The construction industry is facing a new defeat, after months with figures to the low, with the impact that it will generate the coronavirus by the reduction of operations in works, less investment and the suspension of operations of the cement.
The National Chamber of Cement (Canacem) announced that its membership suspended operations, because the sector was not considered as an essential activity in the middle of the declaration of public health emergency.
Jaime Rocha Font, president of the Canacem, reported that will supply the public works and private from the Saturday, April 4, this included the more than 62 thousand hardware stores of the country and other dealers.
In a statement, stressed that the affiliated companies will keep all their staff with their salary and benefits are comprehensive, during the period from 30 march to 30 April 2020.
For his part, Eduardo Ramirez Leal, national president of the Mexican Chamber of Construction Industry (CMIC) reported that instead of a growth of 1.5 percent expected for this year, the coronavirus of the impact with a fall of between 3 and 4 percent.
“I think that after this (COVID-19) could have some impact and certainly the decline may be around 3 or 4 percent,” he warned.
The declaration of Health Emergency in Mexico opened a picture a little favourable, mainly for small and medium-sized businesses that depend on this activity as cement, concrete manufacturers, manufacturers of rod, and inputs derived from steel, among others.
“The more time we are in a contingency, the more it will affect growth, not only in industry but in the economy of our country and all over the world,” said Ramirez Leal.
Ricardo Trejo Nava, director general of the firm analysis Forescatim, he anticipated that, in the first quarter of 2020, if it is sent to a third party for the construction workers to your house, there will be a fall of 8.8 percent and if the 50 percent is going home, the fall would be 9.5 percent.
He added that, with it, the recovery would take until the end of the year.
In pause Cemex and Elementia
Companies such as the cement producer Cemex or the construction firm Elementia has had operations in three to five nations, respectively.
Cemex stopped the production of its plants in the Philippines, Panama, and Colombia, before the measures taken by their governments to contain the spread of the virus.
Alik Garcia, an analyst of Exchange, explained that these measures will impact large companies, such as cement, to be so dependent on economic cycles in the global and have more exposure to regions that have been severely hit by the COVID-19 as Asia and Europe.
With the decrease in operating activities and a lower demand on volumes of production, the analyst noted that they are waiting for the impact that it can have this situation in Mexico, one of the biggest generators of flows from operation (Ebitda) for the company.
“Although Mexico is not a part of such a significant level of sales, if it is at the level of Ebitda, about 36 percent of the operational flow of Cemex in Mexico,” said the specialist.
For its part, the signature of products for the construction, Elementia –a firm in which it has equity participation of Carlos Slim and Antonio del Valle Ruiz –suspended operations in El Salvador, Colombia, Peru, Bolivia and Ecuador until 13 April, a date that could be modified in function of the containment of the spread of the virus.
Coup de grace msmes
The micro, small and medium-sized construction companies will be affected the most by the effect COVID-19.
According to the CMIC, of the more than 6 million jobs generated by the construction industry, about 70 percent comes from the Msmes, which have been hard hit in the last two years, so it is urgent to capitalize on them to address this pandemic.
“We’re not so sure how long it can sustain this because 96 percent of the construction companies in our country are Msmes, and these come from two years with numbers very bad with little production,” emphasized the national president of the CMIC.
Hence the main demand of the agency of the Treasury, is to establish a scheme to provide more liquidity to these companies, enabling it to direct resources, such as the payment of taxes, social security and Infonavit, the payment of salaries
In that sense, the experts agree on the need to put a plan in place counter-cyclical to cope with this crisis, with a pop-up program of investment in public infrastructure.