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.