Construction sector calls for summit to address price surges

With inflation rates going overwhelming, construction industry players are now proposing for a summit that will discuss relevant issues of the sector such as continued rising costs of construction materials to ease its grave impact in their businesses.

In an interview with reporters during the 16th Construction Show-Cebu held at the SM City Cebu’s Trade Hall, former national president of the Subdivisions and Housing Developers Association (SHDA) and President of 8990 Housing Development Corporation JJ Atencio shared that they are very much “saddened and worried” about the unprecedented price surges in the construction sector.

“With this never ending inflation, almost everything right now is high. Not only the construction items but even labor, electricity, and gasoline are high. Price increases before were minimal, manageable and steady but today everything is changed because of the volatility of the market,” he pointed out.

Atencio said that the construction industry is very much concerned right now with the volatile pricing of steel, which is considered among the basic materials for any construction project.

“In Cebu, steel prices rose 60 percent from December and at an annualized trend, it may even go up more than double and even triple by year end,” he said.

Last year, the industry had good outlooks for the year 2008 and a bright prospect for its first quarter because of good sales inventory for 2007 but with the unexpected turn about of events with price surges in the world market, the sector was not able to sustain its growth, said Atencio.

“Compared to last year, we have lower sales this year. Developers are in the middle of materials, labor and buyers so we are in a difficult position. We cannot just increase our pricing because we always consider the affordability of our buyers which remained the same if not lowered and so we end up with diminishing profits,” he explained.

With all these problems in hand, Atencio said that they are looking at the possibility of holding a summit that can will be participated by the entire industry stakeholders. He urged the government sector to take an active stance and lead in this particular endeavor as the private sector’s issues should also be their major concern.

“It’s time for us to get together and help each other solve industry-wide problems because it affects everyone. We should get all stakeholders together for a dialogue to ride out inflation and its impact to the industry then come up with a proposition,” he stressed.

Meanwhile, Cemex Philippines marketing manager Dindo Val Bautista agreed that at this point, a summit will be relevant to discuss measures on how the industry can cope with the rising prices and generate profitable margins.

He also added that apart from other construction materials which raised prices significantly higher this past months, cement has had minimal and manageable increases which can be considered flat.

However, he shared that the rising inflation and energy cost has also affected their sales because 70 percent of their production cost is contributed by electricity.

He said that on their part as manufacturers, their answer to this prevailing price crisis is through creating products that fits the requirement of a greater public rather than to bring down their prices which is difficult to do at this point.    - Rhia de Pablo