Ashford W. Meikle, Staff Reporter
Left: BICKNELL. Right: Tankwell needs a huge storage capacity to meet Jamaica's booming market requirements. - JUNIOR DOWIE/STAFF PHOTOGRAPHER
THERE IS enough steel on the local market to meet rising demand in the construction industry. That's the word from the country's largest steel importer, Tank-Weld Limited.
"We always knew about these projects - the hotels, highways, airports, cricket stadium - so preparations were made. In fact, when we learned about the sheer magnitude of the demand we had to double our orders for the first six months of this year," said managing director of Tank-Weld, Bruce Bicknell, in an interview with the Financial Gleaner.
Bicknell's assurances come in light of the recent cement shortage, which resulted in the government temporarily lifting the restrictions on imported cement because the local manufacturers, Carib Cement, could not satisfy the demand of the booming construction industry. He said the cement shortage slowed down the sale of steel for Tank-Weld because "if you don't have cement you don't need steel."
However, unlike the cement industry, the steel market is operating more efficiently. "We have steel coming in up to June this year which is twice our normal ordering patterns. We reacted... four months ago in anticipation of this surge in demand, therefore, we were and have been able to meet the demand."
About 100,000 tonnes of reinforced steel bars (Rebars) is sold locally in Jamaica each year.
DEMAND FOR STEEL
Bicknell told the Financial Gleaner there is an unprecedented demand for steel as a result of the expansion of the country's ports, Highway 2000, construction as a result of Cricket World Cup 2007 and the investments in the country's tourism principally by Spanish investors. He gave an example of the magnitude of the demand.
"One of the [Spanish] hotels is purchasing steel that is 20 per cent of Jamaica's demand and that's just one hotel alone. And then there is the Pinero project taking place in an undeveloped area of Jamaica, on the north coast - Runaway Bay, the Greenfield area - and they will be putting in 1,800 rooms when they are finished."
Bicknell explains that what is happening in Jamaica has to be put in context of global demand in which there is a shortage of commodities such as cement, steel and sugar. The result is stiff competition for these materials.
"World steel prices have increased by over 25 per cent in the last 4 months, mainly due to the strong economies of the US, Europe, Mid-East, Far East and Russia - all at one time demanding raw material and pushing up prices. In addition, most steel mills are unable to supply their local markets and have restricted their exports, which has had a major effect on countries like us (Jamaica) which depend on imports," he reflected.
One of the main reasons Tank-Weld Metals has been able to meet local demand is as a result of an exclusive contract it has with a Brazilian supplier.
"We have an exclusive contract with a Brazil mill, Gerdau, for the past five years. They have been shipping steel to us at the expense of their local market. So we are really appreciative of that since what you find in the countries that produce commodities [like steel] is that they look after their own market first and countries like Jamaica are seriously being affected."
Against the worldwide trend Tank-Weld has increased its price by about 10 per cent because, according to Bicknell, "we have to be sensitive with our customers. . As market leaders we have to be responsible."
Turning to the state of the construction industry, Bicknell said, "There is so much going on in Jamaica that people don't see it happening but believe me we are seeing unprecedented growth in the construction sector - with the new hotel projects, the highway, airport and port expansion. We see projects coming on stream that were shelved years ago such as major government projects, schools, and so on. And the thing is, it is not only the projects themselves but the spin-offs."
Some of these spin-offs include the expected benefits and goodwill from Cricket World Cup 2007, the third largest sporting event in the world with a two billion audience. With these opportunities Jamaica's infrastructure will have to keep pace with the expansion. Once this happens, Bicknell expects to to see more employment being generated.
"Look at the tourism industry. We have had a stock of rooms in the hotel industry for years and this stock will double in two, three years. It is just hard to contemplate about what that means in terms of activity, employment generation, and wealth creation trickling down to every one in Jamaica."
For these reasons the businessman has confidence in the country's future. "There is so much misinformation going around with people choosing to highlight the negatives but I think the construction industry and economy have a bright future because of all of these projects which are coming on stream. We are extremely optimistic about the future."
He argued that Jamaica will start to see effects when the projects materialise a year or so. As a corollary to this, there is tremendous confidence in the country.
"I think confidence - not just locally but overseas - will be boosted and Jamaica is on the right path."
