The cost overrun in freight transport also threatens the construction sector, which urges the government of Pedro Sánchez to approve an extraordinary price revision in public works that guarantees the completion of schools, roads, hospitals, and other works put out to tender by the Administration. Otherwise, the director of the Association of Builders of the Balearic Islands, Sandra Vergés, calls on the Executive of Marga Prohens to “dictate immediate compensatory measures, as Francina Armengol did during the war in Ukraine”. Vergés tells ARABalears that the entire sector is “expectant”, but warns that “the longer the conflict lasts, the greater the impact will be”.The first major consequence has been a price increase of up to 40% for bitumen, a direct derivative of oil that has a very significant impact on all asphalting works. These, in fact, “should be stopped immediately”, says Vergés, pending state or regional measures. The same could happen, she points out, with all works involving the installation of plastic or derivative pipes.Regarding public works not yet put out to tender, the visible head of the employers' association warns that “many tenders may be left vacant and will have to be revised, as the cost and material calculations made months ago are already obsolete”.As for private works, their continuation will depend on pre-established clauses or the conditions that are renegotiated with the developers. However, she adds, “there is always the option of temporarily stopping them to see how the conflict evolves and if it is resolved quickly”. Otherwise, she warns, “the effects could be particularly serious”.
The war suffocates the transport of goods
The rise in the price of fuel and shipping companies causes a double grievance to the sector, which urges the Balearic Government to compensate for the "insufficient" measures of the State
PalmaThe reduction of VAT from 21% to 10% on electricity and fuel announced a week ago by President Pedro Sánchez to compensate 20 million households and three million businesses in Spain with 5,000 million euros has not satisfied a large part of the economic agents in the Islands. Apart from the uncertain effect that international tension will have this season on tourist activity, the war conflict in the Middle East has hit freight transport, construction, agriculture, the self-employed, and other strategic sectors of the Balearic Islands hard.
The Federation of Small and Medium-sized Enterprises of Mallorca (PIMEM) urges the adoption of immediate measures in favor of transport, especially affected by the rise in the price of diesel and its impact on the primary sector. According to SMEs, the state government's measures have a positive effect for consumers, but not for employers. The vice-president of the employers' association, Rafel Matas, concludes that the 25 cents discount committed by the State is not enough to cope with an increase that has been 50 cents per liter so far.
The Balearic freight transport employers' association has, in fact, been the one that has responded most forcefully so far to the 80 urgent measures dictated by Sánchez, to the point of threatening to stop. President Ezequiel Horrach says that the aid is “insufficient” and, after meeting with the main transporters of the Islands, maintains the threat of a stoppage at the start of the tourist season. Horrach warns that the impact of the war on businesses in the Balearic Islands is twofold, as in addition to the increase in fuel costs, shipping companies have also increased their prices.
Mascaró Morera loses 360,000 euros
With 330 employees and operational offices in Menorca, Mallorca, Barcelona, Valencia, Alicante, Madrid, Malaga, and Vitoria, the main logistics company in the Balearic Islands, Mascaró Morera, is counting the costs. The war is causing them a monthly extra cost of just over 360,000 euros, which state aid will only compensate for a small part. In addition to the drastic rise in fuel prices, they have to deal with the increase in fares that shipping companies have begun to apply on routes between the islands and the mainland. Trasmed charges them eight euros more per linear meter of cargo on their ships, and Baleària, six and a half euros.
Bernat Moll, general director and head of the company in Mallorca, is doing the calculations and estimates that each trip costs them 55 euros more per truck with Baleària and around 70 or 75 with Trasmed. Since their drivers make 50 to 60 boardings daily at the ports of the Islands and Barcelona, and the trucks are 16.5 meters long, the resulting extra cost rises to 150,000 euros.
The increase caused by diesel is even higher, nearing 210,000 euros per month. "We have 350 trucks running, and each one uses at least 25 euros more in fuel," he points out. Furthermore, the 150 refrigerated trailers must be taken into account, "which also consume more than before."
"All together it's an unaffordable cost. It's heartbreaking," admits Bernat Moll. And in the end, the consumer pays for it. "Like 99% of companies in the sector, we have had to pass this extra cost on to our clients because, if we don't, we all go under," he justifies. Mascaró Morera passes on the new tariffs to its clients weekly, calculated based on the average diesel consumption from the previous week.
Faced with this situation, Bernat Moll states that the measures taken by the State "are entirely insufficient. Perhaps it's more beneficial for individuals, as VAT is reduced, but that's not the case for companies. With the VAT reduction, we improve our current cash flow, but this accounting is not real. The reduction is nothing compared to the extra costs we have to face."
Moll, who hopes that the complementary measures being prepared by the Balearic Government will "help" and allow the strike announced by the sector to be cancelled, sees it as "normal for everyone to raise prices: the shipping companies raise them to us because fuel has become more expensive, we raise them to the distributors, they pass them on to the shops, and the citizen is always the one who ends up paying for everything".
The agricultural sector can withstand increases of up to 40%
The war has caught the primary sector in full mobilization and with tractor protests to protest against Europe's cuts to the Common Agricultural Policy (CAP). A scenario that is now aggravated by the rising cost of oil and transport costs, as well as fertilizers and other products used in the field, which have already risen by up to 40%.
The situation also comes at a bad time for fishermen, who are also fighting against the restrictions on their activity imposed by the European Union. For a month now, the grievance, however, has been even more significant for the half a thousand professional fishermen of the Balearic Islands and the 260 boats that go to sea. The president of the Confraria de Ciutadella, Xavier Marquès, puts figures to it. "The cost of fuel has gone from 0.70 to 1.20 euros per liter, and the 20 cents promised by the State only cover part of the grievance. The loss is 30 cents per liter," he explains.
According to their calculations, a boat consumes approximately 8,000 liters of diesel per month, which brings the extra cost to 2,400 euros. Despite everything, the fishermen of Ciutadella maintain, for now, the price of fish, but some companies that supply them with nets and other materials have indeed increased it. For the moment, says Marquès, the accounts add up. "If it weren't so, we wouldn't go out."
Prohens promises measures
The Government's measures will arrive before Easter, after consulting with the most affected groups. “It will reflect your requests”, President Marga Prohens has promised hauliers. Her intention –she has announced– is to complement the “insufficient” measures taken by the State in this regard. Above all, she has stressed, she will try to compensate for the effect of insularity, “which makes the consequences here even more complex” than on the Peninsula.
The island councils have also been active. In Menorca, the government team has already held three meetings with different sectors to take urgent measures to alleviate the effects on families and the island's productive fabric. In this regard, the Council has announced that it will bring a proposal to a plenary session to ask the State to allow local councils to use the treasury surpluses they have accumulated to support those affected. Adolfo Vilafranca's team is also requesting tax incentives and tax cuts to ease the situation and wants the EU to also relax the de minimis aid to remove obstacles for businesses.
“It is essential that administrations work in a coordinated manner and compensate for the increase in costs affecting the Menorcan economy, already conditioned by double insularity”, says Councillor Maria Antònia Taltavull. Only in this way –she believes– can the competitiveness of island companies be guaranteed in this crisis.