Cement factories face 70% staff shortage due to continuous decline in demand

Special Reporter

Bangladesh’s cement industry is in an unprecedented crisis. Most of the factories in the sector are now struggling to survive due to overproduction capacity, steady decline in demand and financial costs. Almost all companies are operating at less than 30 percent of their production capacity, and labor shortages in many factories have reached 70 percent.

Industry experts say that there is a pile of unsold cement in the market. Prices are falling, but sales are not increasing. As a result, on the one hand, revenue is decreasing, and on the other hand, the producers are under severe financial pressure due to bank loans and raw materials.

In the last decade, around Rs 45,000 crore has been invested in this sector, around the potential of mega projects and economic zones. As a result, the annual production capacity has increased to about 100 million tonnes. But the real demand is now less than half that. In 2024, the total demand for cement in the country was only 38 million tonnes, and this year it has also come down further.

Amirul Haque, president of Bangladesh Cement Manufacturers Association (BCMA), said, “After Corona, we thought the situation would turn around. But since 2023, construction has come to a standstill. The closure of government projects has created a severe cash flow crisis. ”

Basundhara Cement with a production capacity of 73 lakh tonnes per annum is currently running at only 20 per cent capacity. KM Zahid Uddin, deputy managing director of the company, said, “We had to reduce the manpower to stop the losses due to the decline in sales. Reducing the price is not profitable. ”

The condition of Mir Cement is even more fragile. Although it increased production capacity in 2023, the company is now producing only a quarter of its capacity.

A senior official said, “We are struggling to pay salaries and allowances to the employees. If the situation does not change, there will be no option but to stop production. ”

According to industry sources, Bengal Cement, Aramit Cement and Mustafa Hakim Cement have already stopped their activities. Top producer Shah Cement is also running at 50 per cent capacity, while Premier Cement is at 40 per cent.

Crown Cement said 60 per cent of its production capacity is unused. Only Meghna Group’s MGI is in slightly better condition – 65 per cent of capacity is being used, but they are also not stress-free.

Prices in the market have also fallen. A 50 kg sack of cement is now being sold at Tk 470-500, Tk 25-30 less than a year ago. On the other hand, the prices of imported raw materials, including clinker and gypsum, and interest on bank loans have increased simultaneously. As a result, the cost of production has increased, but the burden of losses is increasing day by day due to the decline in the selling price.

Member of the Executive Committee of the BCMA. Shahidullah said, “Of the Tk 45,000 crore, about 70 per cent of the investment has come from bank loans. Income is decreasing, but the burden of loan instalments and interest is increasing. Many companies are now unable to pay salaries regularly. ”

The industry employs 7-8 lakh people directly and another 2 lakh people indirectly. Thousands of workers are at risk of losing their jobs as production is halted or limited.

Entrepreneurs in the sector say there is no alternative to reviving government development projects and simplifying the process of importing raw materials. Besides, some other factories may be closed if they do not get low-interest financial assistance for the companies in crisis.

BCMA President Amirul Haque said, “If the financing of the project and obtaining loans is not easy, there will be a wave of defaulted loans and factory closures in the cement industry. ”

“The demand for cement in Bangladesh is sustainable in the long run, but many companies will not be able to survive till the current crisis is over,” he added. ”

Bangladesh’s cement industry is in a difficult time, with the wheel of production spinning slowly, workers in uncertainty, and entrepreneurs hoping to survive.