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During
recent years, the Egyptian cement industry has undergone drastic change. Large
extensions and upgrades to existing plants to raise production efficiency have
been accompanied by: the privatization of government-owned companies and the
sale of majority stakes to international and local investors; new private
companies entering the market to establish their own plants; and multi-nationals
acquiring a number of local companies. The result of upgrades and new
capacities, in addition to the downturn of local consumption due to the general
economic slump and the slowdown in construction activities, has been the
emergence of a large surplus that has turned Egypt from a net importer to a net
exporter to cement.
The
Egyptian cement industry continues to appeal to both foreign and local
investors. A combination of inexpensive labor, plentiful supplies of high
quality raw materials and cheap energy prices, offers the industry strong
comparative advantages.
Notwithstanding these potential benefits, Egypt has found it difficult to
develop a strong export market even while production has been growing to exceed
domestic demand.
The
shift from a supplier’s market to a buyer’s market, in addition to the entry
of world-class players, has changed the rules of the game. Managing the
transition from being a net importer of cement to producing at a level in excess
of domestic demand, will shape the future of the industry in Egypt and could
determine which companies may or may not survive. With global and local
competition intensifying, and the peculiarities of the Egyptian market
continuing to include extensive governmental regulations and immature
distribution channels, the value of enhanced financial controls and improved
operations may be critical to business success.
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