TCL: Increase unavoidable
Thursday, January 10 2013
HOURS after a 9.5 percent price hike in cement came into effect on Wednesday, TCL yesterday said the increase was “unavoidable” but would only increase the overall cost of construction by 0.5 percent.
In a statement late Wednesday evening, TCL marketing manager Rodney Cowan said, “In actuality, the increase in overall cost due to cement will be 0.5 percent on any construction project.”
So for example, Cowan said, a construction project costing $250,000 , with the 9.5 percent adjustment, the new cost will be $251,200. If a project costs $300,000, it will now cost $301, 425.
Cowan said TCL sought to mitigate the impact of the price increase by implementing the lowest possible increase while at the same time keeping its business and stakeholder objectives in mind.
TCL insists the price increase was purely a logical business decision prompted largely by global inflationary pressures, which have been threatening the company’s viability.
TCL explained that highest cost centres are labour, energy, packaging materials and spares and the company had been faced with inflation of 15 percent over the last five years, which has adversely impacted its bottom line.
TCL officials said the Euro economic crisis impacted the local company given that the majority of its capital spares and packaging materials are imported from Europe. Between 2009 to date, natural gas prices have increased by 18 percent (3.5 percent per year); labour — 31 percent, packaging — 16 percent and spares — 16 percent. In 2009, TCL reduced prices by five percent and had no increases in 2010 and 2011, absorbing input increases through increased plant efficiencies.