Many companies based in Central America and the Caribbean are rapidly becoming integrated into the global economy. The small size of local and regional markets has motivated several companies in this region to pursue business opportunities not only in the more developed countries of North America and western Europe but also in fast-growing emerging countries such as India. The rise of multinational enterprises from Central America and the Caribbean is a relatively new phenomenon and one that has not attracted a great deal of attention in the academic literature or business press.
Central American and Caribbean multinational enterprises (CACMNEs) are operative in a wide range of industries from food and beverage to leisure and tourism and financial services. Companies such as CL Financial (Trinidad), Grace Kennedy (Jamaica), Neal and Massy Holdings (Trinidad), and Goddard Enterprises (Barbados) are examples of companies with significant international and regional operations in a wide range of industries. Other companies such as Nicaragua-based Financiera Arrendadora Centroamericana (Finarca) continue to focus on their domestic markets but have become targets of regional and multinational firms interested in their assets and markets, while firms such as the Lovable Group (Honduras) have used their domestic competitive advantages to secure major international customers. These firms too find themselves integrated into the global economy.
CL Financial
CL Financial is a Trinidad-based CACMNE that has aggressively pursued extra-regional market opportunities. CL Financial was established in 1993 as the holding company for Colonial Life Insurance Company (Trinidad) Ltd., which at the time was still a relatively small insurance company offering a limited range of products. However, by 2005 CL Financial had grown into a major conglomerate with business operations in insurance, financial services, real estate development, media, medical services, agriculture, manufacturing, methanol, distribution, and retail. The firm now operates in over 28 countries around the world and has assets in excess of $12 billion.
Through its wholly owned United Kingdom–based subsidiary, CI WorldBrands Ltd., CL Financial has become a major player in the global alcoholic beverage industry. In 2004 the company acquired Paragon Vintners Ltd., a London-based wine and spirits distributor, as well as Fassbind Distributors of Switzerland, a company also focused on the distribution of alcoholic beverages. In 2005 the firm acquired ChateauOnLine, a French wine merchant. Also included in the company’s wine and spirits portfolio are Burn Stewart, a Scotch whisky producer with three single malt distilleries, 200 employees, and sales operations in Taiwan, South Africa, and the United States. CL Financial also owns Thomas Hine and Company Ltd., a French manufacturer of fine cognacs with a 250-year history. In 2007 the company completed the acquisition of Pernod Ricard’s Lawrenceburg facility in Indiana. Pernod is a major producer, importer, and marketer of wine and spirits and is the third-largest company in the U.S. wine and spirits industry.
It is not, however, only in the area of alcoholic beverages that CL Financial has excelled. The company is also a major player in the methanol and biofuels industry. Through its subsidiary, Methanol Holdings (Trinidad) Ltd., CL Financial operates the largest methanol plant in the world with a capacity of 5,400 MT of methanol per day. The company has also, with a German partner, commissioned a methanol plant in Oman that began production in late 2007.
Grace Kennedy Ltd.
Another CACMNE of note is Jamaica-based Grace Kennedy Ltd. This conglomerate was established in the early 1920s as a small trading company. The firm has since grown considerably and now includes some 60 subsidiaries and associated companies and is operative across the Caribbean, North and Central America, the United States, Canada, and the United Kingdom. Grace Kennedy operates in two broad businesses—food and financial services. In the food area, the firm is active in processing, marketing, and distribution across the Caribbean as well as in the United Kingdom and Canada. For example, Grace Foods UK Ltd. is one of Europe’s leading suppliers of ethnic foods while Grace Kennedy (Ontario) Ltd. is a major trading company operating in Canada. World Brand Services is a division of Grace Kennedy Ltd. focused on representing a range of international food and nonfood brands. M&M Mars, Lay’s, Tostitos, Ziploc, and McCains are among the brands distributed by the company. Grace Kennedy (Belize) Ltd. is also a player in the food distribution business; it is the third-largest food importer in Belize and handles primarily “Grace” branded products.
As previously mentioned, Grace Kennedy is also active in the area of food manufacturing. Grace Food Processors is a manufacturer of Grace branded products including tomato ketchup, canned beans, and juices. Dairy Industries (Jamaica) Ltd., on the other hand, is a manufacturer and distributor of dairy products. This dairy operation is a 50/50 joint venture between Grace Kennedy and Fonterra of New Zealand, which is a leading exporter of dairy products. Grace-branded food products are marketed internationally through Grace Food International, which exports to over 25 countries in Europe, Asia, Latin America, and North America.
In addition to food manufacturing and marketing, Grace Kennedy also operates a portfolio of companies in financial services and nonfood marketing. EC Global Insurance, for example, is a provider of insurance services headquartered in St. Lucia, while FG Fund Management (Cayman) Ltd., is a mutual-fund company based in the Cayman Islands, and Grace
Kennedy Remittance Services is based in Guyana and is involved in the wire transfer of funds. Grace Kennedy is also active in the building supplies industry in Jamaica through its ownership of Hardware and Lumber Ltd., which is involved in retailing and wholesaling building materials and home improvement supplies.
Neal And Massy Holdings Ltd.
Neal and Massy Holdings Ltd. (NMH) is one of the largest and most established conglomerates in the region. The company has been in business for over 80 years and has 6,000 employees and over 7,000 shareholders. The firm is operative in a range of industries. The Automotive & Industrial Equipment Business Unit is involved in vehicle sales and service as well as the rental of heavy industrial, construction, and agricultural equipment, and equipment for the petroleum industry. This unit represents a number of world-class brands including Goodyear, Caterpillar, Nissan, Subaru, Hyundai, and Volvo. Associated Industries Ltd. (Guyana) is part of this unit and retails automotive and industrial equipment across Guyana.
NMH also operates the Energy & Industrial Gases Business Unit, which provides a range of products and services to the energy sector, for example, electrical and instrumentation services, and through its associate company, NM Wood Group, has partnered with BP (Trinidad and Tobago) to provide maintenance on the company’s onshore plants. The unit also holds a majority stake in Demerara Oxygen Company Ltd., which markets LPG and manufactures and markets oxygen, nitrogen, argon, and acetylene in the Guyana market. Also part of this unit is Industrial Gases Ltd., which is a joint venture between NMH and Air Liquide International of France. This company supplies a range of gas products in cylinders, bulk liquid tanks, and high pressure tubes.
NMH also operates in the financial and related services industry. The company is active in the areas of property development, real estate, construction, security, and financial services. For example, NMH holds a 24.5 percent stake in G4S Holdings (Trinidad) Ltd., which is part of one of the leading manned-security firms in the world, with 400,000 employees and a presence in the United States, Canada, United Kingdom, Germany, and France. Through Nealco Properties Ltd., the firm is also an active player in the property management, facilities maintenance, and interior architecture and design fields. The NMH group of companies also covers areas such as remittances (NM Remittance Services Ltd.) and leasing, corporate asset financing, and insurance (General Finance Corporation Ltd.).
In 2001 NMH founded Illuminat (Trinidad & Tobago) Ltd., an information technology and communications operation with a presence in Trinidad, Barbados, Jamaica, Cayman Islands, and the Bahamas. Illuminat has more than 400 employees and provides solutions to government, retail, energy, and hospitality clients across the Caribbean. NMH is also involved in the retail, distribution, and logistics business and owns H.D. Hopwood & Company Ltd., a Jamaica-based importer and distributor of consumer and pharmaceutical products as well as Huggins Shipping & Customs Brokerage Ltd., which provides freight forwarding and customs brokerage services. This latter firm has a long history of operation, having been established in 1896. In fiscal 2007 NMH reported total revenues of TT$5 billion.
Goddard Enterprises Ltd.
While CL Financial and Grace Kennedy have taken a decidedly global approach to their international expansion, other Central American and Caribbean firms have opted for a more regional expansion strategy. Goddard Enterprises Ltd. (GEL) is headquartered in Barbados. The firm started in 1921 as a small meat and grocery store in Bridgetown, the capital of Barbados. The company acquired a local bakery in 1939, and by 1943 had expanded into department store retailing and the hotel industry. GEL now operates 50 companies across 23 countries in the Caribbean and Central and South America.
GEL subsidiaries are active in a wide range of industries including airline catering, industrial and restaurant catering, meat processing, bakery operations, automobile retail and automotive parts, real estate, the manufacture of aerosols and liquid detergents, rum distilling, packaging, fish and shrimp processing, and financial services. Countries in which the firm operates include Antigua, Barbados, Bermuda, Cayman Islands, Colombia, Curacao, Grenada, Jamaica, St. Lucia, St. Maarten, and St. Thomas, Trinidad and Tobago, El Salvador, Ecuador, Guatemala, Paraguay, Uruguay, and Venezuela.
The company’s airline catering business was established in 1954. In 1972 GEL entered into a joint venture with the Marriott Corporation, and by 1976 the firm had established its first regional catering operation with its expansion into the Antiguan market. GEL quickly expanded into other Caribbean and Latin American markets with catering units established in over 20 countries. The firm also established airport terminal catering operations and negotiated deals to service a number of major regional and international air carriers including KLM, FedEx, United Airlines, Air Jamaica, Air Canada, American Airlines, Delta Airlines, Virgin Atlantic, Cayman Airways, Mexicana, and British Airways. The firm also secured a number of major industrial clients such as British Petroleum PLC, Repsol S.A., BHP Billiton, Esso, Kellogg’s, Bayer, and Altria.
Most of GEL’s manufacturing and service operations are based in Barbados. For example, Hipac Ltd. is based in Barbados and produces a wide range of meat and seafood products, while the West Indies Rum Distillery, also based in Barbados, is a manufacturer of aged rums, vodka, and gin. Another subsidiary, Purity Bakery, produces baked goods for supermarkets, shops, hotels, and restaurants across Barbados. The company’s sole overseas manufacturing operation is BEV Processors Inc., which is a shrimp and fish processor based in Guyana. GEL also manages a number of import and marketing businesses across the Caribbean. Hutchinsons & Brisbane, for example, is a marketing operation based in Antigua that represents a number of major international brands such as Uncle Ben’s Rice, Brunswick Seafoods, Lysol, Harpic, Dettol, and Pedigree and Whiskas. GEL also holds a 70 percent stake in Fidelity Motors, which distributes Nissan vehicles in the Jamaican market.
Other Companies
Grace Kennedy, GEL, and CL Financial operate in a range of diverse and unrelated industries. Other CACMNEs are more focused. Digicel Group Ltd. is a privately owned company incorporated in Bermuda. In 2001 the company launched its operations in Jamaica, becoming the first company in that country to offer GSM mobile services. The firm is the largest mobile telecommunications company in the Caribbean with six million subscribers in 23 markets across the region. Digicel serves markets in the Caribbean and Central America, including Anguilla, Antigua & Barbuda, Aruba, Barbados, Bermuda, Bonaire, the Cayman Islands, Curacao, Dominica, El Salvador, French Guiana, Grenada, Guadeloupe, Guyana, Haiti, Jamaica, Martinique, St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Turks and Caicos, and Trinidad & Tobago. In addition, the company has licenses to operate in Honduras and Panama. The firm has 4,000 employees, operates 1,000 retail stores, and posted revenues of US$1 billion in fiscal 2007.
Nicaragua-based Finarca has become integrated into the global economy, not by expanding internationally but by attracting inbound foreign direct investment from regional and extra-regional firms. This company began operations in 1997 and was the first to introduce the leasing concept to the Nicaraguan market. The company is involved in leasing industrial and agricultural equipment to small and medium-sized companies. With assistance from the Inter-American Development Bank (IDB) Finarca has established a special leasing program for small and medium-sized businesses. As part of this initiative Finarca provides financing to small enterprises of between $3,000–$8,000 for up to four years. Norfund and the IFC injected equity into the company in 1999, and the company has also been successful in raising loan financing from Finnfund, the OVF, SIFEM, and Citibank. In 2003 Interfin, the largest private bank in Costa Rica, acquired a 25 percent stake in Finarca and subsequently increased its ownership to 51 percent in 2005. By 2007, however, Interfin had been acquired by Scotiabank Costa Rica in a $300-million deal that included its 51 percent share of Finarca. In 2008 Scotiabank acquired the remaining 49 percent of Finarca, effectively bringing the Nicaraguan leasing company under the control of the Canadian bank and part of its Latin American and Caribbean network of financial services operations.
The Lovable Group was founded in 1964 in Honduras and has grown to become one of the largest industrial companies in Central America. The firm employs 8,000 people and is active in a number of industries including textile and apparel, the operation of industrial parks, and energy cogeneration. The firm’s textile and apparel operation counts among its clients Russell Corporation and Cross Creek, Jockey, Costco Wholesale, and JC Penney. On behalf of these and other clients, the Lovable Group exports products to a number of countries around the world including the United States, Canada, United Kingdom, Japan, Korea, and Taiwan. As part of the textile and apparel operation, Lovable owns and operates a number of companies including Genesis Apparel SA, a sewing operation with 1,000 employees; Pacer Screen Printing and Embroidery; Trueform; and Villatex SA, which produces products for Victoria’s Secret and Tommy Hilfiger.
The Lovable Group also operates four industrial parks in Honduras. Zip Buena Vista SA is a 950,000-sq.ft. facility, while Zip Tex is a 900,000-sq.-ft. operation. These complement two other facilities—Zip Choloma 1 and 11. All four parks provide basic infrastructure services as well as assistance with the recruitment of local workers. The Lovable Group also offers power through its cogeneration facility, established in 2004 to supply its industrial parks. Surplus energy is sold to the local National Energy Company. The Group also provides wastewater treatment as well as food and water laboratory analysis services to industrial clients.
Bibliography:
- Karen Retana, “Scotiabank Expands Its Nicaragua Presence,” La República (April 11, 2008);
- CL Financial, www.clfinancial.com (cited March 2009);
- Digicel Group, www.digicelgroup.com (cited March 2009);
- Finarca, www.finarca.com (cited March 2009);
- Goddard Enterprises, www.goddardenterprisesltd.com (cited March 2009);
- Grace Kennedy, www.gracekennedy.com (cited March 2009);
- Lovable Group, www.lovablegroup.com (cited March 2009);
- Neal and Massy Holdings, www.nealand-massy.com (cited March 2009).
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