Luxury is not cost effective

However, with the slowdown of the construction industry it appears to indicate that bad times are near for the local businesses.

For companies such as Pietra D’Arte or Hispania-Noriega, that are suppliers of luxury materials for major clients like the architects and decorators of high cost skyscrapers, the fact that construction of those towers is slowing down could mean bankruptcy for many of them.

According to reports of the National Comptroller, the construction sector in 2008 generated $1.4 billion and registered a growth of 21.8 percent, which was well below 2007 when growth was 28.3 percent.

Carlos Noriega, president of Hispania Noriega said that if the construction sector stops, then his business will stop too for lack of customers.

Companies such as Hispania-Noriega sell luxury materials such as onyx, marble and granite annually generate between $25 to $35 million in sales.

But if the slowdown in the construction activity continues, then their businesses will be doomed.

“The construction sector represents a high percentage of our clients and if the slowdown continues, our annual sales will go down by half. That means that we will be generating $10 to $15 million instead of $25 to $35 million,” said Noriega.

During 2008, Hispania-Noriega, a Panamanian enterprise that has been operating for the last 88 years, registered a growth in demand of 15 percent over 2007.

Noriega believes that in 2009, the rhythm of the demand will be similar to 2008, because his company has contracts for projects that will be executed this year.

The panorama for 2010 could be very different, but according to the entrepreneur he will have to wait and see, because a contraction in the market could mean serious economic problems, especially with the possibility that sales could go down by 50 percent.

Proof of that is that the number of outstanding bills of Hispania-Noriega for collection has increased, but “we can still support ourselves,” said the president.

This year around seven luxury projects have stopped construction. The general manager of Pietra D’ Arte, Patrick Aubuchaine, said that the number of sales has diminished by 30 percent.

Abuchaine added that 2009 is going to be a hard year where they are going to have to struggle to survive