Clothes manufacturers report falling sales

Garment manufacturers are reporting a drop in sales since the introduction of Government’s controversial National Social Responsibility Levy (NSRL), which has been blamed for an increase in the prices of some back-to-school uniforms.

As a result, President of the Small Business Association (SBA) Dean Straker is calling on the Freundel Stuart administration to reconsider the application of the tax on the sector.

Describing the levy as a retrograde step, Straker said at last Friday’s Social Partnership meeting at the Barbados Hilton Resort, manufacturers were not averse to paying taxes.

He said while they recognized that the economy was in a precarious state, the NSRL was simply too onerous.

Jason Sambrano and Dean Straker

The levy, which was introduced in September last year at two per cent of the customs value of imported goods and products manufactured here, climbed to ten per cent as of July 1 this year, as Government seeks to close a gaping fiscal deficit.

Straker, a managing director of the garment manufacturing firm Barbados Industries Limited, said since the introduction of the tax his business has experienced a 20 per cent decline in sales.

“In a time like this people are going out there and having to buy school uniforms and all of these schools uniforms are made in Barbados, and they are having to pay more money. I can tell you right now that our sales compared to last year from the beginning of July 1, to now is 20 per cent down, and everybody I have spoken to in the business is telling me the same thing. It is only obvious that if the sales are down you cannot continue to pay your expenses. So I am really begging and pleading here to please reconsider how the NSRL is implemented on the manufacturers of this country,” Straker begged.

The levy is applied on the production cost of locally produced goods and the Value Added Tax (VAT) is added to the total cost, inclusive of the levy.

Stressing that the sector did not want a free pass, Straker said all local manufacturers wanted was a level playing field since they had to compete with cheaper imports.

The SBA head said the higher prices would drive customers in search of cheaper items which most likely “will be an imported item from China or Thailand, for example.

“What we would be happy to contribute is if we can pay NSRL on the raw inputs,” he recommended.

In an interview with Barbados TODAY this afternoon president of the Barbados  Manufacturers Association Jason Sambrano said he was aware that manufacturers of school uniforms had already increased their prices due to the NSRL, as well as the two per cent fee on foreign exchange transactions and the increase in excise duty on fuel, all of which added to their production costs.

These increases, he said, were making it difficult for manufacturers to compete both locally and internationally.

While highlighting the importance of buying locally produced items because it contributed to job creation and would benefit the economy, Sambrano said the taxes made this difficult since the increases had to be passed on to consumers.

“With the added costs that some companies would not be able to bear they would have to be passed on to consumers. But also what is an added challenge are the difficulties with Government paying VAT returns that is even putting even more pressure on the working capital of manufacturers to be able to operate.

“When you are being asked to operate in a high cost environment then you get these cheap imports coming into the island from other jurisdictions and you are asking them to compete against these items which is not a level playing field,” Sambrano said.

10 Responses to Clothes manufacturers report falling sales

  1. Patrick August 16, 2017 at 6:47 am

    So the children are going to school naked? Bunch of complainers , they do not care whether people can buy uniforms or not; just about opposing the government

    Reply
    • Jennifer August 18, 2017 at 12:58 pm

      Patrick – True. Some parents may be just using common SENSE and instead of buying 5 uniforms, just buy 3 or two and work in the others. In this way EVERY ONE WILL FEEL the NRSL burden. We as a people need to band together and support each other more and refrain from non essential buying to feed the lion. I will buy what I want only.

      Reply
  2. Lee August 16, 2017 at 7:35 am

    Actually, they will cut staff. It will certainly not bother their breakeven or even their salary levels . . . but the import bill will increase a little bit. No problem, right?

    Reply
  3. Ernesta Catlyn August 16, 2017 at 9:00 am

    No Patrick, the children will not go to school naked. Government social services will just be placed under greater pressure. There may also be a further break down in societal morals as parents do whatever is necessary to get the children’s basic needs for school – no one must be left behind (I think that is somebody’s motto, somewhere)

    Hard ears you wont hear, own way you will feel

    Reply
  4. Francia MATTHEWS August 16, 2017 at 9:32 am

    Let get serious. They are a lot of good seamstresses in Barbados who can made proper uniforms, work clothes and casual clothes. We NEED to support our own artisans.

    Reply
  5. vad50 August 16, 2017 at 9:52 am

    It fascinates me that companies go into business; then expect the government to reduce taxes and levies; but I do not see them sharing it with their customer. You are not going to be broke; because you will either reduce the number of staff you currently have or raided the prices for the consumers. We need more local seamstress and tailors, who can work for which is a skill that should never have been lost in Barbados. The current ones should get together and start a uniform factory, hire your local people to work for you. It is time for the Barbadians who are African Descendants to get together and open companies and businesses. Your Motto is Pride and Industry; begin to make it work for you. Tough times birth entrepreneurship and innovation. Wake Up, African Descendants.

    Reply
    • Vad50 August 16, 2017 at 10:24 am

      It fascinates me that companies go into business; then expect the government to reduce taxes and levies; but I do not see them sharing it with their customers. You are not going to be broke; because you will either reduce the number of staff you currently have, or raised the prices for the consumers. The current tailors and seamstresses should get together, and start a local uniform factory, hire your local people to work for you, reduce the cost to the parents and still make a profit for the business; start making the uniforms locally. E.g. of the current situation for school uniforms; A parent with three children in school have to pay $66 for a shirt and pants set for one child, the child would need at least three sets; which is $594 for a parent for the three children. Some parents will have to work a month in order to cover the costs; because they still have to cover their other expenses. Think about it, manufactured locally, the costs could be reduced by 30%, both the manufacturer and the consumer wins. Everyone is aware that it costs more to import; and the levies are past unto the consumer; not the manufacturer. Take a look at who the local Manufacturers are, and realize that 5% of the population is making money off the 94% of the population. It is time for the Barbadians who are African Descendants to get together and open companies and businesses. Your motto is ‘Pride and Industry’, start making it work for you. Tough times birth entrepreneurship and innovation. Wake Up, African Descendants; and make your ancestors proud.

      Reply
      • Jennifer August 18, 2017 at 1:02 pm

        Them lot $elfi$h, greedy and hoggiSh so. Mind you them paying minimal for the goods.

        Reply
  6. samantha walker August 16, 2017 at 9:55 am

    It is more expensive to buy locally manufactured goods than imports, who is running the show ???

    Reply
  7. Kathy August 16, 2017 at 11:22 am

    You know I am trying really hard to take these complainers seriously. I have worked in sales for a number of years and I know only too well that sales figures move in either direction depending on what is happening at the time. Sometimes an entity would be doing a project in a particular year that make your sales go sky high at that time. When or if the project is not repeated the next year, obviously sales will not look good at that time. These manufacturers think that the average Bajan cannot think for themselves. Stop blaming everything on the new tax and look at the real reason. The cost of production always goes up for one reason or the other, gas prices, material cost etc. but if there is a demand for your product it will sell regardless so please stop all the whining and complaining and start marketing your products better knowing that these are changing times and people have several options open when making their purchases.

    Reply

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