The rise in the dollar and inflation, to which is added the lack of imported products, led to the fact that two weeks ago there were “no prices and no deliveries.” Weiss acknowledges that the situation is normalizing, although prices are at higher values. Below are the most salient aspects of the conversation with Ámbito.
Journalist: What is your opinion of the Economy Minister’s announcements?
Gustav Weiss: From the macroeconomic point of view, clearly something had to be done, I don’t know if they will be enough, but something had to be done.
The single cash criterion, as the minister explained, of paying based on income, is a measure similar to that used in provinces with difficulties.
I believe that what was announced by the minister is an urgent measure since external credit is exhausted and credit in the local Bank is exhausted. It would seem that there were not many other measures to be taken.
P.: Aren’t you afraid that public works will be affected?
GW: Our concern is that, as has happened on other occasions, the first thing that begins to have payment difficulties is public works. We hope that this time will be the exception, but the reality is that if one looks at history in similar processes, the sector that has suffered the most has been payments to public works.
In addition, we have difficulties with the increase in inputs that are not reflected in the price determination formula, an issue that complicates the works a bit, but in terms of collection we are very, very well. We are concerned that the announced measures will also begin to influence arrears in payments for works.
P.: Are you having problems importing supplies?
GW: Regarding the current situation of the sector and now speaking of public works, for some time now, motivated by the shortage of dollars from the Central Bank, we have had problems with imported items. For example, those imported products that require works such as electricity, sanitation, road machinery and spare parts, among others, we have shortage problems. There is a bottleneck that continues.
P.: doHow is inflation affecting?
GW: Inflation is very, very seriously complicating the progress of public works contracts because all of them have a formula for updating prices with high inflation, it works very badly. The contracts are devalued over time, and in some cases it becomes impossible to continue the works. In others, they take a long time because the input that is purchased is more expensive than what is later charged to the State.
We have been discussing this problem, which has been going on for several months, with the government, but still without any solution.
Q.: How does the rise in the dollar affect?
GW: There are two different situations. The big investors or enterprises when the dollar rises the works are paralyzed. If someone was about to make a decision, delay it until the market calms down. Regarding the small builder, it helps him because the gap with the inputs favors him (of course, if he has dollars).
Q.: Is there a lack of supplies?
GW: Regarding supplies and replacement, last week, there were no prices and there were no deliveries, it was very complicated and difficult. Now it has started to normalize little by little.
However, some products did not increase, such as the large producers of steel or cement. That is to say, they did not increase that week but every month they have been increasing their prices between 3%, 4%, 5% or 6%.
Last week there were imported items that claimed to charge 10% or 30% more. As long as the market continues to be reasonably calm, the situation begins to normalize, but of course the prices are from a higher floor.
P.: How much is the import ratio in the construction industry?
GW: The vast majority of civilian supplies are domestic. On the other hand, works with more technology, for example, a power plant, a transformer station, a water or sewage treatment plant, have a lot of imported input. Road machinery and spare parts are also imported. Some of the factories installed in the country have imported inputs, for example, iron ore is imported or plates.
P.: How is the construction activity?
GW: Construction is at a high level of activity. We have been growing uninterruptedly since mid-2020 because public works were exempt from confinement, that is, it never stopped.
And, simultaneously, the small private works, that is to say, the refurbishment and construction of family homes also began to grow. These two segments drive activity and, to a lesser extent, large private works.
P. How is housing construction?
At the moment there is no big movement in the real estate market and no big investment from factories or public service companies.
The real estate market is paralyzed, for two reasons. One because investors have withdrawn from the real estate market since the traditional business of buying in the well and selling when the product is finished making a difference has disappeared. The finished product is not for sale.
On the other hand, renting is a lousy business that has no profitability. For these reasons, investors have withdrawn.
And, there are only individual investors who have been reduced because there is no mortgage credit. To access a home today you have to pay in cash and there are not many who can do it.
P.: How many workers have joined construction since the pandemic until now?
GW: On average, we have taken on close to 100,000 workers after the pandemic and we are approximately 470,000 workers between those belonging to UOCRA and administrative or non-agreement workers. In 2017, 527,000 workers were reached. We are not yet reaching the historical maximum but we are quite close to achieving it.
P.: Is it true that the office or real estate market for companies began to move again?
GW: A small rebound in office sales is noticeable, people are partially returning to face-to-face activity.
Source: Ambito
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