| Work Detail |
25With national public works paralyzed and the private sector not moving while waiting for positive signs, construction companies cling to provincial work in order to survive. Concern about the drop in revenue.
After the opening of imports, a national beer freezes prices and a supermarket revives promotions
With the paralysis of national public works and the private sector that remains extremely calm and waiting for the evolution of the economic measures carried out by the government of Javier Milei, the construction sector in Mendoza subsists with the small works that the province decided to maintain, even if at a slower pace.
What was not in the original plans and burst in force to darken a panorama, which already looked dark, and set off alarms among local businessmen, is the 14.5% drop in revenue at the end of the first quarter.
“Unfortunately, its all bad news we have these days,” lamented one businessman.
THE OFFICIAL DATA
With 2023 being quite disastrous, 2024 started from bad to worse. According to data collected by the National Institute of Statistics and Censuses, the construction sector sank 23.1% at the end of the first two months of the year. The stoppage in national public works and the slow movement in the private sector are the main reasons
According to the information revealed by Indec, in February 2024 the synthetic indicator of construction activity (ISAC) shows a decrease of 24.6% compared to the same month of 2023.
This figure shows that the accumulated decrease in the first two months of 2024 was 23.1%, comparing it with the same period in 2023.
Thus, it is observed that between January and February of this year asphalt consumption plummeted by 63.4%; 42.3% in round iron and steel for construction; 34.2% in plaster; 31.6% in manufactured concrete; 21.7% in granitic and calcareous mosaics; 21.7% in Portland cement; 19.1% in hollow bricks; 17.2% in ceramic floors and coverings; 16.0% in limes; 15.6% in plasterboard; 12.6% on the rest of the inputs (includes taps, seamless steel tubes and glass for construction); 12.1% in ceramic sanitary ware; and 4.8% in construction paints.
SURVIVING WITH PROVINCIAL WORK
While public works continue to be paralyzed and there is no news about the cancellation of the debts that the National State has owed to contractors since October 2023, construction companies are trying to survive the recession with the works that the Mendoza government.
Currently there are neighborhoods in progress through the Provincial Housing Institute (IPV), the repairs to school buildings undertaken by the General Directorate of Schools, the work of the Metrotranvía, the Monte Comán - La Horqueta livestock aqueduct. We can also mention the work on the route between Junín and Rivadavia, plus route 82 and the Gailhac hospital, in the El Algarrobal district, in Las Heras.
“There may be some more, but beyond that, it is little and it is for subsistence. At least the governor (Alfredo) Cornejo is complying with what he said, that he was going to support the provincial public works and I understand that he does it as he can,” admitted a businessman.
Dalmiro Barbeito, president of the Chamber of Independent Builders of Mendoza (Cecim) made his colleagues comment official.
“The construction sector is one of the most affected by the recession that we have been experiencing in recent months due to the economic plan implemented by the National Government. The national work is paralyzed and is subsisting with a commitment from the provincial government to continue with the contracts with the resources they have available and are doing so,” said Barbeito.
He also acknowledged that "although the works continue, the contracts have slowed down, the province slowed down the pace of execution of the works."
An example of a slower pace of work is what happens with the livestock aqueduct in San Rafael (Monte Comán – La Horqueta).
The work carried out by the company Corporación del Sur continues, however a work that should be completed within eight months, by contract, is now an unknown.
“It is a work that has eight months left, but well, we have to do with the Government, to see what deadline they want us to give it, due to the budgetary restriction it is having. Normal work continues but the pace has slowed down,” said Dalmiro Barbeito, owner of the firm.
“By curve, we should advance 9% per month and we are at 6% per month because they have asked us to adjust the pace of work a little,” he added.
They do not express it openly but, in the midst of uncertainty, businessmen are fearful of the financial problems that the province could face if revenue collection continues to decline.
According to data from the Ministry of Finance, at the end of the first quarter, collection in Mendoza decreased by 14.5% in real terms, both in terms of income of national origin from federal tax sharing, as well as in the collection of local taxes.
Between January and March, the Government had $31,325 million less per month, compared to the first three months of last year, to meet expenses.
“The effort that the province is making to support public works is really great, but it is a problem that revenue drops. Unfortunately, its all bad news we have these days, there isnt any good news,” commented a businessman who preferred not to reveal his name.
In the midst of the bad news that is added day by day, the builders keep alive the hope that the sector will turn around once the Mendoza president undertakes a package of works by using the 1,023 million dollars that are compensation for the damages caused by industrial promotion, which were originally going to be used for the construction of the Portezuelo del Viento dam in Malargüe.
There are no great signs of what works Mendoza would undertake with these resources, beyond some guidelines (water and energy efficiency and sanitation could also come into play), if it is commented in different environments that the Governor is willing to receive and analyze projects that come from municipalities or sectors such as business chambers and give them the green light if they are viable to bring to reality.
WAITING FOR SIGNS
Regarding private work, activity is also slowing down and investors are choosing to wait for the outlook to become clearer.
“The private sector is waiting for signs that the economy is settling in,” said Dalmiro Barbeito.
Within the information collected by Indec, private work is also measured through the surface area to be built authorized by the building permits granted by the municipalities.
In this case, the data goes back to January 2024, and according to the organization, a decrease of 0.7% was recorded compared to the same month of the previous year.
“The private sector is also quite paralyzed by a question of relative prices that are high. Today this construction of a square meter greatly exceeds the values ??that we have brought, that ends up being transferred to prices and the market does not pay for it. So, thats why it stops," said a developer.
“We are with new projects, but since we are at the project level it does not mean having to invest and start it. Whats more, we are delaying the start because we are waiting a little for all this to fall into place," added the businessman.
The response is in line with the results of the qualitative construction survey carried out monthly by Indec.
When asked about what they expect for the next three months, 53.6% of the companies consulted that mainly carry out private works predict that the level of activity in the sector will not change. 39.1% estimate that the situation will be worse since the level of activity in the sector will decrease and only 7.3% expected that it will increase. |
