A local manufacturer is appealing to the government to honor a duty exemption, declaring that the success of his growing and promising business depends on it. Phillips Sailmakers & Awning Manufacturers, a staple on the business landscape for more than two decades, is "eagerly awaiting" a review that its owner hopes will restore the exemption granted to it when it launched its furniture division, Oasis Chic Living, in 2009. While praising the current administration for its business-friendly policies to help local manufacturers, the company fears its cause may have slipped through the cracks..
"We can unequivocally state that without duty exemptions, a local awning manufacturer like Phillips Sailmakers & Awning would not be able to compete with foreign companies and would not have considered launching Oasis to handle custom-covered outdoor furniture," said Larry Phillips, owner of the company. Without duty exemptions, he said Phillips Sailmakers & Awning Manufacturers would not have grown and become a success, hiring some 15 Bahamians through the production of custom marine, residential and commercial products at competitive prices.
Prior to the exemption being granted under the Industries Encouragement Act (IEA), Phillips Sailmakers was almost exclusively a marine industry and marine upholstery provider with two or three staff, despite being tooled up for awning manufacturing. "We watched every week as awnings imported from the U.S. were being installed in The Bahamas," said Phillips. "From the moment that the exemption kicked in and we were licensed under the Industries Encouragement Act, we were able to compete.
That allowed us to grow, to build our own building, to add employees. It made all the difference in the world to us as a company and it meant that the money stayed in The Bahamas." He was so proud of being a licensed IEA manufacturer, he used it in all of his advertising materials. According to Phillips, he had every reason to believe that the exemptions would be granted. According to a letter obtained by Guardian Business, dated February 2011, the furniture company was granted a reduced 10 percent rate under the provisions of the Industries Encouragement Act.
While this payment structure was in place for the first few containers, that duty shot up to 45 percent, a rate the company has continued to pay for the better part of two years. For example, Phillips noted how a container received yesterday will cost the company $12,000 in customs duties alone. "With the exemption restored, we will be in a position to compete against foreign companies, and we know our product is superior because of the 25 years of high-end marine upholstery experience we put into the manufacturing process."
He is hoping that government will review his case quickly. Minister of Financial Services Ryan Pinder, who is also responsible for trade and manufacturing, has been praised in recent months for extending the duty exemptions for manufacturers in The Bahamas. However, a grey area appears to exist between what people consider to be "manufacturing" and "assembly". "Certainly, we want to facilitate all business. I haven't denied anyone due to the judgment it is assembling and not manufacturing. In general, manufacturing takes into account raw materials. We know the growth of industry is what will have an impact on employment," according to the minister.
Guardian Business understands that the minister is looking to tour Phillips Sailmakers & Awning Manufacturers and its furniture division in the near future. Pinder did note that he wants to "encourage everyone" looking to spur local business and employment opportunities in the country. For his part, Phillips noted that there are very few items made in The Bahamas that involve natural raw materials. Nearly everything is brought in and "assembled" in some sense, he explained.
Citing an example, he detailed how Phillips Sailmakers imports the materials used for putting together outdoor cushions, which is a 11-step process. "If manufacturing were limited to raw natural resources, the only thing that would qualify for full exemptions would be salt production," said Phillips. "All Bahamian manufacturers start with some imported resources, otherwise there would be no reason for exemption, because there would not be any duty since there would not be any importation."
Phillips Sailmakers & Awning Manufacturers and its other divisions are hoping to benefit from the full exemptions and use that money to grow. "Everything goes right back into the company, and it was the belief that the furniture division would someday be the evolution of the manufacturing process that caused us to expand and nearly double the size of our useable space. All our new working and display space is under awnings we made," said Phillips. "The better small to mid-size companies do, the better the Bahamian economy is."
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