After 15 years of growth, the US housing bust is a loud reminder that the construction industry remains cyclical. Fortunately, its timing has so far coincided with a building boom in the developing world, record ocean freight rates, and a depressed dollar, all of which have maintained a floor on prices and facilitated import cutbacks. In addition, US imports could be affected by the cost of carbon emissions in producing countries.
The current US downturn will reverse itself in a few years and, in the long term, demographics favour growth in concrete demand. When the cycle might turn in the rest of the world is another question, and opinions vary widely. However, with its ongoing consolidation and integration, the US should better buffer itself from future global volatility.
In the meantime, sustainable development has become the industry's central issue. It is likely that the US will follow Europe and succumb to the pressure of greenhouse gas (GHG) regulation. So far, the EU has bravely played the world's guinea pig for testing Kyoto's cap and trade medication. It is, however, debatable to what extent this experiment has actually reduced GHG or stimulated new technology. What is clear is its side effects: the offshore dislocation of production with competitive disruptions to some companies and financial windfall to others. Hopefully, US policymakers will take notice when they consider their options.
Sustainable development is both the industry's greatest challenge and its greatest opportunity. Its technical, marketing, and regulatory dimensions require that we clearly define the industry's identity. That the marketplace views us primarily as concrete, while regulators view us as cement, has contributed to current schizophrenia. Reflecting this blurry image, most of the public still unknowingly uses these terms interchangeably.
In fact, the industry continues to think as a fragmented chain of intermediate materials: aggregates, cement, chemicals, cementitious additives, and concrete, leading to the eventual visible result - concrete structures. Sustainability is a global issue, but there is not one global business model for this industry. In fact, the US, Europe, and the developing world have different predominant business models. The US is a blend-at-the-concrete-plant bulk industry; Europe is a blend-at-the-cement-plant bulk industry; and the developing world is a blend-at-the-cement-plant bagged industry. Hence the confusion and difficulty in trying to apply universal solutions.
In my opinion, given its business model and degree of integration, the time is ripe for the US industry to declare that concrete is its core identity. This would enable it to build an image and sustainability strategy with technical, marketing, and regulatory dimensions centred on concrete. It would also provide more options for improving the industry's environmental footprint and comparing that to those of competing construction alternatives on a whole life-cycle basis. If, instead, the industry limits itself to thinly-sliced segments, such as clinker or cement, it risks missing out on opportunities for industry-wide solutions and optimisation.
The US today is a leader in the "green" construction movement. This is primarily through the LEED(r) (Leadership in Energy and Environmental Design) programme, in which private initiative led and government followed. Through effective industry action, concrete has a tremendous opportunity to gain momentum as the construction material of choice.
Sustainable development requires the communication of a clear, consistent, and unified image and message to both the marketplace and regulators. For this reason, the multiple industry associations need to work even more closely together. In the US, the Portland Cement Association (PCA) and the National Ready Mix Concrete Association (NRMCA) should lead the industry to: define the technical agenda that will aim to continuously improve the environmental footprint of concrete structures; develop and communicate more credible comparisons between the environmental footprint of concrete structures and competing alternatives; and advocate that policymakers adopt metrics and incentives to promote such continuous improvement and avoid undesirable side effects.
The time to act is now!
Aris Papadopoulos, CEO, Titan America, and Chairman, PCA Sustainability Committee
World Cement Magazine May 2008
A Word from our editor.
