FORUM: SUGAR-MECHANIZING OUR LIFE OR DEATH.
Does Mechanization Reduce Costs?
Mechanization does not necessarily reduce the cost of production. Since the end of the second World War a substantial amount of mechanization has in fact taken place in the West Indian sugar industry, including Jamaica’s (a fact which is partly responsible for the present level of unemployment). The cost of production has however, risen consistently. Costs rise because mechanization itself involves a cost. The Jamaican statistics suggest, for example, that non-labour costs have been keeping step and at times out-pacing labour cost. The saving on labour would have to be greater than the addition to cost resulting directly from capitalization if the net result is to be an overall reduction of unit costs.
Costs rise too because average wages go up. Indeed, one of the rationalizations of mechanization is, and has been in the past, that it would make it possible for the average wage to rise to a decent level (which it certainly is not now). Then too labour productivity in the non-mechanized sections of the industry is apt to fall because when you know that you are next on the road regardless of how you sweat you don’t feel too much like pressing on with the job. More important is the now well-known fact that any effective trade union would claim sufficiently high increases in wage rates to maintain (or increase) the total share of labour in the industry’ income, i.e. an extra increase in average wage would be claimed to make up for the earnings lost by the retrenched workers. The unions in the past were only partially successful in doing this. They probably will do better this time because they now know what the game is.
Based on past experience one might be inclined to say then that the mechanization which took place in the West Indian sugar industry (large-scale as it was) did not go far enough to effect the cost reductions aimed at. So we must now contemplate a reduction of the work force by at least 50 per cent (which may have in addition an equivalent indirect effect via domestic expenditure) to bring about effective reduction of cost. Such a cut in the labour force would reduce production cost by only about 20 per cent-under the quite inapplicable assumption that mechanization is costless and average wages do not rise! Practically, we could count on reducing cost by probably not much more than IO per cent with a 50 per cent cut in the work force. That level of cost reduction is not, in a competitive sense, effective whilst the reduction in employment is, in any event, practically unfeasible in the present context. There enters into the picture therefore a view that such mechanization as can be carried out without disruption is really nothing more than a means of “avoiding” serious labour relations problems and work stoppages in production. This surely is a socially worthless reason.
Is Sugar Mechanization Nationally Economic?
Another question arising is ‘whether the capital invested in the mechanization of sugar is justifiable from a national stand point. The question could be posed as follows: Does a capital investment of, say, £1 million of foreign exchange in sugar industry machines (which will be idle for one-third to one-half of the time) yield a greater benefit to Jamaica (not Tate and Lyle) than a similar sum spent on, say, a manufacturing industry or on a hotel or on other kinds of agriculture. No one knows the answer exactly. The question has not even been posed. The first and only concern is: How can we save the sugar industry. Mechanize is the answer. The question is not: what beat can we do for Jamaica with our capital. Sugar is deemed to be Jamaica! And that’s the end of the matter.
