It was the most difficult decision in the history of the Carvajal Organization.

The Organization Carvajal has announced the closure of its Propal plant in Guachené, Cauca, marking what Pedro Felipe Carvajal described as the most difficult decision in the organization’s history. The move comes after years of financial strain caused by declining prices, currency fluctuations, and rising production costs. According to Carvajal, the decision was made following extensive analysis and exploration of all possible alternatives, including efficiency measures, investor engagement, and diversification efforts. Propal, which was founded in 1957 in Yumbo and expanded in 1989 with a plant in Caloto, had long been a key player in Colombia’s paper industry. It became part of the Organization Carvajal in 1998 and was historically known for using sugarcane bagasse as its primary raw material. The company played a significant role both within the organization and in the broader Colombian manufacturing landscape. Its operations in Guachené were a critical component of this legacy. The decision to close the Guachené plant followed a period of sustained financial challenges. Over the past three years, Propal has faced external pressures that have impacted its profitability. These include persistent low prices for its products, both internationally and domestically, despite the imposition of tariff measures last year. Additionally, the Colombian peso has appreciated to levels not seen in seven years, making it increasingly difficult for the company to compete with imported goods. Rising production costs further exacerbated these issues, affecting the entire sector. Carvajal emphasized that the current situation differs from previous periods of economic volatility. While there have been instances of strong currency revaluation in the past two decades, none have combined with the simultaneous rise in operational costs that Propal is currently experiencing. This convergence of factors, low prices, high costs, and unfavorable exchange rates, has led to negative operating margins, rendering continued operation unsustainable. In response to the decision, Carvajal acknowledged the emotional weight of the choice. He stated that while the pain of closing the plant is immense, the action was necessary to protect employees and other stakeholders connected to Propal. The organization has committed to ensuring that affected workers receive appropriate support during the transition. No specific details were given regarding future plans for the workforce, though the focus remained on safeguarding their interests. The closure of the Guachené plant represents a significant shift for the Organization Carvajal. It marks the end of an era for Propal, a company that once stood as a symbol of national industrial strength. As the organization moves forward, it will need to navigate the implications of this decision, particularly in terms of maintaining its market presence and adapting to evolving economic conditions. The coming months will likely see further announcements regarding restructuring efforts and potential new directions for the organization.