Governors query Mexican tariff

Governors query Mexican tariff
11 August 2005

Four Western governors have asked US Commerce Secretary Carlos Gutierrez for immediate help in lifting a tariff that restricts Mexican cement from entering the country. Govs. Bill Richardson of New Mexico, Jon Huntsman of Utah, Kenny Guinn of Nevada and Mike Rounds of South Dakota told Gutierrez in a letter sent Wednesday that states are experiencing cement and concrete shortages that have impacted both the price and scheduling of private and public construction projects.

They said lifting the tariff, which was instituted in 1990 to prevent inexpensive Mexican cement from flooding the US market, would be a possible solution to the shortage. "The construction industry is driving economic growth in our states and across the country, and eliminating this obsolete tariff will protect jobs and show support for American businesses," Richardson said Wednesday.

The governors told Gutierrez that market conditions have changed significantly since the tariff was enacted. Most notably, demand has risen over the past year because of the US housing boom, China’s economic growth, and reconstruction from last year’s Indian Ocean tsunami and Florida hurricanes.

Concrete producers are being forced to reduce their allotments to their customers, which the governors said could result in costly delays or the cancellation of construction contracts. "If this shortage continues, thousands of jobs and millions of dollars in broken contracts will be at risk, and many small construction businesses could be forced out of business," they wrote. "Public projects will increase in cost while failing to meet construction schedules."

Also on Wednesday, Richardson and Albuquerque Mayor Martin Chavez announced that they reached an agreement with a Mexican company that will help the local construction market. The two met with officials from Grupo Cementos de Chihuahua and agreed that the company will increase New Mexico’s cement allotment by about 10 percent despite the expensive tariff, which is equal to 75 cents on every dollar on cement imported from Mexico. The company will ship the cement from Chihuahua because its factory in Tijeras, just east of Albuquerque, is at full capacity.

William Webb, vice president of marketing for Grupo Cementos in New Mexico, said the company’s Tijeras plant produces about 500,000t of cement a year. That supplies about 80 per cent of the current demand faced by the company. "It’s a simple age-old problem of supply and demand," he said. "This is not something new."

Published under Cement News