Three developments tracked since January stand out at year’s end: 1) overall concrete shipments did not pace projected level; 2) among global operators, the annual revenue bar for cement, aggregate and ready mixed concrete shipments is moving from the $10 billion–$15 billion to $15 billion–$20 billion range, with the top players deriving about 20–25 percent of sales in North America; and, 3) U.S. and Canadian wood interests’ multi-story building market pursuits are reverberating among ready mixed and manufactured-concrete producers.
Tempered expectations. We noted in January Portland Cement Association projections of 7-8 percent cement shipment gains for 2015, followed by two years of similar increases. This year’s consumption instead is up 4 percent or less against 2014 levels, and 2016–2017 look poised for gains in the 5-6 percent ranges. PCA’s late-year market update attributed lower than projected shipment levels to declining oil prices’ affect on construction activity, especially in Texas and North Dakota; increasing use of supplementary cementitious materials; and, lower cement intensities, as reflected in the volume of powder consumed per construction dollar.
Cement shipments and concrete output at levels below original 2015 forecasts, however, have coincided with a harmonized vibe from Associated Builders & Contractors, Associated General Contractors and National Association of Home Builders. Each reported throughout the calendar industry-wide employment levels or project start watermarks not seen since 2007–2008. As their concrete suppliers confront the challenge of finding competent drivers, builders and contractors observe qualified-labor shortages up and down the trades.
Mega multinationals. The global cement, aggregate and concrete elite ranks are shrinking, as one mid-tier and four major operators are becoming three even bigger powerhouses: CRH Plc, HeidelbergCement AG and LafargeHolcim Ltd., each reporting worldwide cement, aggregate and ready mixed concrete sales in the $15 billion or higher range, with estimated North American business in the $3 billion–$5 billion range.
The mid-year Lafarge S.A. and Holcim Ltd. merger tracked the target officials noted upon outlining their proposed union in April 2014. One of the last pieces in the merger puzzle was an early-May consent decree with which the U.S. Federal Trade Commission forced a sale of strategic Lafarge North America and Holcim (US) Inc. cement production and terminal assets—to the benefit of suitors Buzzi Unicem, Eagle Materials and Summit Materials. FTC conferred with its peer to the north, Canadian Competition Bureau, which had approved Holcim Ltd.’s planned sale of the Holcim (Canada) Inc. business to CRH. Now operating as CRH Canada Group, that Ontario- and Quebec-centered platform is a fitting complement to Oldcastle Materials.
On a smaller scale than LafargeHolcim Germany’s Heidelberg Cement AG is projecting a mid-2016 closing for a merger with Italcementi S.p.A. Although bound by less shareholder maneuvering than that required for Lafarge and Holcim tie up, the HeidelbergCement and Italcementi union is subject to FTC approval where Lehigh Hanson Inc. and Essroc Cement Corp. are concerned.
Tall wood. Early in the 2015 calendar, northern New Jersey and New York City residents—along with building code officials across the country—tuned into news feeds of a spectacular, late-afternoon fire along the Hudson River. A blaze that consumed more than half of the wood-heavy Avalon at Edgewater apartment complex appears to have had little effect on the building-market development ambitions of U.S. and Canadian softwood lumber interests; industry groups on both sides of the border seek code accommodation for 60-plus ft. structures.
Front and center in the effort is the Softwood Lumber Board’s reThink Wood campaign, which is targeting low- to mid-rise building opportunities that equate well into the million of yards of concrete annually. Tall wood building proponents are pitching cross-laminated timber and other engineered components differing from the Avalon at Edgewater trusses and lightweight vertical supports. From a market challenge standpoint, the wood question might top all for concrete stakeholders moving into 2016.