Construction material companies adjust to cope with political chaos
March 04, 2014 00:00 By Darin Chosungnoern
Foresight saves DCON from severe impact, looks to the provinces
Construction-material companies have adjusted their business strategies to deal with the prolonged political disturbance.
DCON Products president Wittawat Pornkul said his company, a major manufacturer of concrete slabs and pilings, had not been significantly affected by the crisis, as DCON noticed signs of a slowing economy last year. Hence it adjusted its business plans according to the projected business and economic projections.
DCON will focus on distribution of its products in the provinces rather than Bangkok. The company aims to become a fully integrated construction-materials supplier in the provincial markets. Moreover, it has lowered the portion of revenue it expects from construction from 95 per cent to 65 per cent this year. DCON will attempt to boost revenue from real-estate development to 35 per cent from the current 5 per cent.
Sittichai Leeswadtrakul, chief executive officer and managing director of Millcon Steel Industries, a maker of steel products for construction, said the political unrest had depressed the company’s revenue by 10 per cent last quarter. Fortunately, the revenue shortfall has been compensated for by revenue so far in the first quarter
of this year, which is the peak season for the construction-steel business.
Backlog in hand
Should the political impasse drag on, the company still has a backlog of orders in hand for about two or three months. Sittichai believes the political situation should be resolved soon.
He said Millcon had always adjusted to the business environment by seeking new markets, such as potential opportunities in neighbouring countries.
The company continues to lower production costs whenever possible, such as for wages and electricity via use of cost-efficient advanced technology, and tries to integrate value-added features in its products.
Millcon has not been significantly affected by the political unrest so far, but a prolonged situation could be of some concern. In any case, the steel market should grow by about 5 per cent this year despite the lack of state projects under the Bt2.2-trillion infrastructure programme. The demand for construction steel will rise sharply when those mega-projects can proceed, Sittichai said.
Virasak Chaisuphat, managing director of CSP Steel Center, a fully integrated steel-products centre, said the company had not been significantly affected by the unrest, but if the situation continues and prevents the formation of a new government, the firm
could be adversely affected by the second quarter. However, the company will be looking for new markets, especially exports, which should benefit from the improving economies of the United States and Europe.
Moreover, the company will not be making any new investments and will try to cut production costs and reduce product inventories from three months to two in order to keep this year’s operational results close to last year’s. However, should the political deadlock end soon, the situation will improve significantly, Virasak said.