Cement, Hydraulic

Cement is manufactured by grinding minerals, typically a controlled mix of limestone and clay, in either a wet or a dry environment. The ground material is then heated in a kiln, chemically changing it into a substance called "clinker" that is cooled and reground with additional minerals, such as gypsum. This leaves a finished powder--the cement itself--that reacts with water and can be mixed with gravel or sand to create concrete. Cement is used in a variety of construction-related industries, particularly in building and roadway construction.

U.S. cement makers shipped $11.9 billion of cement in 2007, which was up from $7.2 billion in 2002. The industry runs an annual trade deficit, but significantly reduced its reliance on imports as a proportion of consumption in the mid-1980s, when import volume was as much as 20 times greater than export volume. In the following decade, imports declined and exports increased, bringing the deficit down to less than a factor of 10. However, in 2005 imports of building materials like stone, sand, and cement jumped 29 percent from the prior year, reflecting record levels of construction and slow growth of domestic production. Part of the increase in demand for cement was the result of damage caused by Hurricanes Katrina and Rita in 2005. According to the Portland Cement Association (PCA), rebuilding New Orleans, which suffered major damage, had the potential to use up to 1.8 million tons of cement annually between late 2005 and 2010. PCA projected that U.S. companies would meet this demand without a need for increased imports through 2010.

Industry employment dropped steadily beginning in the 1970s due to automation and a decline of small producers. Between 2002 and 2005, total industry employment decreased from 17,660 to 16,877. The number of production workers in 2005 was 12,848, making an average hourly wage of $23.95. In the mid-2000s approximately 246 establishments manufactured cement throughout the United States. Plants were typically located near the regional market they served to minimize transportation costs.

International relations were eased in the industry when Mexico and the United States settled a disagreement that had begun in the 1990s when the U.S. government imposed a countervailing duty of 55 percent against several Mexican cement companies on the premise that they were selling surplus cement in the United States at below-market prices. The agreement reached in 2006 stated that the United States would gradually eliminate its antidumping tariffs on Mexican cement in exchange for Mexico dropping its complaint against the United States for unfair trade practices on imports of Mexican cement.

U.S. cement shipments continued to climb, reaching an estimated $11.9 billion in 2007, compared to $9.25 billion in 2005. In contrast, cement consumption fell to 110.3 million metric tons of Portland cement in 2007. The industry blamed the ongoing residential construction downturn for the decline. The top five performing companies were responsible for 51.2 percent of total production, while 80.5 percent of U.S. cement capacity was held by offshore companies.

From the middle to the end of the first decade of the 2000s, the number of cement manufacturing plants dropped from 246 to an estimated 116 in 36 states. In 2008 Texas had the majority of plants, followed by Georgia, Pennsylvania, Florida, and Ohio.

Despite high capacity utilization rates, U.S. cement plants continued relying on imports to meet demand. For 2007, 22.7 million metric tons of cement and cement clinker were imported, while cement exported to Canada totaled 1.6 million tons. The industry was in the process of increasing capacity by 25 million metric tons by 2012 in an effort to eliminate its reliance on imported cement.

During 2008 manufacturing of hydraulic cement was responsible for 53.4 percent of market share, while Portland cement accounted for 18.7 percent of share, followed by masonry cement with 18.3 percent of market share. Manufacturers of natural cement were able to capture 9.1 percent of the industry share. Industry-wide employment totaled 20,335 workers.

Total cement consumption was projected to drop 22 percent to 75 million metric tons in 2009, followed by a 10.9 percent increase in 2010 and a 13.1 percent increase in 2011. Growth was expected to be spurred by a resurgence in residential construction. "The residential sector has largely run its course as a significant cause of cement consumption declines and will start to be a strong contributor to growth in late 2010, early 2011," according to Edward Sullivan, PCA chief economist in August 2009, who added that "Nonresidential construction will continue to be a drag until the end of 2011."

Current Conditions

U.S. cement shipments plummeted to $6.5 billion in 2010, compared to $11.9 billion in 2007. Imported hydraulic cement for consumption continued to decline from a high of 21.4 million metric tons in 2007 to 10.7 million metric tons in 2008 and 6.2 million metric tons in 2009 increasing slightly in 2010 to 6.3 million metric tons. Employment figures also continued to fall from 15,000 in 2008 falling to 13,000 in 2009 and 12,000 in 2010.

By 2010 the total number of cement manufacturing plants had fallen to 102 in 36 states. Texas, California, Missouri, Pennsylvania, Alabama, and Michigan were responsible for about 50 percent of U.S. production. About six plants were closed between 2008 and 2010 and another nine plants were idled, while plants with more than one kiln idled one of them to curb production.

Although cement demand was stagnant in 2009, it originally was projected to increase 2.4 percent in 2010, followed by a 6.7 percent increase in 2011 and an 8.4 percent increase in 2012. An 18.8 percent increase was forecast for 2013 because demand for highway construction was expected to resume. However, an apparent rebound in mid-2010 fell apart as the economy began to slow, prompting the Portland Cement Association (PCA) to re-assess its projections for cement consumption. The revised report for cement consumption projected a 0.2 increase in 2011 and a 0.4 percent increase in 2012. Significant gains of 16.4 percent were forecast for 2013 based on an expected new highway bill that year. According to Edward Sullivan, PCA chief economist, in an article in the August 2010 issue of Pit & Quarry, "Delays in an extension of SAFETEA-LU reduced highway cement consumption by 1 million metric tons in 2010." Sullivan added that "Lacking a new highway bill until 2013, highway cement consumption will be based on inflation-eroded SAFETEA-LU extensions, declining ARRA stimulus and extremely weak state fiscal conditions." However, Sullivan indicated that the negative effects of the debt crisis on highway funding, as well as on consumer, business, and bank confidence, would continue to hamper any recovery in the construction industry.

Industry Leaders

Lafarge North America, Inc., headquartered outside of Washington, D.C., and a subsidiary of Paris, France-based Lafarge Group, in was responsible for more than 20 percent of parent Lafarge S.A.'s reported revenues of $26.8 billion in 2008. Cement sales accounted for 60 percent of Lafarge Group's revenues in 2009. Lafarge North America, Inc. reported revenues of more than $4.33 billion in 2009 with 10,883 employees.

Allentown, Pennsylvania-based Lehigh Cement Company reported $300 million with 2,249 employees in 2008.Lehigh's revenues fell to $164.1 million in 2009 with 2,249 employees. Holcim U.S. Inc. was one of the top 10 producers of Portland cement in 2009. According to ElectricalEngineer.com, Waltham, Massachusetts-based Holcim U.S. Inc. had more than $1.1 billion in sales in 2011, significantly higher than the reported $480 million in 2006. Holcim has the capacity to produce 17 million tons of cement at 14 manufacturing plants.