Susan Gordon, Staff Reporter
( L - R ) Denall Barnes, assistant vice-president, hardware sales and international purchasing, ARC Systems. Don Mullings and Lystra Sharp
JAMAICA'S CEMENT crisis has thrown an estimated 30,000 people, mostly low-skilled young men, out of work and, at present, is costing the country up to $100 million a day, according to estimates by the umbrella body for most of the island's construction industry professionals.
A severe production problem at the island's sole manufacturer of Portland cement, Caribbean Cement Company, turned into a full-blown crisis in February, when Carib's quality control system went awry, forcing the company to recall tens of thousands of tonnes of the material that had already reached the market.
The upshot is that several major construction projects have been suspended or delayed, new ones delayed and some even abandoned, according to industry officials.
"The association had estimated that as many as 30,000 workers would be losing their jobs and that the industry would be losing approximately $100 million per day," said Don Mullings, the immediate past president of the Master Builders Association, which groups industry professionals such as architects, engineers, quantity surveyors and building contractors.
Although a precise apportioning of the estimated loss was not immediately available, Mullings, an engineer who runs a large construction company, suggested that it included the loss of sales by hardware firms of products such as paint, pipe fittings, nails, steel and lumber.
Last year, in the face of criticisms from the political Opposition and cement importers, the Jamaica Government gave Carib Cement a virtual monopoly in the market, by imposing a 40 per cent tariff on imports, up from 15 per cent.
In exchange for the protection, which was to be for three years, Carib Cement promised to spend US$133 million to modernise is facilities, including putting in new kilns, that would double its capacity to two million tonnes a year.
But by mid 2005, only months after ramparts had been pulled up around the company, problems began to emerge. Hurricane forced it out of production for several days and the shutdown was exacerbated by damage to stockpiled raw material.
Since then the company's difficulties have mounted and it has been unable to meet local demand, especially at a time of robust growth in the construction sector, driven by the construction of large hotels as well as major public infrastructure projects, including highways and stadiums.
In fact, Lystra Sharp, Carib Cement's public relations manager, said yesterday that daily cement demand in Jamaica stands at approximately 4,000 tonnes a day, but the company is able now to produce only 75 per cent of that ? 3,000 tonnes a day.
In the circumstance, Carib Cement has been forced to 'rationalise' its distribution of cement, selling only to its 100 or so registered distributors and ensuring that the big, showpiece projects, such as the expansion of the Sabina Park cricket ground in Kingston in preparation for next year's cricket world cup, are kept going.
"We do give the Government projects the high priority," said Ms. Sharp, citing the Sabina Park modernisation as one such projects.
But some major hardware companies insist that the supply crisis is deeper than Carib Cement has acknowledged, while the political Opposition has accused the government of a dithering response to the problem.
Among Carib Cement's biggest critics is ARC Systems Ltd, which the manufacturer has in the past accused of importing dumped cement.
According to Denall Barnes, ARC's assistant vice president for hardware sales and international purchasing, Carib Cement's inability to supply the market has caused an accumulated shortfall of between 250,000 and 300,000 tonnes. The real problem, according to Barnes, is that the company can supply only 800,000, against an annual demand of approximately 1.4 million tonnes, or only 53 per cent of the demand, when by CCC's estimate it is producing 75 per cent.
"The big projects, are getting the special treatment," Barnes said. "They get a fairly steady supply."
"My estimate is that many others are getting 25-30 per cent of regular supplies," Mr. Barnes added.
The Half-Way Tree Transportation Centre under construction on March 2. - RUDOLPH BROWN/CHIEF PHOTOGRAPHER
The big projects, he suggested, were being allowed to import cement, without paying duties. This week, the Minister of Industry Technology energy and Commerce, Phillip Paulwell announced that this preference would be open to the entire entire market with the removal of the 15 per cent duty, to which the tariff had been rolled back recently because of the supply crisis.
Dr. Wesley Hughes, the director general of the Planning Institute, on Monday underlined the negative impact the cement crisis was having on the national economy when he reported a 6.3 per cent decline in the construction sector during the first quarter of the year, which helped to pull down growth to a mere 1.4 per cent, against the more than three per cent that had been projected by the finance minister, Dr. Omar Davies.
In the face of the crisis and the uncertainty of time lines for the delivery of imported product product, the Master Builders Association's Mullings said that his personal engineering and construction firm, M&M Jamaica Limited, has also felt the pinch. He has put a hold on new hirings even though he has projects on the books .
"Our company deals with infrastructure (such as) roads and sewers," Mullings explained. "We've been impacted, but not that severely."
According to Barnes of ARC Systems, the problem has persisted at a crisis level because of a weak and disjoined policy on the part of the government in dealing with imports.
The solution, he said, was aggressive importation of the needed cement. Barnes argued that it required at least a year to amortise the capital outlay needed to organise a substantial cement import operation, yet the government had offered only a a three month waiver on duties in the policy announced by Paulwell, and then it was at the discretion of the minister of the finance.
"Because of the urgent need now, we will be bringing in emergency supplies from Colombia and the Dominican Republic," he said. Larger quantities will be sourced from the Ukraine and Russia. "That is where we are expecting a steady supply to come from, at least 250,000 tonnes."
