The cement industry is a relatively small but significant component of the U.S. economy, with annual shipments valued at around $8.6 billion. In the United States, 39 companies operate 118 cement plants in 38 states. Worldwide, the United States ranks third in cement production, behind China — the world’s leading producer — and India.

U.S. cement production is rather widely distributed. The largest company produces just over 13% of the industry total, and the top five companies collectively produce around 53%. Foreign companies now own approximately 81% of U.S. cement capacity, up from about 22% in 1980. Investments during the 80’s by European companies, as well as Asian entities, were spurred by the favorable position of the U.S. dollar against foreign currencies.

Construction Markets
In 2002, U.S. Portland cement consumption was 103.8 million metric tons, a decline of 4% from 2001 levels. Cement’s fate — like that of most of the other building materials — is closely tied to that of the construction industry. Cement consumption is spurred by strong performance in the construction industry as a whole; however, individual sector growth, such as highway construction, affects cement consumption more heavily.

Inflation-adjusted construction spending was $693 billion in 2002, down 1.7% from 2001 levels and accounting for a 7.3% share of the national economy. Strong construction markets in the 1990’s helped boost cement consumption in that decade. Nonresidential construction, until recently, was one source of cement consumption growth. Continued strength in the public construction sector also contributed to cement’s performance. Public construction spending was $168 billion in 2002, up 3.7% from the previous year.

Authorizations of the Federal Surface Transportation Act of 1980, as well as the Intermodal Surface Transportation Efficiency Act of 1991, have provided much of the funding needed to keep the highway construction sector moving forward. The Transportation Equity Act for the 21st Century (TEA21) and its current pending reauthorization (SAFETEA) should support future consumption.

Cyclical, Seasonal, Regional
Although cement consumption is closely tied to overall construction industry performance, cement is somewhat protected from extreme cycles because cement is used in nearly every type of construction. While individual construction markets have their own distinct business cycles, at any given time cement is usually needed by at least one segment of the construction industry.

The cement business, however, is fairly seasonal. Nearly two-thirds of U.S. cement consumption occurs in the six months between May and October. The seasonal nature of the industry can result in large swings in cement and clinker (unfinished raw material) inventories at cement plants over the course of a year. Cement producers will typically build up inventories during the winter and ship them during the summer.

The cement industry is also regional in nature. Because the cost of shipping cement quickly overtakes its value, customers traditionally purchase cement from local sources. Nearly 96% of U.S. cement is shipped to consumers by truck. Barge and rail modes account for the remaining distribution modes.

Approximately 75% of all shipments are sent to ready-mix concrete operators. Plants shipped 13% of the cement they manufactured to concrete product manufacturers, 6% to contractors, and 3% to building material dealers.

Imports Fill Production Gap
The gap between domestic production and consumption was filled in 2002 by 24.2 million metric tons of imported cement and cement clinker. About 56% of cement and clinker imported in 2002 came from four major countries: Canada, Thailand, China, and Greece. Imports from Thailand, less than one million metric tons in 1998, surged to 4.3 million metric tons in 2002.

Cement and clinker importation is generally cyclical. Typically smaller amounts of cement are imported during recessions — perhaps less that 5% of total national consumption — but during boom times, imports can increase to 20% or more of total national consumption. U.S. producers tend to import the most when plants are operating near full capacity. According to PCA estimates, U.S. cement plants achieved an average capacity utilization rate of 90% in 2002.

Exports of cement seldom exceed 1% of total U.S. production. Like imports, exports are cyclical reaching marginally higher levels during economic recessions when domestic markets are slack. In 2002, the United States exported 438,000 metric tons of cement to final customers.

Efficiency Gains
Employment in the U.S. cement industry has declined dramatically during the past 20 years. In 2002, the cement industry employed 19,140 workers—a 29% reduction compared to 1982 levels. This drop in employment is the result of industry efforts to increase efficiency by automating production and closing small kilns. The average kiln in use today produces over 60% more cement than an average kiln produced 20 years ago: 468,000 metric tons in 2002 compared with 287,000 metric tons in 1982.

The cement industry has boosted efficiency by concentrating new capital investment in plants that use the dry process of cement manufacture, and by phasing out operations that rely on the more energy-intensive wet process. Since 1974, the number of wet process kilns has dropped from 234 to 54 — a decline of 77% — while the number of dry process kilns has only been reduced from 198 to 136. Nearly 56% of existing U.S. clinker production capacity has been built since 1975 — all utilizing the dry manufacturing process. Currently, about 81% of the cement produced in the United States is manufactured using dry process technology.

For More Information
Information and statistics used in this summary are presented in reports compiled by PCA from various government and private sources. For additional information of the U.S. and Canadian cement industry, refer to the Economic and Market Research pages of our web site, or contact PCA directly.

 
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