Arawak forced to make more cuts
Four months after it reported a turnaround in its operations, the St Lucy-based Arawak Cement Company Ltd (ACCL) is preparing to cut more staff.
On Wednesday, the Trinidad-headquartered company informed employees of its intention to offer voluntary separation packages as the 35-year-old cement manufacturer embarks on another phase of its financial and operational restructuring programme started in October 2015.
“The company is continuing this initiative now because the first phase of the restructuring has not yielded the results that are necessary to attain profitability and competitiveness,” a statement from the company said.
It blamed unfavourable economic conditions globally and in the region, which “regrettably make it necessary to further reduce costs in all areas of our operations.
“With significant excess cement capacity in the region and highly competitive price sensitive markets, cost reduction is vital for Arawak to return to profitability and improve competitiveness in this market and grow export in the region, ” it added.
Last October, 40 workers at the Checker Hall plant were made redundant as part of a comprehensive restructuring plan which the company said was designed to save the operation from going under.
The then General Manager Rupert Greene had explained at the time that Arawak had been recording significant losses since 2008, while its cost of production was significantly higher than that of other subsidiaries in the Trinidad-based TCL Group.
Greene had also identified the high cost of energy and labour as the two largest components affecting the company’s performance, saying its viability was at risk unless the current mode of operation was significantly transformed.
However, in May of this year Arawak boasted of a turnaround after Greene was replaced by Manuel Toro, a Stanford University-trained mechanical engineer, who admitted that harsh measures had to be taken for Arawak to become competitive.
Company officials had also reported back then that despite added competition in the local and export markets, its earnings before interest, tax, depreciation and amortization (EBITDA) had increased last year. In fact, they described 2015 as a “very encouraging” year for the former monopoly cement provider which reported improved operational efficiencies and a 20 per cent increase in exports, compared to 2014.
On Wednesday morning, General Manager Manuel Toro was singing a different tune as he met with employees at the St Lucy plant to inform them of the need to continue the restructuring process that will commence over the coming weeks.
The company has not yet said how many workers it is aiming to send home, but has promised that “all severance will be done in accordance with the collective agreements currently in force with the Barbados Workers’ Union and the National Union of Public Workers. It has plans to meet with the two unions shortly to discuss the terms of the voluntary separation.
Toro said TCL’s $20 million investment in Arawak demonstrated the company’s commitment to the long-term development of the Barbados operation.
However, he said the cost of energy and labour, which are significantly higher than regional competitors, combined with a slowdown of the construction sector worldwide and in the region, were two key factors that have challenged its St Lucy operation.
Since November last year, Arawak has been faced with new domestic competition from the Mark Maloney-led Rock Hard Cement which entered the domestic market and is already taking credit for a drop in the price of the product on the market, as well as an improvement in quality.
In an exclusive interview with Barbados TODAY earlier this year, Maloney said cement prices had dropped by 30 per cent since his company came on the scene from US$220 per tonne to US$160 per tonne.
At the same time, the prominent businessman said there has been an improvement in the quality of both the product and customer service.