Anti-crisis infrastructure plans insufficient to reactivate industry

Anti-crisis infrastructure plans insufficient to reactivate industry
Published: 14 January 2009

Regional anti-crisis packages to combat the economic crisis by promoting infrastructure development will not be sufficient to reactivate the cement industry in Latin America, an official from  Holcim’s Chilean cement company Polpaico told BNamericas.

Extraordinary infrastructure development plans recently announced by countries such as Chile, Argentina, Mexico, Brazil and Colombia will help create jobs and keep a certain level of construction going, but they are definitely not enough to restore growth in the cement and concrete industry, the official said.

The industry was already suffering the effects of flat cement and concrete prices versus increasing energy and fuel costs, among others, which have reduced profit margins in general, the official added.

A boost in private investment, and construction in general, is the key to ensuring the cement industry’s growth, said the official.

The crisis has affected cement sales, and concrete sales even more, the official said, as demand for these materials began to decline tremendously since the start of the financial turbulence.

In August 2008, the world began to experience a slowdown in construction projects and, although sales remained fairly strong in Latin America for the rest of the year, the effect of the crisis on the industry has now become apparent, the official said.

Polpaico’s operations are expected to remain relatively stable in Chile, where the company had no expansion plans due to its consolidated market share.

In terms of the new plants under construction, the official said they will not suffer from the crisis as they are initiatives specifically related to the mining industry.

In the case of Latin America, the scenario is not so comforting, as a number of countries are in a much more jeopardised economic situation than Chile, the official said.