TBY talks to Carlos Jacks, President of CEMEX Colombia, on the development of the infrastructure and housing sectors, product innovation, and the significance of the Colombian market.

Carlos Jacks
Carlos Jacks graduated in Mechanical Engineering and Administration from Monterrey Technological Institute and later obtained his MBA in Finance. He worked at Metalsa between 1989 and 1992 as an Account Executive and Financial and Planning Assistant, before joining CEMEX. He has worked with CEMEX around Latin America, including Mexico, Colombia, Costa Rica, Puerto Rico, and the Dominican Republic. He is currently President of CEMEX in Colombia.

How has the infrastructure and housing sector in Colombia evolved in the last few years, and what impact is that having on the cement industry?

If you have to select a sector in which to invest, it should be housing and infrastructure, followed by the oil and mining sectors. Colombia has huge infrastructure needs. When it comes to housing, this is a country that has about a 1.5 million-unit quantitative housing deficit plus another 1 million-unit qualitative deficit. Probably half of the population is also under 25 years of age. Cement consumption is at 225 kilograms per capita per annum, while the average in Latin America is 330 kilograms. This means that in order for Colombia to catch up with Latin America, it needs to grow by 50%. The sector will lead economic growth in the near future, and the government is taking steps in order to close the gap. At this particular moment, there is more of a focus on housing, and that is why the authorities have just launched an initiative to build 100,000 houses per year. There are also a lot of regulations that need to change in Colombia in order for that number to grow much faster. For example, in Colombia there is no program for people not formally employed. The government needs to deliver regulations to provide housing, or facilitate housing, for that population group. In infrastructure, I think it has been taking the right steps in recent years. It has faced some problems with corruption, which has created a slowdown in the development of new infrastructure projects, but I think the country is quite clear about what it needs. Officials are trying to position Colombia as a country for safe investment. FDI has been growing tremendously over the last couple of years. Several free trade agreements (FTAs) have been signed and more are planned.

CEMEX is present in over 50 countries. What does Colombia represent for the company, and what further expansion plans do you have?

Colombia is number two after Mexico in CEMEX's estimations, and we believe that the country will continue to grow at a double-digit pace. In order to catch up with that vision, we have to invest. For example, in our aggregate business we have doubled our capacity. In our ready-mix business, a year ago we had just 16 plants, and now we expect to finish 2012 with 38 fixed plants and 24 mini plants, which we did not have in the past. If you add it up, it totals 62 plants. We are also bringing in 200 new trucks for the ready-mix business. For the cement business, we brought in 350 trucks and increased our cement capacity by 20% over 12 months. Equally, we are also planning to invest in two new plants; one in Antioquia and one on the north coast of Colombia. This will allow us to increase our production by 50%.

Where is demand mainly coming from, and how do you see it changing in the medium term?

Right now, it is coming from housing. Approximately 70% of cement is sold in bag form. This is sold in small quantities and used in the construction of informal housing. However, after 2013 I expect the main driver will be infrastructure. I see Colombia growing over the next 10-12 years in order to catch up with the big gap that it has in infrastructure.

“In our ready-mix business, a year ago we had just 16 plants, and now we expect to finish 2012 with 38 fixed plants and 24 mini plants, which we did not have in the past."

How are plans progressing to list the company on the Colombian stock market?

We believe in this country, as it is the second most significant country in CEMEX's portfolio. We are planning to create a holding in Colombia called CEMEX Latin American Holding, where most of our Central and South American operations will be based. We are then planning to sell a minority stake in that new holding in the very short term. It will be a huge transaction for the Colombian market. It is very important for the country as it is the first time a foreign company has done something like this. It is also important for CEMEX because it is the first time in our history we have decided to do a listing like this.