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PCA's Economic Forecast For The Cement Industry

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By eovery


Ed Sullivan, who is the Chief Economist for the Portland Cement Association (PCA), gave a talk at the 2009 IEEE Conference for Cement about the currect state of the cement industry. Mr. Sullivan, who before had testified to congress on the stimulis package and was complemented on the accuracy of his predictions, gave a break down over the next few years how the cement industry would look in the United States. A summary and breakdown on his talk can be found at BridgeGap Engineering.

Several of the points from Mr. Sullivan speech are impressive and i think they can be applied to other industries and to the recession in general.  Since the cement industry is a major part of the contruction industry, it can be used as a model for the economy.


"Cycles are temporary. Recessions are caused by market imbalances!"

This is a very strong point. What is the imbalance he is talking about here? Was he saying supply over did demand? A lot of factories have slowed down and some even closes, but we have had no shortages on anything that I know of.  So as the surplus is used up, the factories and production should start increasing again, one would think.


The economy will come back and it is going to come back with a flury

Wow! He is predicting that between 2011 and 2012, the cement industry and the market will come back very hard and strong.  The industry will not fully recover until 2015.  This is also very simular to the late 1970's and 1980's when the cement industry and the economy was in poor shape.  Then in the mid to late 1980's the economy and the cement had a good strong growth for nearly 20 years.

The Stimulis Package Will Help The Cement Industry

The Highway Bill will strengthen the Cement industry. There will be a lot of highway construction. The new highways structures will be using mainly cement and not tar and gravel. The new CO2 reduction will pressure this change. This will be huge for the cement industry. The Highway Bill also includes widen and un-clustering the current highways so cars do not idle and waste fuel and produce as much CO2 and other emissions

Along with this, there is predicted to be over 50 million new drivers. This will boost the demand for cars, fuel and roads, thus pushing the economy.

The Green movement will mean a lot of construction and cement used. Wind mills require a lot of cement. The twenty eight nuclear energy sites that are applying for permits will require a lot of cement, with more to come.

So with the cement industry demand increasing, the construction demand and jobs will increase significantly with it.

More Cement Plants Will Be Needed To Be Built

Mr Sullivan predicts that there will be a shortage of 67 millions tons of cement in the future. New cement plants will need to be built to supply this 67 million tons, and possible over 80 million in the future. Adding on the effect of new emission and the cap and trade regulation that may pass, several older less efficient plants will be shutdown and replaced with new.

Mr. Sullivan, predicts that up to forty new plants may need to be built over the next few years to make up for this expansion. in the past imports from other nations would have filled this gap, but it is projected that they will be in a large growth time, just as the USA will be.  Also, the transportation cost to the USA will be restrictive.


Foreseen Problems

Mr. Sullivan also talked about some problems. These consisted of the following:

  • Higher taxes because of the current administrations decision to fund the economy recovery with debt,
  • Higher inflation,
  • And higher interest rates to curb the inflation.

So as again, pretty much as what was seen in the late 1970's and early 1980's. This showing the cyclic effect of the economy.

Another problem he danced around was the new cap and trade legislation.  Depending on how the law was written and how restrictive it is, the cement industry may not be able to meet the standards and have to be very restricted on production.  This would actual hinder the recovery of the economy.

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goldentoad profile image

goldentoad  says:
6 months ago

I can tell you the bidder's board for public works jobs in LA are lit up again for summer. The bond money used to fund the projects was on hold until the stimulus money was promised to come in.

eovery profile image

eovery  says:
6 months ago

It is good to hear from you Toad. Glad things are looking better there. My company (Lehigh-Hanson) has a 3 cement plants in California which are moving slow. We need these to pick up for us.

Great, I do not agree with Obama a lot, but I may back off a little. I would rather he let the corporations fund themselves, and not with our tax dollars, but It may be looking up. Even though I think the economy would be recovering just as good without any interference from the government.

Hopefully we can make it through this yet. We are still slow on cement in the north midwest here. Hopefully it picks up, or at least we can ride the slowdown until the tide comes in again.

Keep on Hubbing!

dusanotes profile image

dusanotes  says:
6 months ago

Nice blog, eovery. Good to know soon they will be needing a lot of concrete made of sand, gravel, and cement -- and that it helps your company. Don White

eovery profile image

eovery  says:
6 months ago

Don, LIke I said, this will probably hold true for the whole economy. So things hopeful will be looking up.

Keed on Hubbing!

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