stock market has a higher degree of risk than a fixed deposit or a money market account. However, despite the many downturns in the market during the course of history, stocks have ALWAYS recovered. The market recovered after the Great Depression, the Asian Crisis, and 9-11. While the recovery took some time it eventually happened. The key is to have the time to wait for the market to experience an upturn. Therefore, you would not want to put money into the market that you would need at short notice. If you have to liquidate a portfolio due to an emergency it may be when the market has fallen causing a loss on your investment.

Over the long term the probability of a high return increases significantly. In fact financial theorists have coined a new term referred to as “Time Diversification of Risk” which means in essence, that the risk of investing in the stock market decreases as the holding period of the investment increases, all things remaining constant. So examine your portfolio and decide, based on your budget, what part of your savings you can lock up in the stock market for a few years. Then, talk to a few stockbrokers to get the best advice about building a portfolio of shares.

Q. What’s the best way to educate myself about the stock market? I don’t want to become a broker, just want to make sure that I don’t get the wool pulled over my eyes.

Thomas, Gasparillo

A: The stock market is a simple thing to understand. The price of a share is determined by supply and demand. The higher the profitability and dividend payout of a share the greater is the demand for that share. Companies on the local stock exchange must publish results every quarter in the newspapers. It would be a good idea to talk to your broker and get the dates at which each company publishes results. You can then monitor what is happening to the financials of the companies listed on the exchange. If the company’s results increase from one quarter to another the price of the share most probably would increase as large pension funds begin to buy the share to benefit from the prospective dividend payout. The larger the percentage rise in a company’s profitability the greater would be the percentage rise in its share price, all things remaining constant. The extent to which the price of a share increases depends on the historical Price Earnings ratio (P/E ratio) at which the stock trades. We explained the workings of P/E ratios in a previous column.

The higher the P/E ratio, the greater is the percentage price increase for every percentage rise in the profits of the company. You can get the information about the P/Es of the various companies on the exchange from the research departments of stock brokerage firms. Try and get these from two or more brokers to get a consensus as to what the P/E of that share is because it does tend to fluctuate over time. To get an idea of where the price of a share may increase to, simply multiply the Earnings per share, which is on the face of the financial statement, by the P/E ratio. The product of these two would give an indication of where the price of a share would go based on its most recent financial performance.

Q. What is an index fund?

Satish, Diamond Vale

A: In order to understand what is an index fund you must first understand what is an index. A stock index is a capitalisation weighted price average of the shares according to certain criteria. For example in the United States, the Dow Jones Industrial Average is a weighted average value of 30 shares concentrated in the industrial sector. Similarly the Nasdaq is a weighted average value of shares in the technology sector. An index fund is a mutual fund whose aim is to outperform or do better than a particular index. The index is a benchmark against which the performance of the particular fund is measured. Investors can expect that the return on the mutual fund is at least as good as the particular index.

Therefore, if the return on the S&P 500 is 10% per year then the performance of an index fund based on the S&P 500 should be at least 10% after fees. If the return is less than that, an investor should not be investing money in the index fund and paying a portfolio manager fees for his expertise as the alternative is simply to buy a pure index that would pay the same return without having to pay fees. An index fund is suitable to investors who want a diversified investment portfolio, but would also like to benefit from the experience and expertise of portfolio managers who may be able to squeeze a few extra points out of the investment.

Questions can be sent to CMMB Securities 1830, Wrighston Road, Port-of-Spain
E-mail : cmmbsecurities@mycmmb.com

MR ANTHONY HOSANG was right on target when he was asked to speak on behalf of the private sector at the breakfast in honour of visiting Venezuelan President Hugo Chavez at the Hilton on Saturday. The essential point which the TTMA president made was in his appeal to both President Chavez and Prime Minister Patrick Manning “to ensure that the revenues derived from oil and gas are used to support and develop the social and productive levels of our respective countries, so that all our citizens will prosper.” Expanding on the point, he added: “Oil and gas provide the revenue. But it has been proven that it is the non-oil manufacturing sector that provides the sustainable productive employment so desperately needed by our citizens.”

Mr Hosang’s appeal is based on a realistic appreciation of the nature of the economies of TT and Venezuela, indeed of all developing oil-producing countries. There are variations on the theme, of course, but the basic fact is that while the energy sector provides the major source of revenue for these countries, it remains, by its very nature, a relatively small employer of labour. This accounts fundamentally for the anomalous situation we see in some countries which may be considered “rich” by virtue of their natural resources and their income from the petrochemical sector yet bearing a serious unemployment problem with a large percentage of their populations living under the poverty line. It must also be noted that this sad scenario results, in many cases, not only from a failure to develop the non-petroleum sector but also from the ravages of endemic corruption, gross mismanagement and dictatorial control. Fortunately, Trinidad and Tobago has not gone that way, but our country still suffers, to a significant extent, from a lop-sided economy with an expanding energy sector dominating the scene.

The imperative for placing the economy on an even keel, better to serve the entire country in the long term, is found in the appeal which Mr Hosang made to the two leaders at the Hilton on Saturday. Revenues from oil and gas, he argued, “must be used aggressively to sustain and grow non-oil manufacturing sectors through strengthened regulatory institutions and infrastructure, so that our countries would be competitive in the FTAA.” Indeed, the competitive demand which a globalised marketplace, specifically the 2005 advent of Free Trade Area of the Americas, will impose upon us makes this appeal even more urgent. Our non-oil manufacturing sector, where the potential for job creation is the greatest, must be able to meet this foreign competition “mano a mano” so to speak, and this can only be done by establishing a facilitating environment and the required infrastructure. The Government may regard such social programmes as URP and CEPEP as one means of relieving the unemployment problem and sharing the country’s oil-and-gas income more equitably among the national population but, whatever benefits these programmes provide, they are not truly productive and not an economically sensible way to solve the problem of development, of long term growth and job creation.

Here again, Mr Hosang makes a relevant point when he expresses the hope that the visit of the Venezuelan President would lay the foundation for further development of trade relations between our two countries, “remembering always that the success or failure of trade determines our future as nations and as a region.” The bottom line is that nations develop and prosper through their productive capacity, they earn wealth and employ their people on a stable and viable basis by producing and trading and, in a globalised marketplace, we must use our assets to the best advantage.

Sugar exporting countries in the African, Caribbean and Pacific grouping (ACP), including Trinidad and Tobago, were dealt a major blow last month when Brazil, Australia and Thailand requested a panel under the World Trade Organisation’s (WTO) Dispute Resolution Mechanism against the European Union (EU) subsidy sugar regime. The sad reality is that the preferential price that some of the former EU colonies receive for sugar may soon go the way of the removal of banana preferences which devastated many Caribbean economies. Last month’s action took both the ACP and EU countries by surprise particularly as Australia and Brazil at their highest political level repeatedly assured the other parties that they would not take steps in their dispute which would directly or indirectly affect the interest of the sugar-producing states concerned.

The three countries are arguing that European Communities’ direct and indirect subsidies on their sugar export are not consistent with the EC’s WTO export subsidy obligations contracted during the Uruguay Round. In a statement following the request for the WTO panel, the EU said it deeply regrets the decision by the three countries as it runs the risk of undermining preferential ACP sugar exports to Europe. “This challenge is hard to understand. It is nothing less than an attack on the EU’s trade preferences for developing countries. Let us be clear. The claims made by Brazil, Australia and Thailand risk undermining the benefits of the EU regime for many sugar-dependent developing countries, especially ACP countries,” Franz Fischler, EU Agriculture Commissioner said. “And to add insult to injury, they are challenging the commitments which were agreed upon by all WTO members during the Uruguay Round and which are fully respected by the EU.”

EU Trade Commissioner Pascal Lamy felt the WTO action would not only destabilise the sugar-dependent economies of small ACP countries, but is also a smoke screen to hide the real causes of the current depressed world sugar prices.” We will vigorously defend them in the WTO,” he said. Brazil has dramatically increased its sugar exports from 1.6 million tonnes in the early 1990s to over 12 million tonnes in the current year. Sugar cane production has quadrupled since the mid-1970s. The EU said this would not have been possible without massive government support for investments during the establishment of the alcohol industry through the “pro-alcohol programme” worth more than US $4 billion. The structure of the Australian sugar market, which Australia claims is free and non-distorting, is practically closed to imports from other countries, even if its internal prices are at least twice as high as world market prices.

At the same time Australian production and exports have increased substantially since the early 1990s. The imports of sugar to Thailand, whose domestic sugar market is based on domestic, import and export quotas, are essentially nil, while Thailand is one of the biggest sugar exporters in the world. In their response, the ACP most of whom are vulnerable, less developed countries (LDCs), landlocked and small island states and are mostly single commodity producers/ exporters said their concerns have been ignored completely. “The steps now being followed by Australia and Brazil, large multi-commodity producers/exporters, are a further demonstration of the use of legal rules in the context of the WTO to further marginalise the interest of the small and vulnerable economies,” the ACP said in their statement. “It is a blatant attack by the big players on the small and vulnerable motivated by pure mercantilist considerations. This is against both the spirit and the letter of WTO Agreements. Furthermore, the challenge could deny the LDCs the benefits which they could expect from the EU ‘s EBA (Everything But Arms) initiative.”

It said its pleas that the challenge if successful would directly affect the lives of hundreds of thousands of poor farmers and will lead to the destruction of their livelihood, have fallen on deaf ears. The EU is currently the largest importer of sugar among WTO members with around 1.9 million tonnes imported in 2001 of which about 1.7 million is imported from developing countries at zero or very low tariff. These imports are the main reason why the EU has to re-export part of its own sugar and ACP sugar. The mechanisms for ensuring this preferential treatment were negotiated and agreed by the WTO during the Uruguay Round, the EU argues. Most of ACP imported sugar is raw sugar which is refined in the EU and re-exported as white sugar. With its Everything but Arms initiative the EU is phasing in duty and quota free market access for sugar from the 49 poorest countries in the world. The quantities of sugar sold to the EU are gradually increasing, allowing the least developed countries to take more and more benefit from this preferential access.

With the Caribbean Community (CARICOM) consuming more sugar, intra-Regional Trade is projected at 120,000 tonnes in 2003 compared with 74,000 tonnes the previous year. President of the Caribbean Development Bank (CDB) Professor Compton Bourne said any dismantling of the EU sugar protocol would mean full exposure of CARICOM producers to a low-cost major exporter like Brazil. Stating that there must also be scales of economies, Professor Bourne said small states cannot entirely ignore the need for enterprises of production size sufficient for international cost-competitiveness. He said in the sugar industry, production costs in CARICOM producing countries exceed internationally competitive prices by a factor of 3.5 in Trinidad and Tobago, 2.5 in Jamaica, 2.4 in Barbados and St. Kitts and Nevis, and 1.3 in Guyana. Only Belize matches the internationally competitive price. “It is therefore necessary to consider consolidation and restructuring of the sugar industry in an effort to create viable sized national industries or a regional industry,” he said. With the challenges facing regional sugar producers including depressed world prices, Bourne’s suggestions should be acted upon with great urgency.

Anthony Burgmans, Chair-man of Unilever NV, said his company has put a hold on acquisitions for now, simply because the company was saddled with a US$16 billion debt. Burgmans was recently in TT to tour Lever Brothers West Indies Limited (Lever), a subsidiary of Unilever. His visit to TT was the first stop in his Latin American tour of Unilever companies throughout the region. Unilever is a global company and about 40 percent of their turnover is in Europe; 25 percent in the United States (US) and the rest is in the Caribbean, Latin America, Africa and Asia. In an interview at Levers’ headquaters in Champs Fleurs, Burgmans noted  that acquisitions are not really their first priority right now. He explained that about three years ago Unilever acquired Best Foods at a cost of about US $26 billion. He said that acquisition, together with two others amounted to about US $30 billion. “That is a huge amount of money so we decided that for the time being we would concentrate on integrating Best Foods into our operations,” he said.

Additionally, he said those acquisitions affected Unilever’s balance sheets and the company now has a debt of US $16 billion. “We want to bring that down a bit to about US $12 to US $15 billion. So acquisitions are not really our first priority right now. We are concentrating on integrating the acquisitions we already made and putting our balance sheet back in order.” Burgmans is one of two chairmen at the head of the fast moving consumer goods multinational, Unilever. He is the chairman of the Dutch branch, Unilever NV. He said while he is quite pleased with Lever’s performance in TT, they have to wait and see how the free trade situation develops before they decide whether or not they want to expand their operations in the country. He noted that Unilever’s activities does not only include manufacturing, noting that this is just a small, but important part of their operations. Burgmans said Unilever also makes huge investments in their selling and marketing operations, as was done with Sedal, a shampoo. “There are huge investments involved with these activities especially in advertising. This benefits the country in which they are operating because these type of investments tend to be very huge,” he said. Apart from their own operations, Burgams said they also have a great interest in the countries in which they operate. He said Unilever worldwide provides employment for a number of people. “I have been told that for everyone person which we have on our payroll, indirectly two other people work full time for Unilever as well. So there is an enormous multiplier effect in every country where we operate.”

Pressed on their expansion plans for TT, he stressed that this is all depends on how the free trade situation develops. Harish Manwani, Latin American group president, Unilever, said while acquisitions and expansion are not  on the top of their lists, they always have new products in the pipeline. “Our business is to constantly innovate. The first thing that we always do is focus on the number of brands which we manage. The onus is on us to really make these brands grow aggressively. There is really only one way to grow these brands and that is to constantly innovate.” Burgmans also reviewed Lever’s financial performance. He said he is quite pleased with the direction the company is moving. “Lever not only has a good achievement record but I have found that they are very clever in the way they network and interact with sister companies in the region.” He said there are many resources available on the Latin American scale in Unilever which have been leveraged here in a very efficient and effective manner.

Burgmans added that Unilever has always promised in its strategy “Path to Growth” that every year it will deliver low double digit earnings per share. “This has been our promise in the last three years and in 2000 we delivered ten percent; 2001, 12 percent and last year 21 percent.” However, he said while this year has been a bit tough for many reasons, they have confirmed to their markets that they will deliver their double digit earnings per share. “Post 9/11 has affected consumer confidence worldwide not only in North America. We are seeing consumer confidence weaken in Europe as well. There is also a hesitant growth in other larger economies around the world and so far it has been a very bumpy year.” But Burgmans assured that under all these difficult circumstances, Unilever has been fairly resilient. “But then again one would expect that from a consumables company, after all people continue to take a shower or have breakfast,” he joked. On small countries, like TT and their survival in a global environment, he said such countries have the advantage of being very flexible which allows them to move more quickly than larger economies.