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Paraguay Construction
Construction was one of the fastest growing areas in the economy
in the late 1970s and early 1980s because of hydroelectric dams,
other infrastructure projects, and brisk growth in residential
housing in Asunción. Many of the raw materials used in the
construction industry, such as lime, sand, kaolin, gypsum, wood,
and stones, were found and mined locally. Construction grew at a
pace of over 30 percent per year from 1977 to 1980, but in the
1980s it fluctuated dramatically with changes in hydroelectric
activity and general economic growth. Construction amounted to 5.9
percent of GDP in 1986.
One of the country's largest investments in construction and in
industry in general involved the expansion and modernization of
cement facilities. After years of undercapacity in cement
production and an outdated wet-cement process, the government spent
nearly US$200 million to expand the country's largest cement plant
at Vallemí. Financed through a consortium of French banks, the
National Cement Industry (Industria Nacional de Cemento--INC) was
completed in 1986. Because this completion date followed the
pouring of cement at Itaipú, however, virtually all cement for that
project came from Brazil. Moreover, located 546 kilometers west of
Asunción, INC was far removed from most industrial activity,
particularly hydroelectric construction. As a result, in the late
1980s the plant operated at only 45 percent of capacity, and the
plant's capital and operating costs formed a major part of the
nation's debt burden in the 1980s. Increasing the plant's
utilization by exporting to regional markets frequently was
discussed but in the late 1980s remained an unlikely prospect. The
financial burden of INC became a political issue as the country's
debt burden mounted throughout the decade.
The metal industry was the other major industry serving
construction activity. Although Paraguay possessed no commercially
exploitable metallic minerals, it had three steel plants. The
largest plant, Paraguayan Steel (Aceros Paraguayos--Acepar), was
completely government owned. Fueled by large charcoal furnaces and
fed with Brazilian iron ore, Acepar was capable of producing
150,000 tons of steel annually, or about five times the country's
average demand in the 1980s. Acepar began operation in late 1986,
having missed both the Itaipú construction boom and the opportunity
to contract for Yacyretá. Acepar's 1987 output was under 50,000
tons and was not expected to increase substantially in the future.
Acepar could not cover its own operating costs, and even with
government subsidies its steel was five times as costly as steel
from other producers. In addition to Acepar, Paraguay had a plant
with a capacity of a 50,000 tons per year that produced
competitively priced steel bars and other metal products; a
marginal plant with only a 6,000-ton annual production capacity was
also in operation.
Beyond steel production, the metal subsector comprised more than
1,000 small smiths and metal workshops. Paraguayan companies
produced a wide assortment of consumer goods such as simple
agricultural tools, general hardware items, and metal furniture.
The subsector also contained several large metallurgical companies.
For the first time in the 1980s, local metallurgical companies
produced water tanks, fuel tanks, and grain silos. Paraguay also
maintained two respected shipyards.
Data as of December 1988
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