The news coming out of the bauxite industry this month has not been good. Production cuts and consequent job losses announced at Alpart, St Ann Bauxite Company and Windalco are alarming warning signals that point to a potential economic derailment in a key industry which for over 60 years has been a mainstay of the national budget.

The world economic recession has adversely affected the demand for alumina and aluminium, and the end users are holding back on purchases, volume and, capital expenditure.

With an oversupply of aluminium on the world market, Jamaica will feel the pinch as owners reduce operations worldwide and focus on lowering inventories rather than maintaining current production levels at their plants.

Unfortunately, the crisis is not confined to the bauxite industry, and it seems that Jamaica must brace for more announcements of cutbacks and production curtailments across the wide spectrum of industry and business activities.

Most serious blow

Expectations from tourism, remittances, manufactured goods, agriculture, and the value of total exports have already been revised. However, the single most serious blow to the economy so far must be the announcement of a 50-per-cent reduction in alumina production at Alpart which is one of the largest earners of foreign exchange for Jamaica.

During 2008, Alpart's gross value of expenditure was some US$600 million through wages and salaries, goods and services, taxes, royalties and bauxite levies, with significant expenditure spent in its operating, in the parishes of St Elizabeth and Manchester. The industry itself is the biggest gross merchandise earner at US$1.3 billion reported for 2007.

Based on these numbers, and to quote from a recent article published by industry expert and chairman of the Jamaica Bauxite Institute Dr Carlton Davis, the global aluminium downturn "cannot be good for Jamaica as is becoming evident even among those who glibly assert that the country could do without the bauxite and alumina industry."

There are indeed shortfalls arising from the environmental impact of industrial activities where issues of dust, red-mud residues, and the discomfort of mining, take their place beside the positives that include economic input, employment and the significant contributions made to education, agriculture and community development.

Deleterious effect

It should be obvious that any decline in bauxite earnings of the kind suggested by the unfolding events of last week will punch a serious hole in the budget and will have a deleterious effect on the supplies of foreign exchange needed to keep the economy running.

It is going to take a balanced view of the industry to help shape the policies that must take us through the current crisis and remodel the future scenario for the preservation of a national asset that must comply with environment and community sustainability needs while maintaining its critical role in national development.

The kind of clear thinking and strategies needed to steer the Jamaican ship of state out of troubled economic waters must be guided by a focus on the exigencies of the situation. There is little room for manoeuvring, and the right choices, no matter how difficult, will have to be made.

In spite of the imperfections and uncertainties, we cannot afford to write off this industry.

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