Manufacturing and construction account for about one-fifth of GDP. Guatemalan
factories produce beverages, candles, cement, pharmaceuticals, chemicals,
cigarettes, foodstuffs, furniture, matches, molasses, rubber goods, shirts,
shoes, soap, sugar, textiles, and apparel. More recently established firms
produce electrical machinery, refined petroleum products, metal furniture,
instant coffee, pasteurized milk, plastic, plywood, aluminum and tires. Handmade
woven and leather goods are sold to tourists and exported.
Most of the country's industrial enterprises operate on a very small scale. A
small domestic market has traditionally limited Guatemala's industrial
potential, although the CACM temporarily broadened the market for the country's
exported manufactures. The value of Guatemala's exports more than tripled
between 1972 and 1978. During the 1980s, however, the industrial sector
declined, partly because of the collapse of the CACM but also because of a
shortage of the foreign exchange necessary to purchase basic materials. In the
mid-1980s, Guatemalan firms turned to export production as internal demand
contracted. The 1986 devaluation of the quetzal raised the cost of imported
industrial inputs. During the 1990s, the value added by manufacturing remained
at a steady pace, except for during 1996. The manufacturing sector suffered from
increased competition from Mexico, often unregistered and untaxed, while export
to major neighboring markets was hampered in 1996 by the slowdown in Costa Rica
and El Salvador.
In 2002, major manufactures included sugar, clothing and textiles, furniture,
chemicals, petroleum, metals, and rubber. Heavy industry included a small steel
mill located in Escuintla, and an oil refinery that had a capacity of 16,000
barrels per day. The pharmaceutical industry shrank by 53% in 1998 because
several manufacturing companies had moved their businesses to Mexico.
Construction, very dynamic during the first half of the 1990s, was affected by
falling demand in 1996 and 1997, but grew by about 25% annually in 1998 and
1999. Electricity generation and telephone services continued to grow strongly,
while oil production, thanks to a very active development policy, increased by
250% between 1992 and 1998.