After a 14-year hiatus, the Phinma group has returned to the cement business to ride on the country’s projected infrastructure boom, reviving its old flagship brand “Union Cement” in a bid to rebuild a formidable market position.
By the first quarter of next year, a new cement factory with an initial capacity of two million tons a year in Bataan is expected to be operational, Eduardo Sahagun, president and chief executive officer of Phinma’s cement production arm Philcement Corp., said in a chance interview with the Inquirer last week.
But ahead of the completion of the brand-new plant, Sahagun said Philcement had started selling cement to the market, for now sourcing supply through toll manufacturing arrangement. This is to prepare the distribution network once the new plant becomes operational.
Union Cement will add about two million bags to the cement industry’s supply this year, he said.
“You have to build the channel. When the plant comes, how can you sell if you don’t have the channel?” said Sahagun.
“We reclaimed our old dominant brand,” said Phinma Corp. president and chief executive officer Ramon del Rosario Jr., referring to Union Cement.
Sahagun explained that Union Cement trademark was already registered with the Phinma group, having been abandoned by Holcim Philippines Inc.
The Phinma group sold its majority interest in Union Cement Holdings Corp. in 2004 and the business eventually became part of Holcim, currently the leading cement producer in the country.
Sahagun, a veteran in the cement industry, headed Holcim Philippines from 2013 until his retirement on April 2017.
Aside from heading Phinma’s new cement business, Sahagun is president and CEO of Phinma’s other subsidiary, Union Galvasteel, a market leader in the manufacturing and distribution of pre-painted and other galvanized roofing, and of galvanized steel building products such as building system components like steel deckings, c-purlins, door jambs, steel trusses, pre-engineered building structures and insulated panels for commercial, industrial and residential applications.
Sahagun said Union Cement had entered the cement market at a very competitive price of about P180 per bag for dealer pricing. But rather than the pricing, he said the group would compete “on the basis of quality and service.”
He is confident that Philcement could revive Union Cement as a very competitive brand and eventually build more capacity in the years ahead. He declined to say how much would be invested to build the first plant in Bataan.
Over the years he had spent in the cement industry, Sahagun said one key lesson would be to become a reliable supplier. “You look after the customer. In the end, if they need you and you are not there, it will cost them a lot of money,” he said.
Sahagun is unfazed by the bad earnings reports of many listed cement companies (except for Eagle Cement Corp.).
“It’s not that they can not sell. Their cost is higher and their price is down. But they can sell everything they have, they even imported a lot,” Sahagun said, noting that the cement industry imported about four million tons of clinker and 2.8 million tons of cement last year.
“So who will supply that? The new plants can’t catch up,” he said.
Sahagun is also confident that infrastructure spending in the country—in line with the government’s “Build, Build, Build” program—would pick up pace this year.