Berger boss sees red over 'sub-standard' paint imports
Published by www.jamaicaobserver.com on Apr 25, 2007
Apr 25, 2007

Berger Paints Jamaica Limited, apparently peeved at the importation of what it said are sub-standard paints, last Thursday advised its shareholders that it would lean on the Bureau of Standards to stop the flow into the island.

Managing director and chief executive officer of Berger Paints, Warren McDonald, addressing shareholders at the firm's annual general meeting held at the Knutsford Court Hotel in Kingston last Thursday. (Photo: Karl McLarty)

"Many of the imported paints are low quality and cheap," Berger's managing director and chief executive officer, Warren McDonald, declared at the firm's annual general meeting held at the Knutsford Court Hotel in Kingston. "There are some 24 imported brands that were recognised to be competing on the local paint market. What we find is that because of the price, consumers will try them out."

McDonald said that when consumers try the imported brands and see the poor results, they resort to buying Berger paints. "But the distributors know this, and in an attempt to trick consumers they keep bringing in new brands," he alleged.

"The laws against this type of behaviour are on the books, but they need to be enforced," McDonald said. "We are working with the Bureau of Standards to have minimum standards so that consumers are not exploited."

McDonald aired his concern against the background of Berger's $1.287 billion in sales for 2006, an improvement on the $1.174-billion the firm recorded in 2005.

However, he said, "In this challenging market environment, profits fell by some 41.5 per cent to $38.487 million in 2006, compared to the $65.791 million recorded in the previous year".

Aside from imports, Berger also expects to be faced with higher costs when the Government's Environmental Tax on all imports is implemented on June 1. McDonald told shareholders that all of Berger's manufacturing raw materials were imported and that the company would have to adjust for the added costs.

However, Ian McNaughton, financial controller and company secretary, told shareholders that the immense buying power of Berger's parent company, Asian Paints (the 8th largest coating company in the world), ensured that Berger's actual input costs were tightly managed.

For example, McDonald told shareholdres that, "With insurance risk being spread over Asian Paints subsidiaries in 23 countries across the world, the insurance premium rate to Berger Jamaica is much lower than if we bought insurance locally. It is estimated that some $12.7 million was saved in 2006 by this arrangement".

During his review, McDonald explained the factors which impacted the company's performance in 2006.

"Our sales performance for the first eight months was negatively influenced by severe cement shortage," he said. "The Incorporated Masterbuilders Association of Jamaica - the umbrella lobby group for the construction sector - estimated at one point that as many as 30,000 construction workers were temporarily laid off as a result of the cement shortage. This shortage has also severely affected the cash flow of our retailers who experienced fall-off in their sales of up to 60 per cent for several months. Left with unplanned high inventories, retailers were unable to pay for paint purchased in accordance with the agreed credit terms."

Crime, he said, also impacted on Berger's operations. "At our factory, at times our trucks and the buying public were unable to access these troubled areas because of violence," said McDonald.