Cement History

1998 to 2005: Local Cement Goes Global

While the Philippines was less severely affected by the Asian financial crisis in 1997 compared with Thailand, South Korea and Indonesia, the effects were nonetheless devastating. For the domestic cement industry, the crisis left a lasting mark.

After the upbeat years of the early 90s, cement manufacturers planned on expanding their capacities as real estate and construction picked up along with the Philippine economy. But all their expansion plans – most of them based on foreign-dominated loans – had to be set aside when the crisis struck.

Many Philippine cement companies had to address the fall in demand and

the enormous debt many of them had contracted in the process of expanding their business. The answer to their debacle – take on multinational cement companies as partners.

Top local players

Before the entry of multinationals, the leading players in the Philippine cement industry were PHINMA which was headed by Ambassador Ramon del Rosario, Alsons of the Alcantara family, and Seacem of the Araneta family.

PHINMA – the largest of the three – owned Hi Cement, Bacnotan, Central and Limay. The group also managed Solid and Rizal for the Madrigal family. The Alcantaras had Alsons and Iligan while the Aranetas had FR, Titan and Lloyds Richfield.

The multinationals’ participation in the cement industry was made possible by a series of mergers and acquisitions which redefined ownership structures throughout the industry.

Recalling those days, PHINMA’s Magdaleno Albarracin noted that local cement manufacturers became very vulnerable to the entry of foreign cement firms when the locals could no longer make money.

“That was the opportunity for foreigners to come in because the Filipino cement makers were under severe pressure to pay off their debts which they incurred while trying to expand,” he said.

With foreign investors in their fold, local cement manufacturers found themselves enjoying the best of both worlds. The multinational partnerships not only bailed them out of indebtedness, it also brought into the Philippines some of the world’s leading technologies and international best practices that would help the cement industry evolve into a globally competitive business.

Foreign partners

Four global cement leaders took interest in the Philippine cement business and took significant holdings among the embattled local firms. These cement conglomerates are –

  • Financiere Lafarge S.A. (France)
  • Blue Circle PLC (UK)
  • Cemex S.A. de C.V. (Mexico)
  • Holcim Ltd. (Switzerland)

During the last quarter of 1997, Cemex forged an alliance with the Madrigal family, paving the way for the Mexican company’s investment into Solid Cement and into the Rizal Group of Companies.

Two years later, Cemex also acquired Apo Cement in Cebu which, at the time, was coming out fresh from rehabilitation and the conversion of its wet process under the management of the Gokongweis.

In 1999, Lafarge entered the picture and acquired Republic Cement – one of the oldest in the country. In 2001, following its acquisition of Blue Circle, Lafarge became the world’s leading cement producer and the Philippines’ largest cement conglomerate in terms of capacity and sales.

Three years later, Lafarge would consolidate operations of Republic and its subsidiaries – Fortune, Premier, Iligan, Mindanao Portland, FR and Lloyds Richfield – with Continental Operating Corp., a wholly-owned unit of Lafarge Cement Philippines.

Also in 1998, Holcim – the erstwhile global leader prior to Lafarge’s acquisition of Blue Circle – formalized its entry in the Philippine market when it acquired Union Cement shares. Since 1974, Holcim has been represented in the country by Alson’s Cement Corporation.

Holcim currently operates two plants in Luzon (Norzagaray in Bulacan and Bacnotan in La Union) and another two in Mindanao (Lugait in Misamis Oriental and Davao City.

Other companies like Pacific Cement (established in 1967) and Taiheiyo Cement (which acquired Grand Cement in 2001) continued to provide a vibrant competition for the growing domestic cement market.

Quality brands

The various tie-ups with multinational cement companies perked up the domestic cement industry, giving way to an array of world-quality products in the market that caters to various consumer preferences and construction needs such as residential, commercial, industrial as well as massive public works.

Apart from general purpose cement, a host of specialized products now includes marine cement, cement for plastering and finishing, low-alkali and sulfate-resistant cement, cement for bricklaying, and cement for foundation.

Lafarge has consolidated its well-established brands such as Republic, Fortune, Dragon, Mindanao Portland, Phoenix, Portland Plus, Universal Falcon and Eagle.

Holcim, on the other hand, has Holcim Premium, Holcim Extra Durable, Premium Portland, Excel, and Wallright.

Cemex boasts an array that includes Cemex Rizal Super, Cemex Palitada King, Cemex Marine, Apo Portland, Apo Pozzolan, Island Portland Cement, and Cemex White Cement.

World standards

Multinational companies brought it an entirely different work ethic and corporate culture that enhanced the Filipinos’ way of running the cement plants and conducting business.

Technology transfer and international best practices helped raise the Philippine cement industry to levels that would be at par with world standards and more globally competitive.

Cement plants now hold international certifications, including Integrated Management Systems standards from the International Standardization Office (ISO) on various aspects of business operations such as quality (ISO 9001), environmental management (ISO 14001), and health and safety (OHSAS 18001).

The companies’ strict adherence to these global standards has earned for Philippine cement plants various recognitions from local and international award-giving bodies. More importantly, it has raised the bar in quality, production, safety on site and environment protection.

Social responsibility

A new wave of civic consciousness has also swept through the industry, enabling the cement companies to breathe life and added meaning to corporate social responsibility or CSR.

Most, if not all, of the cement plants have been involved one way or another in building houses for the homeless, bringing medical attention to the destitute, providing livelihood opportunities for the poor, and offering educational assistance to underprivileged children.

Some have forged long-term engagements with local government units and private foundations to maximize the impact of CSR initiatives on beneficiary communities.

The commitment to help build communities and be part of nation-building is also manifested in the cement companies’ efforts to come up with innovative products that address specific consumer needs. In the same breadth, some companies have embarked on providing training that will elevate the skills of Filipino craftsmen to world standards.

Being true to this commitment, cement companies are also recognized as among the country’s biggest taxpayers.

Meeting challenges

In August 2003, Philcemcor evolved into the Cement Manufacturers’ Association of the Philippines (CeMAP) with 14 companies forming the umbrella organization.

With renewed vigor, CeMAP set out to build on the achievements it has gained in its almost five decades as an industry alliance. Among the areas of cooperation it identified are skills transfer to Filipino employees, exploring market opportunities here and abroad, quality management and excellence, environment safety, community initiatives and efficiencies and cost reductions.

Of course, the challenges remain. The threat of dumping because of low tariffs, increasing cost of fuel and power, flat growth in the construction industry and low capacity utilization are some of the difficulties confronting cement companies. Stiff competition has encouraged local manufacturers to diversify product offerings. Even as cement manufacturers pursue competitive-boosting practices individually, common issues have necessitated collective action.

Except for the Philippines, Asian manufacturers have one thing in common: they all pursue policies that will ensure the viability of their industries and will take all measures necessary to prevent competition from imports. Regional excess capacities had always been a perennial problem and countries with the lowest degree of protection, notably the Philippines, become most vulnerable to dumping.

Hence, the cement industry association finds itself endlessly struggling with a neo-liberal trade policy that is threatening local industries with unfair entry of cement from countries which themselves have safety nets in place.

Following individual company campaigns to pursue only the highest international standards of quality, environment manufacturing, corporate social responsibility, and other international best practices, the Philippine cement industry has earned the high respect of local and world community.

A socially aware, profitable and globally competitive cement industry is vital to building a stronger Filipino nation. But most essential is the creation of strong foundations that would ensure their continuing viability and sustained growth. <back to top of first page>

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CeMAP reserves the right to select appropriate inputs based on relevance and accuracy. Contributions shall be properly credited.

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