Concrete halt makes construction industry sweat

The country’s construction industry is expected to face rough waters as manufacturers of ready-mixed concrete have halted their operations in protest against a cement price hike.

The deepening conflict among cement manufacturers, ready-mixed concrete makers and construction firms comes despite their second meeting yesterday to reach an agreement over prices.

The meeting was presided over by the Ministry of Knowledge Economy and the Ministry of Land, Transport and Maritime Affairs at the government complex building in Gwacheon, Gyeonggi.

Trouble has been brewing among the three groups as cement producers, including Ssangyong Cement and Tongyang Cement and Energy, notified the concrete makers last month that they will raise the price of cement by 15 percent, from 67,500 won ($60) per ton to 76,000 won starting this year.

Concrete makers strongly opposed the hike, saying they will face great losses as spending on cement accounts for more than 40 percent of their production costs.

Yesterday’s meeting comes as around 740 small-sized companies that make ready-mixed concrete came to a standstill as planned on Feb. 22 after cement producers notified them of the price hike.

On Monday, the Knowledge Economy Ministry and Land Ministry called for a meeting with the three conflicting parties to reach an agreement on prices. However, apart from agreeing to find a solution within two weeks, they failed to come up with a detailed solution.

“Small concrete manufacturers fully halted their operations [yesterday],” said Kang Moon-hyuk, an official from the Korea Federation of Ready-mixed Concrete Industry Cooperatives.

“We either demand the current cement price be adjusted [lowered] or that construction firms pay more for ready-mixed concrete.”

The official said that if either of these demands were not met, concrete makers would refuse to resume their operations. They cannot go ahead and raise the prices of their product without agreement as they are locked into contracts.

Concrete makers warned earlier that if the price was not lowered before yesterday’s deadline, they would take action. They also demanded that construction firms pay 65,000 won per cubic meter of ready-mixed concrete, up from 56,000 won at present.

“If production does not resume after five days or so, the construction industry will be affected,” said an industry official.

By Lee Eun-joo [angie@joongang.co.kr]