An unprecedented business plan finalized this month will yield Cemex Inc. an integrated cement, ready mixed and block position across a most impressive geographic expanse: eight Southeast states (note map, page 8). Citing opportunities in the growing region, company officials have mapped a joint venture to which Houston-based Cemex will bring two cement plants (Demopolis, Ala., and Clinchfield, Ga.), 11 cement terminals, 10 Florida Panhandle ready mixed operations, and various block and aggregate assets. Birmingham, Ala.-based partner Ready Mix USA will add all of its ready mixed and aggregate operations in the Florida Panhandle, Alabama, Georgia and Tennessee, along with block operations in Arkansas, Tennessee, Mississippi, Florida and Alabama. By Concrete Products estimates, the joint venture spans more than 100 ready mixed plants, with a mixer fleet of 800-1,100 trucks, and 22 concrete masonry plants with annual shipments of 75 million-110 million block.

The deal includes an option for Ready Mix to sell Cemex its stake after three years. From the outset, Cemex will manage the cement assets, while Ready Mix oversees the concrete and aggregate properties. The joint venture unites two companies that have been among the Southeast's most aggressive investors during the past five years. Cemex gained a significant foothold in Florida cement, ready mixed and block with its fall 2000 acquisition of Southdown Inc. Following the parent company's takeover of London-based RMC Group this past March, Cemex inherited sizable ready mixed and block platforms in the Carolinas, Georgia and central and south Florida, which remain separate from the joint venture.

Ready Mix has emerged as the industry's fastest growing independent producer, and among the Southeast's largest without an integrated cement supply, excepting terminals near Pensacola, Fla., and Birmingham. Under majority ownership by the family of University of Alabama football legend Paul “Bear” Bryant, and with funding from land, dog racetrack and catfish-farming investments, Ready Mix surfaced in 1995 near Mobile, taking an interest in Reynolds Ready Mix. It expanded quickly by acquiring smaller and medium-sized ready mixed and block properties. Multiple-plant deals included Blue Star, Southern Ready Mix and Couch Materials assets. The company more recently moved east, tapping five-plant North Georgia Ready Mix in Rome. That business is about 75 miles north of Atlanta, long-time base of RMC USA Inc. and home to its Allied Readymix flagship. Since the North Georgia deal, Ready Mix has expanded around the Atlanta periphery and in central Georgia through plant and land acquisitions.

The joint venture furthers Cemex's strategy of integrating concrete operations with cement assets, and would appear to thwart similar action by Holcim (US). The latter operates one of five cement plants in Alabama, but is the state's only powder operator with no integrated concrete production assets. Lehigh Cement and National Cement have established ready mixed businesses in Birmingham and other markets throughout the state, with powder funneled from plants in Leeds and Ragland, respectively. Lafarge North America has more recently extended its Alabama reach (upwards of 20 small-market plants in four years), building on a limited platform that had been created by Blue Circle America, which Paris-based Lafarge Group took over four years ago this summer. A management contract covering domestic Blue Circle properties brought Lafarge North America a ready mixed plant and cement mill in Auburn and Calera, Ala.

The Cemex-Ready Mix USA joint venture is not the only deal that made June 2005 a lively month in a state that has become ground zero for global cement commerce, thanks to a tight concentration of mills from the industry's top four players — Lafarge, Holcim, Cemex and (Lehigh parent) Heidelberg Cement. Hanson Plc announced what amounts to an (Alabama, Georgia, Texas) asset exchange with Lehigh Cement, positioning both companies stronger in their core businesses, respectively, of ready mixed and block, and pipe and precast (note page 10). Although his namesake company did not surface in these transactions, the scope and logic of deal-making in the Southeast would surely impress a forerunner in integration no less than Florida's Doc Rinker.

e-mail: dmarsh@primediabusiness.com