The survival skills needed to emerge from the economic meltdown of the 1980s have served Trinidad’s companies well. Ronald F. deC. Harford, managing director of Republic Bank, the second-largest bank in the country, says, “The end of the 1980s was a defining moment for Trinidad and Tobago. It fundamentally changed the mindset and the country became serious about work. They were hard times, but [it was] a great strengthening period.” Today, the country has a number of competitive and aggressive companies that have fanned out across the Caribbean. The largest ones are consolidating their positions as regional leaders or expanding internationally through mergers and acquisitions. Free trade agreements with Costa Rica, Venezuela and the Dominican Republic should enable companies to break into markets in Latin America. The Trinidadian government, which still owns several companies, is preparing them for eventual privatization by tightening up management.

Harford is speaking from experience. He joined Republic bank at the age of 17 and has helped turn it into a Caribbean leader with subsidiaries in the Cayman Islands in the north to Guyana in the south. RBTT Financial Holdings, the biggest financial institution in Trinidad, has expanded aggressively through acquisitions and now operates in 11 countries. These banks are two such companies that have developed a regional presence. Trinidadian corporates are also dominant in the Caribbean. CIBC West Indies Holdings Limited has one of the highest market capitalizations on the stock exchanges of Trinidad, Jamaica and Barbados. Trinidad Cement Limited is one of the most actively traded stocks on those stock markets. Four Trinidadian companies are among the 10 largest stocks by market capitalization on the three stock markets.

Privately held companies are just as aggressive. Trinidad’s manufacturing sector is the most competitive in the Caribbean. SM Jaleel, a beverage and bottling company, exports its best selling children’s soft drink, Chubby, to 50 countries. A year after its launch in 1993, Chubby was the biggest selling fizzy soft drink among children in the Caribbean.

The government’s Vision 2020, a plan to turn Trinidad into a developed country by 2020, will force companies to become more efficient. Brian Harry, president of the Trinidad and Tobago Investment and Development Corporation (TIDCO), says, “Business people understand what it is to compete globally and more companies are becoming aggressive.” Godfrey Bain, chief operating officer of Angostura Holdings Limited, a local brewery and distillery company, agrees, “We are doing business in Colombia and Venezuela and with the trade agreements, we see a lot of opportunity in Latin America.” Trinidad signed a free trade agreement with Costa Rica last year and the Caribbean trade bloc, Caricom, is negotiating free trade agreements with Venezuela, Costa Rica and the Dominican Republic. All three agreements should be finalized by June.

Arthur Lok Jack, chairman of Associated Brands Ltd., a privately owned food exporter, says Latin American markets have great potential for Trinidad’s manufacturers. “The local markets in Caricom are small and these companies are dominant, so there is not much room for growth. But in duty free markets like Venezuela with a population of 30 million people, Trinidad and Tobago’s manufacturers can compete.” He says many of these companies can compete in volatile Latin American markets more easily than other foreign competitors because of their low costs for products such as snack foods and beverages.

Trinidadian companies started listing on the Jamaican and Barbadian stock markets to gain access to local investors in the countries where they were doing business. But recently they have started to penetrate these markets more deeply and are competing to gain control of the market. Last year, Guardian Holdings and The Mutual, two Trinidadian life insurance companies, bid to take over Life of Barbados. The Mutual won the bid paying, TT$15 ($2.41) a share. It acquired 31 million shares for B$162 million ($81.4 million), increasing its stake to 95% in Life of Barbados. Angostura Holdings, a subsidiary of CL Finanacial, one of Trinidad’s largest conglomerates, has exported to Europe and the British Commonwealth countries for years. Last November, Angostura bought a majority stake in US distiller Todd Hunter International, a producer of alcoholic beverages, as well as a 100% stake in the Scottish whisky distiller Burns Stewart Distillers Plc, a publicly listed company.

Bain says having CL Financial as Angostura’s parent company, “has brought a whole new way of thinking to a quiet and assuming company. It has brought aggression and vision for which [Chairman] Lawrence Duprey is famous.” However, as Trinidadian companies expand in the Caribbean, they too are becoming targets. Mexico’s dominant cement company, Cemex, which has a 20% stake in Trinidad Cement Limited, offered to buyout shareholders at TT$7.15 ($1.14) a share, a hefty premium over the TT$4.80 ($0.77) price at the time of the offer. Cemex’s bid was foiled because it could not garner 75% of the shareholder votes to change the company’s by-laws on ownership changes.

The private sector has proved itself and public sector companies in Trinidad could take a cue from their efficient management. Raymond Gatcliffe, head of corporate banking at Citibank in Trinidad, says most state-owned companies are large enough to continue operating as independent companies after they have been privatized. “Not all of these companies need a strategic partner to be successful so a straightforward listing on the stock exchange is possible.” However, Jerry Hospedales, coordinator of the divestment secretariat at the Ministry of Finance, says it is more important to improve efficiency at these companies before selling them. The government plans to either privatize or restructure several companies, including Caroni, the sugar company whose losses have been draining public money for years.

Hospedales wants to convince private investors to recapitalize Export-Import Bank of Trinidad and Tobago. First Citizens Bank (FCB) is also on the block. Larry Howai, chief executive officer of FCB, says his bank hopes to attract investment from a foreign investor this year and eventually to go public on the local stock exchange. Canada’s CIBC is mentioned as a possible suitor. Local investors would also like to see the government divest some of the country’s more profitable state enterprises such as National Gas Corporation.

Dealing with Caroni

Trinidad has produced some of the most dynamic companies in the Caribbean, yet it also has a collection of deficitridden state-owned enterprises such as sugar company Caroni. “It has been a problem at least since 1975 when it was taken over,” says Jerry Hospedales, coordinator of the divestment secretariat in the Ministry of Finance. “It ran up TT$2 billion in debt and the government wrote off the debt in 1990 and by 1999 it ran up the debt again.” It is a situation that many would like the government to deal with. The trouble is that Caroni employs as much as 10% of the country’s workforce and many of those workers are members of the opposition party, the Indian community’s United National Congress. Says Ronald Milford, country manager of US warehouse shopping company PriceSmart, “Governments have talked about divesting Caroni, but none has had the resolve to sell it off. It is a political hotbed and would be a difficult task for any government.”

The Manning government is determined to sort out Caroni. Says Hospedales, “We are not going to get out of sugar, but we will make Caroni competitive.” Godfrey Bain, chief operating officer of brewery and distillery company Angostura Holdings Limited, applauds this action. “I don’t think the government has any other alternative. The government can reorganize the company in stages and redirect employment into other industries. It is their social responsibility to take that money and invest it in training. The private sector can only absorb so many of these workers. It can ill afford to take this responsibility alone.”

Hospedales says the government wants to turn the sugar plantations over to private farmers. They produce 75,000 tons of sugar a year, 60% of the islands’ crop, at a lower cost. “We are getting out of cultivation but we will remain in processing and refining sugar to produce core products such as rum,” says Hospedales. He estimates the restructuring will cost the jobs of 5,000 to 6,000 people in cultivation at Caroni. The government says they can be hired elsewhere. “We are going to offer all the workers of Caroni a voluntary separation package, a very generous one. In the meantime we established another company called the Estate Management Development and Business Company with a mandate to stimulate economic activity on land being vacated by Caroni.” It will develop industrial estates to house heavy and light industry, agriculture and commercial complexes.

Although this plan sounds vague, Hospedales says there is more than enough demand from companies seeking to relocate to more spacious commercial premises. “On the basis of an estimate made two years ago, in which we had requests from companies to relocate to the estates, we estimate we can create 12,000 jobs in five years,” he says. The government says cane cutters can set up their own companies, work as independent farmers or find jobs in companies moving to the estate. Hospedales expects reorganizing Caroni could cost the government around TT$1 billion ($160 million), which it could finance from tax collections or in the local debt market.”