Christian reorganises Cari-Med under new group - Weighs further diversification as business consolidates
It will take two years to build out the new distribution hub that Cari-Med is investing US$46 million ($6 billion) to develop on the north western fringes of the Bernard Lodge lands in St Catherine.
The hub will consolidate and relocate several warehousing operations from Kingston, leaving those properties free for other activity.
Cari-Med Chairman and CEO Glen Christian intends to use the time between now and October 2021 to finalise and begin executing plans he already has in gestation for the spaces being freed up by the migration of the distribution operations to Bernard Lodge.
Christian also advised the Financial Gleaner that he has otherwise been streamlining the group under a newly created vehicle and for greater efficiency, and is weighing further diversification towards that same end.
The new hub, for which construction officially launched on Wednesday, will span 258,000 square feet and consolidate operations currently run from Marcus Garvey Drive and other parts of the capital.
Christian chose Tank-Weld as contractor, after tendering the project.
The Cari-Med chairman also told the Financial Gleaner that he ended up choosing National Commercial Bank to structure the financing, after being courted by several financial houses, because NCB offered the most competitive rate.
Neither Christian nor the representatives from NCB were prepared to divulge the terms of the financing package. It’s unclear whether it covers the entire US$46 million.
Tank-Weld beat out a number of competitors for the construction project, set to be done in two phases, the first of which is due for completion by December 2020. Movement of staff, stock and equipment to the Bernard Lodge facility will begin as the first phase winds down.
Christian is contemplating different income-generating options for the spaces to be vacated, and has at least two possibilities in mind.
“There’s so much that can be done, but in the particular case of Marcus Garvey Drive, it could be a good BPO centre. It has the facility, the layout and the location that would lend itself to that,” he told the Financial Gleaner.
“At any rate there is a shortage of commercial space, both manufacturing and distribution, and we’re prepared to facilitate that if needs be,” he added, regarding option two.
The business process outsourcing or call centre market is not new to Christian, although not as a BPO operator, but as landlord. When Digicel Jamaica placed the former Claro building in new Kingston on the market, Christian snagged the asset in 2014. It is now the home of a call centre operated by Sutherland Global.
Digicel acquired the building when it bought the operations of Claro Jamaica from América Móvil, when the two swapped assets in a tri-country deal that was eventually executed in Jamaica and Honduras, but was killed by regulators in El Salvador.
Cari-Med’s warehouse project is part of a larger restructuring programme for the company that Christian began building 33 years ago.
In May of this year, Christian said, a new entity called Cari-Med Group was incorporated and now holds Cari-Med Distributors and its pharmaceutical and consumer divisions; Kirk Distributors, which also has its own consumer and pharmaceutical divisions; pharma manufacturing operation Federated Pharmaceutical; soap maker Bomber Manufacturing; and Cari-Med International as the company’s export arm.
As a private company, Cari-Med’s size is unknown as its finances are not disclosed.
Presently, Cari-Med operates from Lady Musgrave Road, East Bell Road, Ashenheim Road and Marcus Garvey Drive in Kingston.
“The new distribution centre is part of this consolidation strategy. Currently, our consumer goods warehouses are based at several locations in St Andrew. Going forward, we will be consolidating these warehouses and the associated commercial and support services at this location,” Christian said at the groundbreaking ceremony on Wednesday.
He later told the Financial Gleaner that the Federated Pharmaceutical factory at East Bell Road will remain in operation at that location, so too the Lady Musgrave Road location, which will house the pharmaceutical distribution division and the company’s headquarters. However, the consumer distribution unit at Lady Musrgave will also move to Bernard Lodge.
Federated Pharmaceutical manufactures a range of over-the-counter, or OTC, medications, including Cetamol and DPH. Kirk Distributors sells a number of fast-moving consumer goods under the Kendel brand, while Bomber manufactures laundry soap, as well as the Refresh, Castile and Mildex beauty bars.
Asked about the company’s options beyond the BPO market for the locations to be vacated, Christian says commercial rental is among the considerations.
“When you merge and consolidate you get efficiency, and therefore, we will have to look at what is possible,” he said.
“It could also be part of our diversification strategy.We’re already in distribution and manufacturing, and it may come down to us renting for income to manufacturers or distributors, as the market demands,” he said.
In building the distribution centre in St Catherine, Cari-Med will benefit from tax breaks over a 10-year period under the Urban Renewal Act of 2008.