3 Benefits to Manufacturers in Developing Haiti

To accomplish Haiti Recovery & Development Company, LLC (HR&DC) mission, which is to assist with the creation of an economic engine whereby self-reliance is ultimately possible for Haiti and its people, manufacturing will be vital component to job creation and revenue generation.  As a result, we, HR&DC, must present a business case to corporate prospects and investors to locate their operations within the enterprise zones we have envisioned at the center of each of Haiti’s 5 new cities (see Founder Jim Lange’s Vision For Haiti’s Recovery: Master Plan For 5 New Cities for more information).

So what is the business case for Haiti? 

I believe Haiti provides an excellent business opportunity to manufacturers providing:

• Huge labor cost saving (wages at $4 – 5 per day)
• Faster time to market (600 miles vs. over 2,600 miles from China)
• Significant duty-free incentives for US imports (HOPE II Act signed 2008)

 A March 8, 2010 report in Industry Week, Haiti: A Smart Sourcing For Manufacturers confirmed my beliefs when it stated a very strong case for convincing manufacturers to begin moving operations into Haiti.  And, the Congressional Research Services’ June 24, 2010 report The Haitian Economy and the HOPE Act indicated that the manufacturing sector has had a positive impact on the Haitian economy.  So, it’s good for Haiti too!

 Labor cost saving at $110 – $135, based on a 6 day Haitian work week compared to a $117 – $147 per month in China is a definite cost savings.  With a distance 4.3 times less than China, shipping from Haiti takes significantly less time (6 days vs. 28 days) creating great opportunity cost, and the reduced shipping costs decreases manufacturer direct costs.  Higher profits occur by increasing revenue and reducing costs, and greater return on investment is realized with faster cash flow both these factors occur when manufacturing in Haiti.  Add tax incentives (HOPE II) for importing goods from Haiti, on top of the previous two benefit and direct costs are reduced even more. 

 I think this presents a very favorable business case for manufacturing in Haiti.  So, why aren’t corporations flocking to Haiti?

 Let’s face it.  The business climate in Haiti is among the worst in the world.  According to the 2011 Index of Economic Freedom Haiti ranks 133 out of 179 countries in the world.  Additionally, most companies would just assume avoid the corruption problems as well as Haiti ranks 146 out of 178 countries by Transparency International’s 2010 Corruption Index as reported by guardian.co.uk.

With both sides of the equation noted, a good a business case companies still exists if win-win solutions can be created for all those involved.  HR&DC has our strategy for dealing with Haiti’s challenges and obstacles, but we’re interested in what you think.  What are some ways you can think of to overcome Haiti’s known challenges and obstacles?