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Production and Business of Construction Materials Still Facing Challenges

(News Portal – Dong Nai) - Stagnant real estate market, low construction demand, difficult exports, and weak domestic consumption—all these are issues that businesses in the production and business of construction materials are currently facing. 

The government and various ministries are issuing decisive directives to stimulate the market for construction material manufacturers. Concurrently, many units have made efforts to restructure their production and business operations to adapt to market fluctuations. 

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Production at a steel fabrication enterprise in Vinh Cuu District.

Unfavorable Results

At a recent online conference addressing difficulties and promoting the production and consumption of cement, steel, and other construction materials, the Ministry of Construction reported that domestic cement consumption in 2023 was very low, reaching only 56.6 million tons (83.5% of 2022), marking the largest decline in the history of the cement industry. In 2022, export volume was just 15.2 million tons (52.9% of 2021) and continued to drop to 10.9 million tons in 2023 (71.7% of 2022). It is estimated that by the end of the first half of 2024, cement export volume was only about 5.4 million tons.  

The Ministry of Construction's report also highlighted challenges faced by other building materials such as ceramic tiles, sanitary ware, construction glass, unbaked building materials, and steel.

According to Mr. Nguyen Van Sinh, Deputy Minister of Construction, domestic demand for building materials has declined due to reduced domestic construction investment, with many infrastructure and housing projects being delayed or postponed. Increased transportation costs have raised the prices of building materials, and the import market's rise has impacted the market.

Over the past 10 years, the production capacity of major building materials in Vietnam has increased to approximately 120 million tons of cement, 830 million square meters of ceramic tiles, 26 million sanitary ware products, 330 million square meters of construction glass, 20 billion fired clay bricks, and 12 billion unbaked bricks.

Due to the recent slow consumption of products, many businesses have had to halt some production lines, leading to difficulties in cash flow for bank debt repayment and production material costs. Some building material factories, particularly those producing cement, have been ineffective and incurred losses, resulting in bad debts.

To address these difficulties, according to Prime Minister Pham Minh Chinh, ministries, sectors, localities, businesses, and associations need to review mechanisms and policies for development; adapt to the situation; and proactively respond promptly to adverse impacts to support businesses in stabilizing production and expanding markets. One of the key tasks is to promote public investment, construct transport and irrigation infrastructure, and develop urban and rural infrastructure; resolve difficulties in the real estate and housing markets to stimulate demand for building material products.

Businesses Finding Ways to Adapt

As one of the leading ceramic tile manufacturers, Viglacera Corporation - JSC is also reassessing its business efficiency in the face of market difficulties. According to Mr. Nguyen Van Tuan, Chairman of the Board of Directors, market and competitor assessment is crucial—not only to understand customer needs but also to recognize and capitalize on competitive advantages.

Viglacera Corporation will collaborate with professional consulting units to restructure, reassess its business model, and optimize operations to ensure sustainable development and competitiveness. For the commercial sector, units will focus on expanding coverage, developing more distributors, and first and second-tier agents. In the production sector, attention will be paid to controlling inventory, tightening management, reducing production costs, lowering product prices, and enhancing quality control to create competitive advantages.

Another company, SADO Germany Window JSC (Bien Hoa City), has also recently restructured its organization. SADO has shifted its business direction. Instead of processing and installing aluminum and glass components for projects as before, the company now focuses on manufacturing all types of construction glass and interior and exterior decorative glass. At the same time, the company has developed new products such as ceramic-printed decorative glass and processed products using modern machinery and technology. ​

Author: Bao Nguyen

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