Cemex To Idle Brooksville North Plant

BROOKSVILLE –
Faced with a hobbled housing market and plummeting demand for its products, Cemex will temporarily shutter its Brooksville North cement production plant by the end of year, company officials confirmed Monday.

“Most” of the employees will be transferred to Cemex’s Brooksville South plant on Cobb Road, but some will be laid off, Cemex spokeswoman Jennifer Borgen said.

“We’ve had a severe downturn in the housing market, and we’re taking the necessary steps to meet those challenges,” Borgen said. “Now, unfortunately, we made the tough decision to idle our Brooksville plant.”

The company plans to reopen the plant on U.S. 98 north of Brooksville “when conditions improve,” Borgen said.

Borgen, a Houston-based spokeswoman who evacuated to Dallas as Hurricane Ike threatened, couldn’t cite the total number of employees working at the Brooksville North plant, how many will get pink slips or what kind of severance package they will receive, if any. Borgen said she’d heard employees were informed of the move Friday but couldn’t confirm that.

Local Cemex officials directed media inquires to Borgen.

The company is moving forward with a $230 million project to build a new cement kiln at its Brooksville South facility on Cobb Road, Borgen said. The second kiln was expected to add some 30 jobs to the company’s roughly 200-member Hernando work force. It now appears those positions will be filled with existing employees.

The company last year bought out Rinker, the Australia-based maker of ready-mix concrete and aggregates, for $14.2 billion. The Brooksville South Plant had been a Rinker facility.

The mining and cement production industries have been among the county’s most stable, said Mike McHugh, the county’s director of business development who worked in the industry before coming to the county.

McHugh said he doesn’t recall a cement plant ever being idled in Hernando County.

“So it certainly speaks to the difficulties in the construction and housing market right now,” McHugh said.

But it also makes sense that the company is moving operations to its new, more efficient facility, McHugh said.

Cemex last week announced total earnings of some $1.25 billion for the third quarter of this year, a decrease of about 3 percent compared to the same period last year.

The company estimates its earnings for the first nine months of 2008 at about $3.55 billion, an 8 percent decline versus the same period last year. About half of the drop of earnings “is the result of the lower expected performance from our U.S. operations,” the company said in the earnings statement.

“We continue to face a challenging economic environment in most of our markets,” Rodrigo Trevino, CEMEX’s chief financial officer, said in the statement. “Volumes during the quarter have been negatively affected by the continuing downturn in markets such as the United States, Spain and the United Kingdom.”

The company projects its domestic cement volume in the U.S. for 2008 to decrease by around 18 percent; ready-mix volume to decrease by about 28 percent; and aggregate products to decrease by about 28 percent.

The continued decline in the residential construction sector is the main culprit, company officials said. That decline, in turn, affects the industrial and commercial sectors.

Foreign-exchange fluctuations, including the depreciation of the Mexican peso, have also taken a toll on earnings, Trevino said.

The news comes as Hernando’s unemployment rate continues to climb, hitting 8.4 percent in July, according to the state’s Agency for Workforce Innovation. The state’s jobless rate is 6.1 percent.

Reporter Tony Marrero can be reached at 352-544-5286 or lmarrero@hernandotoday.com.

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