Hard times for construction

FOR THE fourth time in two years, the price of cement has risen, making the cost of the essential construction commodity more than 30 per cent greater than the price in November 2021.

Contractors are unhappy. On jobs for which quotations have already been approved, they must decide between doing a reassessment of costs and quoting afresh, or eating the price difference, which will range between $3.57 and $3.78 per bag, depending on the cement grade.

The Trinidad and Tobago Fair Trade Commission continues to monitor the most recent price increase. Contractors note that the price from Trinidad Cement Ltd (TCL) remained constant when it faced competition from an imported product, Rock Hard.

The Barbados-based business importing Rock Hard closed shop during covid19 lockdowns, when construction came to a halt almost completely. For the importers of Rock Hard, the business model had become more challenging before that. In January 2021, the Ministry of Trade issued Legal Orders 415 and 416 of the Customs Act, introducing a quota, import licensing regime and registration system for building cement. Under the new orders, the maximum that could be imported was 75,000 tonnes of cement (increased to 150 tonnes in 2022), and the tariff increased from five per cent to 35 per cent.

TCL supporters argued that Rock Hard's imported product was of potentially suspect origin and old materials after shipping. This was more than disingenuous given that it is subject to analysis and quality control on import, while customers had no complaints about the product.

The new import regime almost doubled the wholesale price of Rock Hard, increasing from $39 per bag to $65.25. The argument for supporting TCL has always been that it is a local company, employs locals and uses 95 per cent local inputs for its raw materials.

TCL, supported by government subsidy in its formative years, is no longer a local business or even a government agency any more. In 2017, Mexican manufacturer Cemex took a 69.83 per cent share in the company. The remaining shares are held by the NIB, the UTC and the TCL Employee Share Ownership Plan.

The Government might be inclined to offer protections to a company operating locally to supply a material as essential as cement, but there is a point where the hand of the State on the scales of commerce has a deleterious effect.

Earlier this month, the Trade Ministry announced it was considering adjustments of its common external tariff on cement, in the national interest. The quota and registration system has also been suspended. It's an overdue acknowledgement of the importance of competition in critical markets, even when there may be value in maintaining some measure of local operator protection.