georgia construction aggregate association management workshop february 17, 2009 daniel m harrington
TRANSCRIPT
Georgia Construction Aggregate Association Management WorkshopFebruary 17, 2009
Daniel M Harrington
2
AGENDA
Global Cement Industry
North American Cement Industry
North American / Georgia Key Statistics
Challenges and Solutions
Global Cement Industry
4
World Cement Consumption
Source: US Geological Survey
5
47%
6%4%3%
2%
2%
2%
34% China
India
U.S.
Japan
Korea
Russia
Spain
Other
World Production, 2006
6
World Cement Consumption
Source: U.S.G.S., U.S. Census Bureau, International Cement Review,
Statistics Canada.
7
World Cement Consumption
Source: US Geological Survey
8
2009 Scenario-Lower cement consumption across the globe
9
2009 Scenario – Major Export & Import Regions
10
Major Trends in International Cement 2009
China is slowing down more than expected – Exportable surplus acc. To BNP is 60 Million tons
Global market has become a “Buyers’ market” again, after four years
FOB prices are declining around the world
More cement will hit mature markets with low freight costs and overcapacity
Africa and NAM will be threatened by low-cost cement imports
Surplus management will become a major issue
North American Cement Industry
12
0
20
40
60
80
100
120
'02 '03 '04 '05 '06 '07 '08 '09 '10
Million Metric Tons
Estimated Clinker Capacity (2002 – 2010)
13
North American Clinker Capacity (2008 Estimate)
Lafarge15.79%
Holcim12.85%
CEMEX12.15%
Lehigh8.61%
Buzzi6.59%
Other44.01%
Source: 2007 PCA Labor Energy Input Survey
Units: 000 Metric Tons
14
Capacity Expansion
Thousand Metric Tons
0
2,000
4,000
6,000
8,000
10,000
12,000
2006 2007 2008 2009 2010 2011 2012
Stated U.S. Capacity Stated U.S. Capacity ExpansionsExpansions
Stated Southeast Stated Southeast Capacity ExpansionsCapacity Expansions
Share of U.S. Expansions
2008: 0.0%
2009: 0.0%
2010: 42.9%
2011: 61.7%
Source: PCA
15
Portland Cement Consumption (MMT)
100908070605040302
140
130
120
110
100
90
80
Forecast PerformancePortland Cement (MMT)
Trend Forecast Actual
Source: PCA
16
Cement Consumption
Apparent Use ofPortland Cement by Market
(5 Year Average Share)
Nonresidential14.5%
Other7.1%
Residential33.8%
Public44.6%
Source: PCA
17
100908070605040302
140
130
120
110
100
90
80
Forecast PerformancePortland Cement (MMT)
Trend Forecast Actual
Cement and Clinker Imports (MMT)
Source: PCA
18
Cement & Clinker Imports by Census District
Source: PCA
19
100908070605040302
155
150
145
140
135
130
125
Forecast PerformanceCement Intensity Ratio (000 Tons per $ Billion Construction)
Trend Forecast Actual
Cement Intensity Ratio
(000 Tons per $ Billion Constructing
Source: PCA
North American / Georgia Key Statistics
21
100908070605040302
900
850
800
750
700
650
600
Forecast PerformanceTotal Construction (Billions 2000$)
Trend Forecast Actual
U.S.A. Total Construction (Billions 000$)
22
Projected Peak-to-Trough DeclineProjected Peak-to-Trough Decline
Single Family PermitsSingle Family Permits
ME
RI
MA
VTNH
AL GA
SC
TN
FL
MS
LATX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
ILIN
MI
OH
KY
WVVA
NC
MD
DE
PA
NY
CT
NJ
HI
0% to -51%
-52%% to -61%
-62% to -75%
-76% >
Projected Peak-to-Trough Decline
Single Family Permits
Source: PCA
23
Deficit Share of Total ExpendituresDeficit Share of Total Expenditures
State Fiscal HealthState Fiscal Health
ME
RI
MA
VTNH
AL GA
SC
TN
FL
MS
LATX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
ILIN
MI
OH
KY
WVVA
NC
MD
DE
PA
NY
CT
NJ
AK
HI
No Shortfall
Source: PCASource: PCA
0% to 1% 1.1% to 3.6% 3.7% +
State Fiscal Health
Deficit Share of Total Expenditures
Source: PCA
24
As of October, 2008
As of October, 2008
States in RecessionStates in Recession
ME
RIMA
VTNH
AL GA
SC
TN
FL
MSLA
TX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
IL IN
MI
OH
KY
WVVA
NC
MD
DE
PA
NY
CT
NJ
AK
HI
Recession
At Risk
Growing
Source: PCASource: PCA
States in Recession
Source PCA
25
ME
RI
MA
VTNH
AL GA
SC
TN
FL
MS
LATX
OKNM
KS
MN
IA
MO
AR
WY
CO
ND
SD
NE
WA
ID
MT
OR
NVUT
AZ
CA
WI
ILIN
MI
OH
KY
WVVA
NC
MD
DE
PA
NY
CT
NJ
HI
No Deficit 0-10% 11%-15% 16% +
2009 Fiscal DeficitsDeficit % Share of Total
Expenditures
Source: PCA/Census
26
FISCAL HEALTH - GEORGIASurplus/Deficit Index, 2005=100
Surplus
Deficit
Source: PCA
27
Georgia Construction Permits
Units
Source: PCA
28
Georgia Housing Permits
Units
Source: PCA
29
Public Residential Nonresidential
CementCement
20052005Cement Composition - Southeast
2005 2010
Source: PCA
Cement Consumption
Source: PCA
Challenges and Solutions
32
Challenges and Solutions
We’re in a recession and the local governments have no money
Economy recovery plan
33
34
Portland Cement Consumption
Peak (2005)-to-Trough (2009) Decline:
40 MMT (Worst in History)
(On a Percentage Basis: -32%)
Declines Continue Through 2010.
Source: PCA
35
Construction Turning Points – U.S.
60
80
100
120
140
160
180
1996 1998 2000 2002 2004 2006 2008 2010 2012
Residential 2006
Public 2008
Nonresidential 2008
1996 = 100
Source: PCA
36
Portland Cement Consumption
Declines Continue Through 2010.
Peak (2005)-to-Trough (2009) Decline:
40 MMT (Worst in History)
(On a Percentage Basis: -32%)
37
Cement Consumption: U.S. Long Term
Million Metric Tons
Source: PCA
38
2008 2009 2010 2011
No Stimulus 95.6 MMT 81.1 MMT 74.7 MMT 79.4 MMT
- Percent Change -13.2% -15.1% -8.0% +6.3%
With Stimulus 95.6 MMT 87.4 MMT 92.1MMT 97.4 MMT
- Percent Change -13.2% -8.6% +5.3% +5.8
Stimulus Impact 0.0 +6.3 MMT +17.4 MMT +18.0 MMT
- Percent Increase ---- +8.4% +23.3% +22.6%
Stimulus Impacts
Source: PCA
39
Cement Consumption – Georgia 1998 - 2012
(000) Metric Tons
Source: PCA
40
Challenges and Solutions
Industry has downsized, consolidated and globalization will continue to occur
Federations of associations Regulatory concerns will intensify (whether water, air,
or solid) Manufacturing and engineering solutions to
environmental needs
41
Labor Resources
Employee Hours per 000 Tons Produced (US & Canada
Source: PCA
42
Energy ResourcesMillion BTUs per 000 Tons Produced
Source: PCA US & Canadian Labor –Energy input survey
43
Challenges and Solutions
The Greening of America Sustainability / Environmentally friendly issues
will rise Promotion New products into old markets and Old products
into new markets
44
Competitive Opportunity?
Producer Price Index, 2003 =100
45
More Solutions
Political Action – Grass roots Embrace the “Green Opportunities” Stakeholders Employees “Pull through” marketing Cost Leadership
46
New Cement Based (Aggregate) Products Gaining Popularity in Southeast
47
Roller Compacted Concrete - RCC
48
Cement Treated Agg Base Construction - 2008
49
Inverted Base Construction
Asphaltic Concrete PavingFor Protection of GAB Layer
Graded Aggregate Base
Cement Treated Agg Base
Subgrade
2008 Georgia
50
Pervious Concrete holds up and
cools runoff
When used as a Stormwater system in GA, needs an Aggregate recharge bed 6-12”
Typically 6” pervious in parking areas
High density ABG pavers/Pug mill opportunity
Pervious Concrete PavementPervious Concrete Pavement“Green Movement”“Green Movement”
51
2008 Cobb Co Airport – 7 “ Concrete Overlay (vs 5” asphalt)
Concrete Overlays
52
Currently SE – 6 active RCC contractors (TN, GA, SC,AL)
Add at least two more for CTAB
Plus public agencies performing Tests: GDOT, TDOT, & the city of Chattanooga
Steady Increase in Projects Steady Increase in Projects for 5 Yearsfor 5 Years