The Jamaican construction industry has hit a significant roadblock due to a cement shortage, as the sole manufacturer, Caribbean Cement Company Limited (CCC), grapples with supply issues. The shortage has disrupted numerous projects, impacting contractors, hardware stores, and other key players in the multibillion-dollar sector.
The scarcity has become so severe that some hardware stores have resorted to rationing, with customers being limited to purchasing just 10 bags of cement per transaction. Builders and contractors have been forced to adopt creative methods to source enough material to keep their projects afloat, adding strain to an already pressured market.
Caribbean Cement issued a statement explaining the root cause of the shortage. “Caribbean Cement Company Limited has successfully completed the scheduled annual maintenance of its kiln, and we are aware that some customers are experiencing delays in obtaining cement. Prior to the maintenance, the company held sufficient inventories to meet market needs. However, the passage of Hurricane Beryl and the company’s subsequent response to ongoing relief efforts resulted in faster consumption of these initial inventories,” the statement read.
CCC, which is Jamaica’s only cement producer, is in the midst of a US$40 million expansion project, expected to boost production capacity by 30% by 2025. This shortage, however, comes at a critical time for the construction boom that has fueled the company’s growth in recent years. In fact, CCC’s production spiked from 758,800 tonnes in 2019 to 962,600 tonnes in 2023, as it sought to meet both domestic demand and increase exports to other Caribbean nations.
In response to growing concerns, CCC assured the public that efforts are being made to return to full production as quickly as possible. “We recognise the importance of our operations to the construction industry and are working diligently to replenish inventories as quickly as possible for our valued customers,” the company said, adding that normal inventory levels should return in the coming days.
Several prominent figures in the industry have voiced their frustrations over the shortage. Chris Bicknell, chairman and CEO of Tank-Weld Group, confirmed the shortfall and noted that many customers have voiced their complaints. Norman Horne, executive chairman of Arc Manufacturing Limited, echoed these concerns, pointing out that the absence of cement halts construction projects, slowing hardware sales and leaving many workers idle.
“Cement is a key driver in selling all other building materials,” Horne emphasized. “If you don’t have cement, you don’t have construction. If you don’t have construction, the entire supply chain slows down, leaving workers out of a job. [CCC] has faced some issues with its machinery, but they should be resolved soon, and we expect the market to return to normal soon.”
Island Concrete Company Limited’s CEO, Adam Hugh, highlighted the challenges posed by the shortage, stating, “As a premium supplier of ready-mixed concrete, a consistent supply of cement is essential for ICCL. We have implemented alternative methods to maintain supply, including purchasing from wholesalers, but it has still been a challenge.”
The shortage has also drawn political attention, with the People’s National Party (PNP) calling on the Government to intervene. Opposition spokesperson Anthony Hylton stressed the urgency of finding immediate solutions to prevent further harm to the economy and the 150,000 workers dependent on the construction industry. “We are faced with yet another crisis in the cement industry which threatens the growth of our fragile economy,” Hylton warned.
While the shortage is temporary, the situation has reignited discussions about Jamaica’s cement import policies and CCC’s monopoly on the market. Currently, the company enjoys significant protection, with import tariffs ranging from 15-40%. The only other company permitted to import cement is Buying House Cement Limited (BHC), which is capped at importing 120,000 tonnes per year.
There have been calls for the Government to introduce a third importer to avoid the market disruptions that occur during CCC’s annual maintenance shutdowns. Deanall Barnes, managing director of Atlantic Hardware & Plumbing Company Limited, expressed support for this idea. “A third importer would ensure a more consistent supply of cement during these critical periods. It would help prevent severe shortages like the one we’re experiencing now,” said Barnes.
Historically, the Government has stepped in during similar crises. In 2006, it reduced the import duty for three months to alleviate a shortage caused by quality control issues at CCC. There’s now increasing pressure for a similar intervention to stabilise the market.
Despite these challenges, CCC remains financially strong. The company reported a 7% revenue increase to $15.28 billion for the first six months of 2024, with net profit up 75% to $4.28 billion. It also boasts a substantial asset base of $39.60 billion, with $9.46 billion in cash and cash equivalents.
However, CCC’s stock has yet to recover fully, trading at half of its 2021 peak after a controversial royalty payment to its parent company, Cemex SAB de CV, was implemented. Cemex, which owns 79.04% of CCC through its subsidiary Trinidad Cement Limited, receives a 2% royalty on CCC’s consolidated revenues each year.
As the cement shortage continues to grip the construction industry, stakeholders are eagerly awaiting the return to normalcy. Whether this will spark long-term changes in Jamaica’s cement import policies remains to be seen.