Cementing market concentration from the Hudson to the Mississippi

Deals in ready mixed concrete and cement production this past month assure 2015 watershed status on an industry timeline. A true market leader in ready mixed rose in metro New York and New Jersey, with commanding presence on both sides of the Hudson River, while an integrated player with strong growth ambitions became only the second U.S. operator set to pick up major cement production and distribution assets from a multinational peer.

Acquiring Ferrara Bros. Building Materials Corp., U.S. Concrete Inc. appears poised for leadership in ready mixed capacity rarely, if ever, attained in the country’s largest population center: 19 production sites in a 40- to 50-mile radius. Ferrara Bros. is one of a handful of independents that have served the five New York City boroughs through nearly four decades of mergers and acquisitions, during which nearly all other major markets—from Boston to Seattle and Miami to Los Angeles—have experienced consolidation resulting in two to four key producers.

To extend the solid northern New Jersey footprint of its Eastern Concrete Materials business, U.S. Concrete peered across the Hudson River to the New York City market, opening or acquiring plants in Brooklyn and Staten Island. The expansion was timed with growing ready mixed concrete demand from redevelopment of the World Trade Center site and other prime areas throughout the five boroughs. At the World Trade Center site alone, Eastern Concrete and Ferrara Bros. have logged more than 600,000 yd. in deliveries since 2008. Recognizing brand equity, U.S. Concrete will operate as Ferrara Bros. east of the Hudson River, transitioning Eastern Concrete’s four ready mixed plants in Staten Island and Brooklyn. The Eastern Concrete brand will carry to the west.

With a penchant for high performance concrete, Ferrara Bros. was one of the charter customers of the Holcim (US) Inc. slag cement grinding facility in Camden, N.J., which opened in 2001. The GranCem mill is one of six Holcim (US) sites that will be sold as part of a package of assets merger-minded Holcim Ltd. and Lafarge Group are prepared to unload per negotiations with the Federal Trade Commission, whose approval would weigh on a U.S. entity operating under LafargeHolcim.

Essroc Italcementi has agreed to acquire the Camden mill, plus a Holcim (US) cement terminal in Everett, Mass. With 700,000 metric tons’ capacity, the former facility stands to triple slag cement output for Essroc, which mills the supplementary binder at Picton, Ont., San Juan, P.R., and Middlebranch, Ohio, operations.

Remaining Holcim (US) assets to be unloaded are the Chicago Skyway slag grinding operation, located on a Lake Michigan inlet near the Illinois-Indiana border, plus three Illinois and Michigan terminals. The six properties were noted in a joint Holcim Ltd. and Lafarge Group announcement on the FTC negotiations.

Lafarge Group is prepared to dispatch a larger piece of U.S. assets. Under a proposed transaction outlined in mid-April, Denver-based Summit Materials LLC will acquire Lafarge North America’s cement plant in Davenport, Iowa, with 1.2 million tons/year capacity, plus seven Mississippi River terminals from Minneapolis to New Orleans, in exchange for $450 million in cash and a Bettendorf, Iowa, cement terminal. The latter property is part of Summit’s largest asset, Missouri-based Continental Cement, whose capacity and distribution footprint would climb to 2.45 million tons/year and eight terminals.

“The [mill and terminals] are an excellent fit with our materials-based growth strategy and a continuation of Summit’s proven track record of value-added acquisitions,” says Summit Materials CEO Tom Hill. “The combination of the Davenport assets and Continental Cement creates a strategically compelling and complementary multi-plant cement business in very attractive markets along the Mississippi.”

The Summit and Essroc transactions hinge on closing of the merger forming LafargeHolcim, scheduled for July. As a global cement, concrete and aggregatepowerhouse rises, domestic producers are seizing their own opportunities for market leadership and asset concentration.