GraceKennedy Limited is finalising talks with Government to lease factory space and equipment in Hounslow, St Elizabeth, that will become the base of a packaging operation for domestically grown produce.

At the same time, the conglomerate, through its food division, is also tying up plans to acquire, by lease if possible, the adjoining property to establish a 'pepper mash' processing plant to satisfy its own demand for the crushed powder used as input in the production of spices and sauces by companies within the group.

Materialise by summer

"These are brand new projects to materialise by summer," Erwin Burton, chief executive officer of GK Foods, said Tuesday, but declined comment on the level of investment, only that it would take "tens of millions."

GraceKennedy Chairman and Chief Executive Officer, Douglas Orane, has already signalled that the conglomerate plans to invest heavily in its operations in 2009, saying the amount of capital expenditure "was more than" the spend in 2008.

Orane did not specify the figure, but given that last year GK Foods began construction on a US$28 million (J$2.2 billion) warehouse complex in Spanish Town, the spend will be substantial.

Some of the warehouse project funds were spent last year, with the remaining expenditure targeted for the current period, Burton said.

The Hounslow packaging operation is a collaborative project between GraceKennedy and the Government, with the latter supplying the 15,000 to 20,000 square- foot plant and equipment, while GK Foods will operate the plant under lease to package and market the products.

Raw material input will be sourced under the Government's greenhouse project and from other local farms.

Burton said the packaged products, vegetables and ground provisions such as yams and potatoes, will be sold under the Grace brand to hotels, restaurants, supermarkets and market vendors.

Property for distribution

The pepper mash will be stored in holding tanks or vats at the 10,000 square-foot property and distributed, as needed, to GraceKennedy plants in Jamaica and the United Kingdom, specifically Encona which falls under the WT Foods group acquired in 2007.

"We are consistently short of pepper mash," said Burton. "We've been unable to supply a consistent quality product to our overseas markets."

GraceKennedy has markets for its sauces and spices in places like South Korea, Japan, North America, the Caribbean, and the United Kingdom.

The new plant, said Burton, will provide the group with sufficient crushed pepper "as long as the farmers can supply the product".

Ostensibly, the two projects will create jobs in a period of economic downturn. The greenhouse project, for example, is a programme built around self-sufficient and agricul-tural entrepreneurship.

GraceKennedy began the year inauspiciously by cutting 80 jobs at the top of the month in a restructuring of its hardware retailer to drive efficiencies and rescue profits.

Still, Orane told Wednesday Business he was upbeat about the prospects for growth within the group, which commands $50 billion or more of sales revenue annually, pointing to the groundwork laid for the rollout of new products and services over the year.

New range of products

At the end of January, Burton's division will introduce a new range of 'stove top' porridges and a new line of Vienna sausages has been commissioned. Within the invest-ment division, First Global Bank, with funding secured from lending agencies, plans to become a bigger banker to small and medium-size companies, while FGB and First Global Financial Services will roll out a suite of Internet-based services at the end of April, Orane said.

"I am very optimistic about this year," said Orane.

The GraceKennedy chairman, asked if the company would be cutting more jobs, said that's a decision to be made based on circumstances as they unfold.

"As things change, job content changes," he said, but within GraceKennedy reassignments are not uncommon.

business@gleanerjm.com