Pandemic forces cement firms to delay projects

cement mixer

By Jenina P. Ibanez, Reporter

The pandemic has delayed the plans of domestic cement companies to improve operations as part of their measures to compete with imports while safeguard duties are being applied.

In a public hearing held by the Tariff Commission on Friday, Cemex Holdings Philippines Enterprise Risk Manager Jose Mauro Gallardo Valdes said two out of six projects have been delayed and will be completed in 2021.

“The delays are related to the COVID-19 pandemic,” he said.

The trade department last year imposed safeguard duties on imported cement for three years to prevent injury to domestic producers. As these safeguard measures are applied, the domestic industry is required to submit to the government their plans to adjust to import competition.

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Representatives from Cemex, Holcim Philippines, Taiheiyo Cement Philippines Inc., and Republic Cement Services Inc spoke at the hearing.

Zoe Verna Sibala, Vice President and Head of Strategy at Holcim Philippines, said that many of the company’s adjustment initiatives have been completed, which helped improve the company’s competitiveness.

“But if you look at the projects with the most impact in terms of improving our efficiency and productivity, these are around 30% completion and this is mainly because of the operational disruptions brought about by the pandemic,” she said.

The cement industry representatives said that their companies saw opportunity costs from projects that have not been completed because of pandemic-related delays, along with additional costs from testing and housing construction workers on-site.

Overall demand, Mr. Gallardo said, has been “impacted severely,” noting that market conditions are not ideal.

“I cannot divulge the reasons why we decided to invest in these projects given that this is part of our strategy, but what I can assure you is that without safeguards, it would be difficult for our company to implement those investments.”

Republic Cement Services Inc. Vice President of Strategy and Business Development Reinier Dizon said that the company is seeing some benefits from the initial phases of investments this year.

“But it’s such a complex year… all our Luzon plants did not operate during the (stricter lockdown) period while still incurring overhead cost and while not having the revenues,” he said.

Cement Manufacturers Association of the Philippines appealed to the Trade department to postpone the lowering of safeguard duties, which had been set to decrease each year.

The Tariff Commission during the hearing asked the companies to submit data on costs from the project delays.

“The commission is really interested regarding the cement industry’s plan to continue its adjustment plans given this COVID-19 pandemic, so we will appreciate it if you can submit to us your compliance costs, additional or relative opportunity costs for not realizing the project,” Tariff Commissioner Marissa Maricosa A. Paderon said.

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