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Portland Cement Study - 'decline in cement use likely'

Dec, 04 2009

(Oklahoma City)  --  While many economists say it’s the beginning of the end of the recession, conditions facing the construction industry are likely to cause a drag on cement consumption, according to a new study from the Portland Cement Association.

In a document announced this week, the PCA said it expects 2009 to “represent a trough for United States’ total cement consumption,” or a 26.6-percent decline from weak 2008 levels.

However, the association also expects a modest 5-percent increase for 2010, and significant growth in consumption expected for 2011 and beyond.
“Given this weak outlook for private-sector construction, any near-term turn in overall construction activity will be dictated by public construction,” said Edward Sullivan, the PCA’s chief economist.

“Unfortunately … state deficits are sterilizing the spending impacts of the federal economic stimulus plan.”

Locally, concrete dealers have been working to expand their market.
Earlier this year, the Oklahoma Ready Mix Association announced it was working with national industry leaders to develop a promotional campaign to encourage the use of concrete.

“We’re opening new markets that we weren’t able to before,” Kurt Melby, executive director of the Oklahoma Ready Mix Association, said in October. “We’re raising awareness. We’re developing programs that we can take to owners and architects and engineers.”

Melby said his association had seen more emphasis on concrete building. However, PCA officials said that construction could slow down if states’ budgets remain weak.

According to the Center on Budget and Policy Priorities, 33 states are in severe deficit positions for fiscal 2010, compared to 21 for fiscal 2009.

And, with more than 90 percent of all highway and street spending set by state and local governments, public fiscal conditions will influence public construction spending.

And, the PCA said, the harsh economic environment facing state and local governments may result in a double-digit decline in discretionary highway and street spending.

“Reductions in state spending coupled by the slow release of stimulus funds suggest the cement industry will see very little second-half stimulatory impact during 2009. However, more than five million tons of ARRA highway cement consumption should materialize in 2010 and 2011,” Sullivan said.

Founded in 1916, the Portland Cement Association represents cement companies in the United States and Canada. It conducts market development, engineering, research, education, and public affairs programs.

By M. Scott Carter
Source: www.journalrecord.com

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