Local cement firms lay off workers, shut down plants

Local cement companies said they have been forced to lay off workers and rethink further expansion and investment plans due to the global financial crisis and the expected adverse impact of the recent cement tariff elimination.

An industry source said Lafarge (Philippines), one of the leading cement firms in the Philippines, reportedly laid off 45 employees from its Mindanao plant in Iligan City and 30 others in its Batangas operations. The company’s FR Cement in Teresa, Rizal is also going on a six-month economic shutdown, with other plants in Luzon to follow.

Requesting anonymity, the source also disclosed that Lafarge is not the only cement company having difficulty coping with the severe slowdown in demand and dire effects of dumped imported cement without tariff.

Holcim chief operating officer Ian Thackwray earlier said his firm was compelled to shut down one of its kilns last July, resulting in a 15-percent production cut or one million tons. Industry sources also said one of Lafarge’s plants in Luzon has been shut down for economic reasons.

CEMEX Philippines also reportedly reduced its workforce by three percent last month to cope with a depressed market. The firm is also shutting down kiln operations in both of its plants in Antipolo City, Naga and Cebu until market conditions improve. Reports say however that product supply will not be disrupted as both plants keep sufficient inventory levels, and kiln operations will restart once inventories are depleted.

In a related development, since local cement has dropped dramatically to one percent due to weaker than expected construction activity, cement plants have been forced to implement plant shutdowns.

In its 2007 report, the Cement Manufacturers Association of the Philippines said that while construction activities increased last year, cement firms expect uncertain growth of 2009 sales as the financial crisis hits the construction industry. This situation is made worse by the adverse effects of the removal of cement import tariffs.

The domestic cement industry said it will have to endure serious repercussions due to Executive Order 766 allowing duty-free importation of cement for six months, amid the global economic turmoil.

Trade groups and cement workers appealed to the government to rethink the lifting of tariffs, stressing that it only favors importers. The zero-tariff could also increases the risk of importation of substandard cement. As it stands, cement manufacturers in the Philippines, as well as globally, have retrenched employees and, in some cases, closed factories.