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Cracks in JMA over cement - CCC threatens pull-out - Tank-Weld says don't be swayed by rhetoric
Published: Wednesday | June 3, 2009
Mark Titus, Business Reporter
Left: Anthony Haynes, general manager of Caribbean Cement Company Limited. Right: Chris Bicknell,Tank-Weld Limited
The rhetoric has grown more heated, placing the Jamaica Manufacturers' Association (JMA) in the middle of a duel over cement that now threatens to split the lobby group apart.
In a fit of anger over the decision of the JMA to side with cement importers for the continued deregulation of the market for the building product, Caribbean Cement Company (CCC) has threatened to storm out of the umbrella
manufacturers group.
The lone cement producer went even further in its statement issued last Friday to hint that it was prepared to lead a splinter group, though it stopped short of spelling out its precise intent.
"If the JMA supports the cement importers, the board of Carib Cement will have to seriously examine the value of remaining a member of the JMA as clearly the organisation would have surrendered to the traders' lobby against local manufacturing," the company said in an open letter to the JMA.
"Carib Cement will then need to lead a process where 'Jamaican manufacturers' get together to advance the real meaning of 'Buy Jamaican, Build Jamaica'."
CCC is on one side of the issue; 40-year-old construction company and cement importer Tank-Weld, and the Incorporated Masterbuilders Association (IMAJ), the body that represents builders, are on the other.
Tank-Weld in response Monday to CCC's open letter suggested that Carib Cement was attempting to cloud the real issue with rhetoric.
15 per cent waiver
"Jamaica should not allow CCC to befuddle us into taking the backward step of reintroducing its CET-protected monopoly," said Tank-Weld, "rather than establishing a reasonable mixture of supply that would still leave 75 per cent of the local market in CCC's hands, along with its expanding drive into export markets."
Like Carib Cement, Tank-Weld is a member of the JMA, which last week decided to support extension of the waiver on the 15 per cent Common External Tariff on imported cement, but also said it would set up a working group to decide a more equitable long-term solution on a fight for market share that has been ongoing since the turn of the decade.
Carib Cement was once a state-owned and failing company, but is now foreign property, owned by Trinidad Cement Limited.
Cemex of Mexico holds 20 per cent, but is selling its stake in the company.
CCC was just as upset last week about the JMA's stance as by its detractors, who have been critical of its dividend policy, charging that its earnings go to Trinidad.
Carib Cement profits in the past two years have averaged $470 million per year.
The company has not paid dividend in three or so years - choosing to pour back earnings into its plant expansion project which ends in June - but CCC says that when it does pay, 25 per cent of profits is shared with 23,000 Jamaican shareholders.
The company is chaired by chartered accountant Brian Young and managed by Anthony Haynes.
Imported bulk cement
Head of the IMAJ, Raymond Cooper, who supports the local importers' bid to stave off the re-imposition of the CET on imported cement, lifted after severe hiccups in the Carib Cement supplies some four years ago, argues that competition in the market place was good for the construcion firms he represents.
Tank-Weld, which continues to build out its new $1.2-billion port development at Rio Bueno on Jamaica's northwest coast, says that investment was predicated on 15 per cent of the cement market.
A critical plank of the development is the bagging and distribution of imported bulk cement.
Carib Cement last year served 85 per cent of the market but wants a bigger slice, if not total control, it says, to pay for its US$177 million (J$15.8b at current conversions) plant upgrade.
The plant now can produce 1.8 million tonnes of cement, up from one million.
Tank-Weld's Chris Bicknell says the reimposition of the duty would force the shutdown of his cement import and distribution business.
"One would have hoped, if not expected, that CCC would have learned from the mistakes of the past, recognise the sensitivity of cement as a critical commodity, and propose to the Government the wisdom of maintaining the 75:25 split that would protect the manufacturer, protect Jamaica, protect the consumers and protect the construction industry," Bicknell told Wednesday Business.
Direct stimulus to economy
Omar Azan, president of the Jamaica Manufacturers' Association.
Construction-sector players agree that even with unrestricted imports, CCC would still control the lion's share of the business, at 75 per cent, down from 84 per cent last year.
The JMA, before the CCC's public characterisation of its position as "another nail on the manufacturer's coffin" - had shot back that in weighing the matter, it took into account the potential impact on the national economy, the construction sector, and the interests of both manufacturers and consumers.
However, as the tit-for-tat continues, Carib Cement is trumpeting its own contribution to the economy, noting, "Over 60 per cent of the cost of manufacturing cement goes into the acquisition of goods and services in Jamaica, adding a direct stimulus to the economy."
In contrast, it added, "When foreign cement is purchased, over 80 per cent of the value goes directly overseas in terms of freight and the cost of the product."
Contacted this week, Marketing Manager Alice Hyde said Carib Cement was looking at all its options.
Without explaining further, Hyde said the company hoped a meeting between CCC and JMA this week would cause the association to reverse its position. She did not indicate the basis for Carib Cement holding out such hope.
mark.titus@gleanerjm.com
Published: Wednesday | June 3, 2009
Mark Titus, Business Reporter
Left: Anthony Haynes, general manager of Caribbean Cement Company Limited. Right: Chris Bicknell,Tank-Weld Limited
The rhetoric has grown more heated, placing the Jamaica Manufacturers' Association (JMA) in the middle of a duel over cement that now threatens to split the lobby group apart.
In a fit of anger over the decision of the JMA to side with cement importers for the continued deregulation of the market for the building product, Caribbean Cement Company (CCC) has threatened to storm out of the umbrella
manufacturers group.
The lone cement producer went even further in its statement issued last Friday to hint that it was prepared to lead a splinter group, though it stopped short of spelling out its precise intent.
"If the JMA supports the cement importers, the board of Carib Cement will have to seriously examine the value of remaining a member of the JMA as clearly the organisation would have surrendered to the traders' lobby against local manufacturing," the company said in an open letter to the JMA.
"Carib Cement will then need to lead a process where 'Jamaican manufacturers' get together to advance the real meaning of 'Buy Jamaican, Build Jamaica'."
CCC is on one side of the issue; 40-year-old construction company and cement importer Tank-Weld, and the Incorporated Masterbuilders Association (IMAJ), the body that represents builders, are on the other.
Tank-Weld in response Monday to CCC's open letter suggested that Carib Cement was attempting to cloud the real issue with rhetoric.
15 per cent waiver
"Jamaica should not allow CCC to befuddle us into taking the backward step of reintroducing its CET-protected monopoly," said Tank-Weld, "rather than establishing a reasonable mixture of supply that would still leave 75 per cent of the local market in CCC's hands, along with its expanding drive into export markets."
Like Carib Cement, Tank-Weld is a member of the JMA, which last week decided to support extension of the waiver on the 15 per cent Common External Tariff on imported cement, but also said it would set up a working group to decide a more equitable long-term solution on a fight for market share that has been ongoing since the turn of the decade.
Carib Cement was once a state-owned and failing company, but is now foreign property, owned by Trinidad Cement Limited.
Cemex of Mexico holds 20 per cent, but is selling its stake in the company.
CCC was just as upset last week about the JMA's stance as by its detractors, who have been critical of its dividend policy, charging that its earnings go to Trinidad.
Carib Cement profits in the past two years have averaged $470 million per year.
The company has not paid dividend in three or so years - choosing to pour back earnings into its plant expansion project which ends in June - but CCC says that when it does pay, 25 per cent of profits is shared with 23,000 Jamaican shareholders.
The company is chaired by chartered accountant Brian Young and managed by Anthony Haynes.
Imported bulk cement
Head of the IMAJ, Raymond Cooper, who supports the local importers' bid to stave off the re-imposition of the CET on imported cement, lifted after severe hiccups in the Carib Cement supplies some four years ago, argues that competition in the market place was good for the construcion firms he represents.
Tank-Weld, which continues to build out its new $1.2-billion port development at Rio Bueno on Jamaica's northwest coast, says that investment was predicated on 15 per cent of the cement market.
A critical plank of the development is the bagging and distribution of imported bulk cement.
Carib Cement last year served 85 per cent of the market but wants a bigger slice, if not total control, it says, to pay for its US$177 million (J$15.8b at current conversions) plant upgrade.
The plant now can produce 1.8 million tonnes of cement, up from one million.
Tank-Weld's Chris Bicknell says the reimposition of the duty would force the shutdown of his cement import and distribution business.
"One would have hoped, if not expected, that CCC would have learned from the mistakes of the past, recognise the sensitivity of cement as a critical commodity, and propose to the Government the wisdom of maintaining the 75:25 split that would protect the manufacturer, protect Jamaica, protect the consumers and protect the construction industry," Bicknell told Wednesday Business.
Direct stimulus to economy
Omar Azan, president of the Jamaica Manufacturers' Association.
Construction-sector players agree that even with unrestricted imports, CCC would still control the lion's share of the business, at 75 per cent, down from 84 per cent last year.
The JMA, before the CCC's public characterisation of its position as "another nail on the manufacturer's coffin" - had shot back that in weighing the matter, it took into account the potential impact on the national economy, the construction sector, and the interests of both manufacturers and consumers.
However, as the tit-for-tat continues, Carib Cement is trumpeting its own contribution to the economy, noting, "Over 60 per cent of the cost of manufacturing cement goes into the acquisition of goods and services in Jamaica, adding a direct stimulus to the economy."
In contrast, it added, "When foreign cement is purchased, over 80 per cent of the value goes directly overseas in terms of freight and the cost of the product."
Contacted this week, Marketing Manager Alice Hyde said Carib Cement was looking at all its options.
Without explaining further, Hyde said the company hoped a meeting between CCC and JMA this week would cause the association to reverse its position. She did not indicate the basis for Carib Cement holding out such hope.
mark.titus@gleanerjm.com
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