CONSTRUCTION INDUSTRY
Compiled by Yamini Sequeira
RESILIENCE AMID TURMOIL
S. C. Weerasekera urges businesses to adapt to changing market dynamics
Q: What are the major challenges faced across industries due to existing macroeconomic factors here in Sri Lanka?
A: The construction industry and building materials sector, as well as others, have faced major hurdles due to the prevailing macroeconomic conditions.
Challenges such as elevated inflation, fluctuations in foreign exchange rates and escalating interest rates have significantly impeded the sector’s operations.
Moreover, the imposition of higher income taxes, increased VAT rates and elevated energy costs have eroded the purchasing power of the middle class, dampening their propensity to invest in construction projects.
This in turn leads to an adverse economic cycle. Many industries have incurred substantial exchange losses and continue to grapple with recovery efforts.
In parallel, the real estate and development sectors are encountering their own set of obstacles, including unsold inventories and stalled projects due to escalating costs.
These issues not only hinder sector growth but also have broader implications for the economy – including potential job losses and shrinking investor confidence.
Q: In this stressed environment, do you believe that the same sales and marketing rules apply or are companies trying to innovate?
A: The recognition that traditional sales and marketing techniques may not suffice in the current environment underscores the importance of innovation and agility.
By exploring new methodologies and approaches, companies can stay ahead of the curve and adapt to changing market dynamics.
It’s encouraging to see companies in the construction industry and building materials sector recognising the need for innovation in their sales and marketing strategies amid challenging economic conditions.
Embracing digital marketing and e-commerce channels is indeed essential for reaching a wider audience, and adapting to changes in consumer behaviour – especially in an environment where purchasing power may be reduced.
These channels offer opportunities to engage with customers directly, provide tailored solutions and streamline the buying process.
Prioritising value-based marketing is also a smart strategy, as it enables companies to differentiate themselves based on the quality, durability and cost-effectiveness of their products. By highlighting these matters, companies can communicate their value propositions to customers and justify their pricing even in times of economic strain.
To counteract the effects of high inflation on sales, companies could adopt various strategies such as introducing smaller pack sizes or lower priced alternatives to maintain affordability, emphasising value added services or products to justify higher prices, and optimising supply chain efficiency to minimise costs.
These tactics will not only help mitigate the impact of inflation but also demonstrate a commitment to meeting customer needs while managing operational challenges.
Q: Do you see any other economic or market obstacles to recovery?
A: Looking ahead, one major obstacle to recovery could stem from the persistent foreign exchange crisis.
Continued depreciation of the local currency may elevate import costs, consequently affecting production expenses across many industries. Moreover, political instability and uncertainty loom as potential impediments to economic recovery efforts.
Navigating these challenges may prove daunting for companies in the sector, particularly concerning the sale of their products to projects.
This in turn could result in surplus inventories and diminished demand.
Addressing these obstacles will necessitate strategic foresight and adaptability.
Q: Are there any economic quick fixes in the present context, in your opinion?
A: Yes. To address the current economic challenges swiftly, several immediate measures could be considered.
Firstly, implementing strategies to stabilise the exchange rate – such as by bolstering foreign exchange reserves through cost-effective borrowing or incentivising foreign investment – could provide stability and confidence in the market.
Addressing underlying structural issues within the economy, like infrastructure deficiencies and bureaucratic hurdles to business operations, can stimulate growth by improving efficiency and attractiveness to investors.
Furthermore, reducing income tax and VAT could inject liquidity into the economy, encouraging consumer spending and business investment. Incentivising energy efficient practices could minimise operational costs for businesses, thereby improving competitiveness and sustainability.
Additionally, promoting infrastructure development projects can generate employment opportunities and stimulate demand for construction materials, supporting the recovery of the construction industry and building materials sector.
The outlook for the sector this year is challenging yet promising. Despite the current economic conditions, there are opportunities for growth – particularly in the infrastructure and affordable housing segments.
Companies that innovate and adapt to the changing market dynamics will likely thrive in the coming years.
