TBY talks to Manuel Román, Legal Representative of Cemento Chimborazo CA, on the company’s goals, new projects, and major investments in 2012.
TBY In which areas will the company invest, and how will this improve production?
MANUEL ROMÁN The investments will be made between 2011 and 2012, and about $35 million will be used for increasing the grinding capacity and the cement dispatch. This work will consist of a complete installation from the raw material hangar, a pozzolana drying and dosage system, a 200 tons-per-hour tubular mill, a cement storage silo with five compartments of 15,000 tons each, an automatic 12-slot baler, and an ultra modern pallet system. The installed capacity is 800,000 tons of cement annually, and we can currently produce 330,000 tons a year. By eliminating some obsolete equipment, our capacity can triple to reach 1 million tons per year. Other investments are geared toward the construction of a new technical-administrative center with intelligent operations for $2.2 million, since the previous facility was demolished to make space for new installations. The remaining $6 million will be invested in the adaptation of roads and access networks, process control, lighting, and services, such as energy, compressed air, and water.
Chimborazo looks to join the public company Cementos Guapán to improve market participation. How will your market share improve after this process?
In 2011, the cement market was divided as follows: Holcim with the largest market share reaching 63.5%, followed by Lafarge with 22.4%, Guapán Industries with 7.8% and Cemento Chimborazo with 5.9%. Evidently, the two smaller companies that have a combined market share of 13.7% should unite to be able to compete by creating synergies. It is more necessary for Guapán since it doesn’t have a nearby limestone source, which is the main raw material; therefore, its high production costs make the company less competitive. With the production improvements projected for both companies, we expect to surpass a 20% market share by 2013.
Cemento Chimborazo is the main employer in the province. How has the company’s restructuring affected employment?
It will definitely improve the employment situation of the province. In stage one alone we will be requiring 250 additional workers. Because we will maintain production, we will maintain employment. For the second expansion stage, the demand for labor during the 3-year period construction will be larger.
In 2012 the government will start the construction of eight hydroelectric plants. How would you describe the opportunities for the company and the sector?
It is an exceptional moment for the industry due to sustained growth in the demand for cement in the past years, at 6.9% annually between 2001 and 2011, and 12.25% between 2007 and 2008. To illustrate this growth, August 2011 sales figures jumped 10% compared to 2010, which was a historical record for monthly cement sales in the country. To emphasize the demand peak, the monthly average of delivery in the first six months of 2011 was 441 million tons and in August we delivered 531 million tons, which means an increase of 25%.
What new innovations and projects do you plan to introduce to the market in the near future?
We invested $12 million in the Fábrica Ecuatoriana de Prefabricados de Hormigón, and in the beginning it was designed to manufacture one product only—concrete sleepers for the rehabilitation of the Ecuadorean railroad—a project that will be completed in September 2012. A personnel restructuring was carried out in order to adapt to the demand. Therefore, a reconversion of the production unit is an urgent requirement, which will be separated from Cemento Chimborazo to be constituted as an independent entity in 2012. The long-bedplate adopted technology allows a degree of reconversion from the current production unit. The shed with the cement mixer will be kept, and new molds will be installed for the production of pre-manufactured elements for construction, particularly for port panels destined for public buildings such as schools. We are working with the Instituto de Contratación de Obras (ICO) to define the constructive elements that will surely constitute an innovation for the country. We expect to have this reconversion done by the 4Q2012, aiming to deliver the first pre-manufactured elements in October.
What are your forecasts and main objectives for 2012?
We are working to finish the first stage of the cement factory expansion and consolidate the profitability levels of the company, which have been improving spectacularly since 2008. We also aim to implement synergies with Guapán Industries and settle the inclusion of a strategic partner for the second expansion stage. Meanwhile, we expect to separate the pre-manufacturing unit and settle its reconversion to manufacture construction elements, as well as increase the company’s socio-environmental commitment in the region and the country.
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