Prices in Menorca, doubly affected by the war
Construction becomes especially expensive for Menorcan companies, for whom it is more expensive to buy materials in Mallorca than on the Peninsula
CityUntil a few years ago, it was very common for Menorcan families to take the plane or boat to go to Palma or Barcelona to buy clothes. The large chains and franchises had not yet landed on the island and it was more economical to travel to buy clothes on the Peninsula or on the neighboring island than to buy them directly from small shops in Menorca.
Years later and with the aggravating factor caused since February by the new war conflict of the United States in the Middle East, it is now the same professionals, especially those in construction, who travel abroad to acquire materials at a lower price than those that can be found on the island. According to some sources, prices in Menorca can double.
Since the war in Iran broke out two months ago, a good part of the economic activity has become especially expensive, which has seriously affected sectors such as construction and its auxiliaries, and has fully harmed families' pockets, to whom these surcharges are often directly passed on. Steel, cement, aluminum, and ceramic components are, for now, some of the most affected. And the result is that building or renovating a home is even more expensive today than at the beginning of the year.
The Association of Builders of the Balearic Islands has put figures on it. The increase in the price of oil by between 34% and 41% has increased the logistical transport of goods and the raw material needed for their manufacture. But maritime transport has also increased by at least 10%.
The companies most affected for now are those that incorporate asphalt as the main element, since the cost of bitumen has skyrocketed in Mallorca by around 50%. Concrete, which requires a lot of energy for its manufacture, has also suffered a 10% increase on the island, and steel has increased its price by 26%, going from 387 euros per ton to 488.
But this extra cost is even greater for companies established in Menorca and the Pitiusas, which are suffering the effect of double insularity like never before. At this point, the Association of Constructors, presided over by the Menorcan Climent Olives, assumes that, "evidently, there is an extra cost derived from double insularity", but has not yet been able to quantify it precisely. The employers' association is also waiting for the calls for aid from the island and regional administrations to be published to know how they will be able to cover the impact caused on their economic activity.
The domino effect
For the moment, constructors and architects warn of the domino effect that has occurred and that is increasing the cost of the entire production chain, meaning that much public work in execution or about to be tendered could be paralyzed. Foreseeing the situation, the Consell de Menorca has already requested to extend the completion deadlines for works to be financed with European funds.
The package of extraordinary measures launched by the Balearic Government commits an contribution of 160 million euros among all the islands, 45 of which are precisely for reviewing prices in the contracting of services and public works. The Executive announces that it will take into account the double insularity of Menorca and Ibiza and the triple insularity of Formentera in order to adapt the aid to each territory. In any case, and pending clarification, in Menorca the Consell has supplemented this with another public injection of 7 million euros in favor of the island's social and economic fabric.
Xavi Moliner, manager of A Palliser, confirms the general increase in construction prices as a consequence of the war, but says that most are still affordable. "For the moment, we are making an effort to absorb the transport shock so as not to pass it on to our clients," assures the manager of the largest chain of construction materials in Menorca. "And if we can do it - he points out - it is because the increases are not so great for now."
The most significant increases affect insulation and oil derivatives, such as plastics, paints, and solvents. These are materials that, like all tools and machinery, come from the Peninsula, especially from factories in Barcelona and Valencia.
However, says Moliner, the most significant additional costs are for a good part of the products that arrive directly from Mallorca. The explanation is clear. "What arrives in Mallorca must be stored and then taken out again to be loaded back to Menorca, and this clearly means an additional cost," he points out. The double insularity is also justified by the greater volume of business in Mallorca, which means that prices for material supply are more adjusted than in the smaller islands, where the number of units that can be marketed is significantly lower.
“But fortunately –says the manager of A Palliser– Menorca has up to three concrete prefabrication plants and several quarries, which also reduces external dependence for obtaining cement or aggregates”. However, let no one get carried away. It remains to be seen if public aid is sufficient, and experts say the effects of the war will be felt for at least the next two years.