Holcim to freeze operations on weak demand

Holcim Philippines Inc. announced they will be shutting down their plant for six weeks as demand for cement continues to weaken.

In an interview at the sidelines of the Holcim galing Mason Awards at Crowne Plaza, Holcim chief operating officer (CEO) Ian Thackwray said they are planning on closing their remaining cement line.

Thackwray said they are not yet certain when they will implement the shutdown. “It depends. We are very flexible,” he noted.

Thackwray said that depending on how the industry performs this year, Holcim may periodically halt operations of their plant.

In 2007, Holcim closed down one of its two cement lines. Thackwray said they will not open the mothballed cement line this year. He said the earliest possible time would be next year.

 Holcim is operating at spare capacity and it would be inefficient to run all the lines now.

The plant’s full production capacity is 6.6 million tons.

Holcim refused to say how much they produced last year.

Despite the slump in the demand, Thackwray said they will not be laying off workers.

Private construction, which makes up 60 percent of Holcim’s business, is expected to go down. This means that the industry, Thackwray said, is now dependent on how much the government will spend on infrastructure.

With regards to cement prices, Thackwray said that he does not see any increase in prices. “For the moment it is not necessary,” he noted.

Likewise, Thackwray said the decision of the government to suspend the tariff on imported cement for six months had little to no effect on their sales.

The government temporarily lifted the tariff on imported cement in an attempt to give the public access to cheaper cement and force companies to lower their prices.

However, the move seemed to not work because Thackwray said most construction companies still prefer local cement over imported cement because of quality and reliability.

He said imported cement pose serious risk because there is no assurance that the quality is good. Reliability is also a factor. Delivery of imported cement may not be as consistent as the local supply.

Thackwray said local players are still their main competitors as opposed to imported cement.