CONEXPO-CON/AGG VIP SHOW GUIDE contains Floor Plans and a complete listing of companies exhibiting at the ConExpo-Con/Agg 2014 trade show in Las Vegas March 3-7, 2014. It also contains 2014 forecasts for the Aggregate, Concrete and Cement industries

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CONCRETE & CEMENT MARKET REPORT A year ago, the concern was resolving the so-called "fiscal cliff" that threatened to erase all gains in the 2012 U.S. construction markets just as 2013 was beginning. Thankfully, Congress post- poned that crisis and allowed 2013 to experience a 4.5 percent increase in total cement consumption (portland and masonry), over 2012 levels, to slightly more than 82 million metric tons. Additionally, consumption levels are expected to reach 86 million metric tons in 2014, an 8.1 percent year-over-year gain. However, once again, growth in U.S. construction markets could be dampened by Congressional squabbling, which has the tendency to erode consumer confidence and hinder recovery, according to the latest forecast from the Portland Cement Asso- ciation (PCA). "American consumers love drama. Moreover, Con- gress knows how to create it, with more on the way when the debt ceiling talks resume in early in 2014," says Edward Sullivan, PCA group vice president and chief economist. "Each time the political circus on Capitol Hill addresses extensions of the debt limit, budget approvals or the fiscal cliff, it harms the burgeoning economic momentum." Consumer and business confidence is a key ingredient for stronger economic gains, explains Sullivan. Recessions generate pent-up demand to correct their imbalances, and large imbalances need a long correction process. While the economy is positioned for stronger growth, it needs a trigger to unleash this potential. The trigger lies with consumer and businesses willingness to spend and reinvest in capital. Congress can easily derail recovery momentum with political drama created by the federal shutdown and debt ceilings. During 2014, it is possible that all sectors of construction— residential, nonresidential and possibly public—record growth. While the growth will be broad based, half of it anticipated for 2014 will come from residential construction activity where there is the largest amount of pent-up demand; the commercial and institutional sector will contribute another 25 percent. PCA pre- dicts real construction spending to grow 1.3 percent in 2013 and 8.0 percent in 2014. Sullivan believes the trough point for roadway construction was reached in 2013, noting "Improving state finances could pro- vide surpluses by 2015 that states can apply to neglected infra- structure spending." Perhaps most exciting—and possibly nerve wracking—for cement producers is that according to PCA projections extending to 2018, the end of the forecast horizon, portland cement con- sumption is expected to reach nearly 119 million metric tons— roughly three percent below the past cyclical peak of 122 million metric tons consumed in 2005, which implies a 14-year recovery. The only reason this may be of concern to U.S. cement producers is that presently the nation's cement capacity is approximate- ly 121 million-metric-ton/year, meaning a substantial increase in imported powder—to the tune of about 40 percent by 2018, according to PCA. Sullivan reminds us that changes in cement consumption are dictated by changes in construction activity and changes in cement intensity, which measures the amount of cement used per real dollar of construction activity. Many factors impact chang- es in cement intensity, including the amount of starts activity to total construction activity, changes in the composition of construction, changes in the regional composition of cement demand, and changes in the competitive price position of con- crete against competing materials. During the recession, massive declines in construction activi- ty were reinforced by equally large declines in cement intensity— the combination of both factors resulted in the unprecedented 54 million-metric ton decline in cement consumption from 2006- 2010. In the initial stages of the recovery, starts as a percentage of total construction activity increased—pushing intensity upward and enabling modest cement consumption gains in the context of marginal declines in overall construction activity. A new pattern of intensity is now under way, whereby construction activity and intensity gains reinforce one another, prompting more robust gains in cement con- sumption. A mainstay in construc- tion-industry forecasting and business planning, the Dodge Construction Outlook predicts that total U.S. construction starts for 2014 will rise 9 per- cent, to $555.3 billion—high- er than the 5 percent increase to $508 billion estimated for 2013. The Dodge projections were made last fall at McGraw- Hill Construction's 75th annu- al Outlook Executive Confer- ence, in Washington, D.C. 30 • March 2014 VIP Show Guide U854.indd 30 2/14/14 12:10 PM

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