Block makers await construction revival
Published:Sunday | July 4, 2010 | 12:00 AM
Avia Collinder, Business Writer
Block makers say they have been losing business for three years.
Barely had the cement crisis passed when the recession hit, driving construction activity down.
Now, Anthony Charley, head of Channus Block Factory in Brown's Town, St Ann - a medium-size operation which has been producing blocks to Bureau of Standards of Jamaica (BSJ) requirements for the last 21 years - is desperate for a return to good times.
In 2007, said Charley, production all but stalled, sinking to 30 per cent of 2006 levels, with very little cement available.
This was followed by a 65 per cent resurgence in production and sales activity in 2008. However, with the advent of the recession late into that year, and the continuing economic problems since then, demand for the basic building product has sunk once more.
"When we started, blocks were selling for under J$2 a unit. The blocks are now being sold for J$69 each," Charley said.
The current price, he insists, is cheap.
"A grade 'A' quality block made with the right materials should be selling for $75 ex-factory."
Channus is now operating at 55 per cent capacity, using only 300 bags of cement monthly as opposed to the usual 900.
"A lot of projects are delayed. We are just hunkering down and waiting," said Charley, who is also first vice-president of the Block Makers Association of Jamaica (BMAJ).
Channus was started in 1989 as an offshoot of a family-owned hardware enterprise.
Rewarding investment
"We were selling blocks, cement, stone and sand. We decided to do an expansion, including the making of our own blocks and aggregate."
The Charleys bought land for the factory site and went to the United States to purchase crushing and block-making equipment.
"We borrowed a lot of money from the bank and started with 14 workers," said Charley.
The investment was rewarding in the first decade, he said, but since the cement crisis, the situation has been nightmarish.
Added to block makers' current difficulties is the progressive increase in the price of cement which, along with electricity and fuel for transport and maintenance of equipment are major input costs. "There are block makers who are paying as much as J$250,000 monthly for electricity costs," said Charley.
The BSJ requires that no more than 35 blocks are produced from a bag of cement. Other inputs are sand and stone dust of the correct gradation, as required by the standards agency.
Informal block makers
"We have had to absorb costs with so many others in the business, finding ways and means to undersell us."
Charley said that compliant block factories were further affected by the presence of nearly 150 informal block makers doing their own thing - many using hand moulds and moving from location to location. Homeowners, he said, often bought the cheaper product rather than that of the 70 block makers who are registered with the BMAJ and who are subject to BSJ regulations.
While demand from hotels and other major projects has fallen since the start of 2010, factories like Channus have been selling to hardware stores, primarily, and to some individuals for residential construction. For market advantage, Channus delivers anywhere in the country.
"There are a few projects in the works which we hope to come to fruition soon. We are concentrating on the domestic market and supplying hardware stores," said Charley.
"MSME's are taking a battering."
Factories within the BMAJ network range in size from 6,000 block-a-day operations to 8,000. But most businesses are not operating anywhere near full capacity, because of the demand, the BMAJ vice-president said.
A small home may require between 3,500 and 5,000 blocks for construction, but a larger dwelling may use as many as 8,000.
Under current conditions, however, larger home builders tend to stockpile supplies and buy over extended periods.