Mark Titus, Business Reporter

Acceding to a request from Prime Minister Bruce Golding, Jamaica's manufacturers will meet today behind closed doors to chisel out a position on cement amid the lobby by the Rockfort monopoly producer for a reimposition of duties on imports.

Similar invitations have gone out to large construction interests who have been asked to weigh in.

But, already, several hardware stores and construction-related businesses have declared the move bad for business, and say they will push back against the move by Caribbean Cement Company (CCC) to have the import waiver rescinded and its efforts to dominate the market.

CCC controls about 75 per cent of the market, with the other 25 per cent open to cement importers, under a duty regime that waives the 15 per cent Common External Tariff (CET) as long as they conform to the stated import volumes.

The waiver allows importers to bring in about 240,000 tonnes of cement duty free.

That would leave Carib Cement with a market of 720,000 tonnes.

Last year, the Rockfort producer commanded 84 per cent of the local market, whose demand declined to 840,000 tonnes in the period, CCC reported.

Capacity ramped up

Since then, the plant's installed capacity has been ramped up from 1.0 million tonnes to 1.8 million tonnes, under the US$170 million expansion project that the company expects to wrap up next month.

A larger market share could only help to narrow the payback period on the investment.

CCC confirmed that it has approached the Government to reinstate the CET, but say it is not the first time it has made the request.

This time, however, it has sufficient capacity to churn out the volumes needed by the market, and far more efficiently.

The Trinidad-owned company said it does not expect to corner 100 per cent of the market, but is not averse to building on the more than 80 per cent share it now has.

"We now have the capacity to supply all the cement that the country needs," CCC marketing manager, Alice Hyde, told Wed-nesday Business.

"We have been in discussions with Minister Samuda in regard to having the CET back in place, as it rightfully should be."

But none of the hardware stores polled by Wednesday Business wants the import regime to change, saying that making it harder to bring in foreign supplies would not translate into cheaper cement for Jamaican builders - quite the opposite.

It is these concerns that the board of the Jamaica Manufacturers' Association (JMA) will weigh today - as well as the broader implication for the construction sector - in a meeting at its Duke Street, Kingston headquarters.

Both Tank-Weld and CCC are JMA members, putting the association in a ticklish position.

The cement waiver was first implemented in 2006 during the cement crisis, sparked by the release of over 550 tonnes of faulty cement into the market by CCC back in late 2004 and early 2005.

This caused a severe shortage after Rockfort-produced cement was pulled from the market, while throwing an estimated 30,000 of mostly low-skilled young men out of work.

CCC then admitted that its mills were operating at 80 per cent capacity, and that the country would have to import to fill the gap.

The 40 per cent safeguard duty that protected the Rockfort-based producer up to then against imported cement was lifted, allowing hardware merchants such as Mainland International, Arc Systems, Buying House and Tank-Weld Metals to enter the market over time.

According to information from the Trade Board received this month, only three companies - Tank-Weld, Arc Systems and Buying House Limited - are currently importing the product.

Tank-Weld recently received its first shipment of 5,000 tonnes of cement under a 10-year contract from Vulcan in the US, while Arc System's last shipment was in January.

Local importers

Other registered local importers are Mainland International, Freight Managers Limited, Hypro Hardware, Sangster International and Tropical Investment Company.

While they pay no duty, the product attracts 16.5 per cent general consumption tax.

The discussions on the CET now reside in Samuda's office.

"The matter is up for review in September and the minister has given a commitment that a decision will be made then," said Hyde.

Samuda two weeks ago met with cement importers, and it was the concerns raised there that prompted PM Golding to invite comment from the JMA, informed sources told Wednesday Business.

According to information from the Trade Board, only three companies in Tank-Weld, Arc Systems and Buying House Limited are currently importing the product.

Doreen Frankson, former president of the JMA and a manufacturer of paints, said Government ought to encourage competition in the market, as monopolies have not brought any benefit to the consumer.

"I do not support any one industry being protected while the rest of us as manufacturers are open to all the competition that is there, sometimes to the detriment of the country," she said.

Frankson was speaking as a businesswoman, and not necessarily for the JMA.

She said local investment must be encouraged as revenue will remain in the country, whereas for CCC all its profit goes to Trinidad.

CCC has paid no dividends in recent years, choosing instead to pump back earnings into the operation during the expansion.

Frankson, the owner/operator of EdgeChem, says it took her a year to recover from the cement fiasco in 2005.

"All construction sites and hardware facilities were impacted, and that is my customer base, so even though I don't trade in cement, it was a terrible period for me as well."

Back then, Tank-Weld only concentrated on their core business, steel, CEO Chris Bicknell told Wednesday Business.

"The Government must protect the cement market, because placing the supply of cement into the hands of a sole company will be ignoring the lessons of the recent past, while leaving the construction sector vulnerable," he said.

"Our sales fell by 50 per cent in the first month, and in a distribution company like ours that was devastation."

Today, apart from investing over US$4 billion in the purchase of the Rio Bueno ports, and a 10-year deal to import Vulcan cement from the US, Tank-Weld has also leased a cargo ship for US$1 million and has obtained a licence to import a number of construction items, including steel, cement, lumber, as well as aggregate; the company will also distribute limestone and Liquid Petroleum Gas.

Benjamin Terrelonge, vice- president of Arc Systems, suggests that the Government introduce a quota system for cement, arguing that the market can accommodate all players.

"We have imported cement out of Egypt and Dominican Republic; and for the past two years have been importing from China and have played our role in rescuing the nation from a complete disaster," he said.

"What I think they should do is establish a quota system. This will allow everyone to remain in business."

mark.titus@gleanerjm.com