Investing in factories creates jobs and sweat, but not much wealth
With all of the pronouncements that “Haiti is open for business”, we get the feeling that investments are pouring into every segment of the marketplace. Yes, millions of dollars are focused on building industrial centers with very large warehouses. Unfortunately history suggests that in poor countries these buildings are converted into huge factories full of low-wage workers. We cannot argue with the blessing that having a job brings to a poor family, but our hope is that other business investments are being considered that move beyond stitching and sorting.
We have written about what we call the “Ant Farm” mentality toward workers in poor countries, and these large factories put this type of thinking on full display.
Economist Camille Chalmers suggests that “They are betting Haiti’s future on slave labor,” he said. “I think it is more than just an error. It’s a crime, because in general assembly industry factories don’t bring development, they don’t bring prosperity, and they won’t help us get out our current situation.”
When we see an industrial development with many warehouses under construction we see hundreds of business opportunities. Not for sewing machines, but for construction machines. These construction projects could be supported by several small or medium-sized business contributing to a vibrant construction supply chain. There could be hundreds of machine operators who traditional command a much higher wage than any factory worker. These local machine operators should be building back the infrastructure of Haiti.
Why do large, well-connected foreign firms get the benefit of these massive construction investments? Because focusing investments on building a functioning local supply system is not a priority. Investors in factories are easier to find because they seek the low-cost of labor that is possible in Haiti. The alternative is to invest in the local supply chain in an effort to build wealth within the country, rather than transferring the benefits of development work off the island.
Adding construction machines with local operators will provide quality building materials and processes that will keep the factory workers safe during natural disasters. Buildings constructed with the proper engineering, construction and quality control will return a higher return on investment because we are not rebuilding and rescuing after every calamity.
The buildings nor the people should be considered easily replaceable.
We do not suggest that the factories be shuttered. We do suggest that stitching machines have replaced older hand-sewing methods in an effort to improve consistency and quality. We therefore suggest that an investment in construction machines should replace “hand-work” to improve the construction consistency and quality in Haiti.
Sweatshops may be the easy target of negative commentary, but building sustainable foundations and a functional concrete supply chain will be good news for Haiti’s people.