Cement industry takes a hit from political impasse
The factory of MI Cement at West Mukterpur in Munshiganj district. Photo: MI Cement
Cement manufacturers are passing tough times as the sector is being hit hard by political instability.
The cost of transporting cement from mill gates to retail-level sellers has doubled, and more importantly, no transport can be arranged during shutdowns, manufacturers said.
Sales dropped 30-40 percent due to severe disruption in transportation, also increasing the cost of doing business, they added.
If this situation continues, manufacturers fear that profit growth figures will fall in the next quarters; some may even face losses and that would be detrimental to the country's economy.
Mohammed Jahangir Alam, chairman of MI Cement Factory that makes the Crown brand, thinks the business community is the main victim of political instability, which has a chain reaction, especially in the manufacturing sector. “Transport is not available, transport costs increase, delivery of goods disrupted, workers sit idle, and no revenue collection.”
Truck fare from Munshiganj to Sylhet rose to as high as Tk 15,000, which was Tk 6,000 a few months ago, he said.
“We can still arrange a truck from Munshiganj or Dhaka at a higher fare, but the situation is the worst in Chittagong. It is very hard to get a truck to transport goods from Chittagong,” he added.
If goods are not delivered in time, factory stockpiles build up, stopping production until deliveries are made, Alam said. “But we have to pay the workers' salary.”
“Not only is our sales and production being hampered, we are also facing difficulties in collecting our revenue from retail levels,” he said, adding that the industry will suffer a lot more in the long run for this.
Mohammed Amirul Haque, managing director of Premier Cement, said the supply chain has been damaged. “So, we cannot maintain the delivery of produced goods.”
He said transportation is the main problem during hartals. “On the other hand, the fare has increased by double or more,” he said. For example, the transport owners now demand Tk 12,000 for a trip that was Tk 5,000 before.
“We are now passing uncertain days and just waiting for a stable situation,” Haque added.
Bangladesh's total cement producing capacity is around 2.5 crore tonnes a year, while the demand is around 1.5 crore tonnes, with a surplus of one crore tonnes.
Bangladesh also exports cement, mainly to the northeastern states of India. In July-September this year, Bangladesh exported cement worth $1.49 million, according to statistics from Export Promotion Bureau.