By Dennise Williams, Staff ReporterCARIB CEMENT Company Limited (CCCL) is involved in a fierce battle with importers, for control of Jamaica's growing cement market.
Industry experts say that the projected demand in 2003 for cement is 936,000 tonnes, up 20 percent from the 780,000 tonnes used in 2002. Carib Cement disagrees.
"We feel that the market size is close to 800,000 tonnes for 2003 and we can meet this," said Alice Hyde, marketing manager at CCCL. "For 2004, we project an increase of 3%, which we can meet."
There is agreement by parties interviewed by Wednesday Business that the construction industry is growing with the considerable help of government initiated projects and this is driving the demand for cement.
With only a part of the first phase of Highway 2000 completed and the inner-city housing redevelopment programme to be launched by the National Housing Trust, the growth in demand for cement is projected by one major player to reach 1 million tonnes by 2004.
To meet this demand, competitors have brought in cement from other countries. Carib Cement has been complaining not only about dumping, but also short-term protection from low priced imports.
The cement manufacturer is awaiting a ruling of the Anti Dumping Commission today, in its case against ARC Systems Ltd. In contrast with its previous case against Mainland International dealing with dumped cement from Indonesia, this case against ARC Systems revolves around the new Safeguard Legislation.
WORLD CLASS STANDARDS
"If we are successful with our case, a remedy would be put in place that would give us time to get our production to world class standards," said Hyde. "We just want breathing room."
But Senator Norman Horne, CEO of Carib competitor, ARC Systems, said the market is big enough for all the players.
"It is pretty clear that the market will absorb more cement each year," Senator Horne said. "We will continue to see demand, but the real question is can CCCL meet the demand? The numbers show that it cannot."
Carib Cement is seeking a monopoly in the market, said Garth Walker, Mainland Group investment executive. "At this stage when Government is looking at the construction industry to kick start the economy, no one company can supply the entire construction industry".
Walker says CCCL does not have the capacity to supply the entire market.
"If CCCL cannot produce the full amount of clinker (a key component of cement) for their own uses, and they have to import the rest, how can they supply the market," Walker asked.
And the result of underproduction, according to Senator Horne would be disastrous for the construction industry.
"If CCCL was the only cement supplier in town, and there was a shortfall, then construction sites would stall," the Senator said. "Imported cement stabilises prices and increases sales for other construction products like steel, sand and lumber."
Carib Cement refutes these statements.
"We have more than enough milling capacity," said Hyde. "We can produce up to 1 million tonnes per year."
But both Mainland and ARC feel that a protected market is a thing of the past.
Stated Walker, "the best way to protect your market is through fair trade and efficiency, not through legislation," said Walker.
The ARC boss said, "we are also manufacturers of nails and other construction materials, and we don't make any attempt to file for protection because the world has gone in a different direction. Remember that Jamaica is a signatory to the WTO and this means a breaking down of the barriers to competition and an end to protectionism."
Walker adds that CCCL is not a locally owned company and despite competition, continues to do very well financially.
"I think that the average person who is not in the construction industry will say that we should protect our local industries, but CCCL is not locally owned, Trinidad's TCL Group owns it," Walker said. "Jamaican, Jeffery Myrie owns Mainland, so the profits stay here."
Research on CCCL's financial statements by Dehring Bunting and Golding (DB&G) underpin this argument. A report released by DB&G said, "revenues grew by 9 per cent on account of a 14 per cent and 7 per cent price increase on the cost of bag and bulk cement." Additionally, its net profit was $374 million in 2002, which represented a 28 per cent increase from 2001 figures.
