With declining demand for cement in the local market and the lowering of prices in other countries, Holcim Philippines Inc is already discounting the possibility that it will pour in new investments for any expansion project next year.
Ian Thackwray, Holcim Philippines chief operating officer, said the consequence of the bearish condition in the domestic and global markets is that the company will have “very limited capital expenditure” for 2009 and will, therefore, exercise “caution on investments and optimization of cash flow.”
“Now we will have enough to continue to maintain our plants to good standards and make sure that we comply with our environmental standards and we keep getting efficiencies through our plants, but there won’t be any money for expansion, or new equipment or new capacity,” Thackwray said. He noted that domestic demand has decreased, while export prices have fallen to the point that they will be losing money if their intention to produce cement is solely for shipment abroad.
Aside from the market condition, the local cement industry is also battling a government plan to eliminate the 5-percent tariff on imported cement.
Holcim has already decided to shut down one of its lines in its Lugait plant, although Thackwray assured that no retrenchment of workers will be happening.