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 local spending activity. On a national basis, home prices began recording sustained gains in mid-2012. This implies an increase in local spending activity could begin in mid-2015 (fiscal 2016). Furthermore, analysis suggests that municipalities have gradu- ally increased the millage rates applied to properties. As home prices rise, therefore, there is the potential that localities receive an additional boost to budgets via the higher property tax rates. According to the Dodge Construction Outlook, public works construction will drop 5 percent, pulling back after a 3 percent gain in 2013 that was lifted by several large highway and bridge projects. The report predicts that more focus on deficit reduc- tion will limit federal support for environmental public works, although the improved fiscal position of state and local govern- ments will help cushion the extent of decline. Best of the Rest Based on significant research and in-depth analysis of mac- ro-trends of 2013 activity and 2014 prospects, the 2014 Dodge Construction Outlook details the forecasts for each of the remain- ing construction sectors: • Commercial building will increase 17 percent, a slightly fast- er pace than the 15 percent gain estimated for 2013. Both warehouses and hotels will continue to lead the way, while stores and office buildings pick up the pace. The positives for commercial building are improving market fundamen- tals and more bank lending for commercial development. Next year's activity in dollar terms will still be 28 percent below the 2007 peak. • Institutional building will edge up 2 percent, turning the corner after five years of decline. For the educational build- ing category, colleges are revisiting capital expansion plans, and passage of recent construction bond measures in sev- eral states should help K-12 school projects. Healthcare construction is expected to remain flat, given continued emphasis on cost containment. • Electric utility construction will retreat 33 percent, con- tinuing the 55 percent correction estimated for 2013 that followed the current dollar high reached in 2012. Capaci- ty utilization is down sharply, limiting the near term need for new generating capacity. The need for transmission line work remains strong. GLOBAL SURVEY: BACKLOG, MARGIN INCREASES RENEW OPTIMISM IN CONSTRUCTION After prolonged economic uncertainty, a majority of executives in the global engineering and construction sector are confident in the growth prospects for the industry, according to the 2013 Global Construction Survey from New York-based tax, audit and advisory giant KPMG Inter- national. A general increase in backlogs and margins is giving cause for opti- mism across the industry, with further growth anticipated. Just over 50 percent of 165 C-level executives from the Americas; Europe, Middle East and Africa; and Asia-Pacific regions said their companies experienced an increase in backlogs of at least 5 percent from 2012 to 2013. Moreover, though margins are not rising at the same rate as backlogs, 80 percent said their margins will either remain stable or increase more than 2 per- cent in the same period. The Americas region had the highest confidence for growth with 90 percent forecasting margins as stable or increasing by more than 2 per- cent. By contrast, 28 percent of companies in the AsPac region see mar- gins decreasing by fewer than 2 percent. "Our 2013 survey shows the overall outlook in the industry is directionally positive," said Geno Arm- strong, global leader of KPMG's Engineering and Construction practice. "A higher level of confidence in the Americas, demonstrated by large margin growth, is an indication of greater efficiency and cost management." Looking at final growth forecasts for 2013, optimism pervaded with 64 percent expecting growth up to 25 percent. The highest growth was expect- ed in Central & South America, and Africa. KPMG's Armstrong attributes the growth to "favorable trading conditions in the regions, as well as good prospects for mining, oil and natural gas." And, overall, companies with revenues greater than US$5 billion see the greatest potential for growth. Drivers and Barriers to Growth Government infrastructure plans (66 percent) were most frequently cited as the leading driver for growth, followed by global economic growth (42 percent) and population growth (38 percent). In the Americas, privat- ization efforts via public-private partnerships (48 percent) and access to new energy sources such as natural gas or renewables (42 percent) ranked as the leading drivers for growth behind government infrastructure plans (58 percent). Even with resurging optimism, many companies maintain a balanced view on what the likely obstacles to growth might be, with budget defi- cits and public funding shortages being the overwhelming factor, accord- ing to 72 percent of executives. Private-sector financing (43 percent) ranked second among respondents. As companies ramp up for growth, a near consensus (93 percent) said that their risk management programs have improved project performance. Yet, more than three-quarters of respondents said the underlying causes of underperforming projects were project delays, poor estimating practices and failed risk management processes. Expansion Plans In anticipation of continued growth, 47 percent of respondents said their companies are making plans for international expansion into new regions. Africa (35 percent), U.S./Canada (28 percent), and the Middle East (22 percent) are the leading regional targets for expansion. Entering new sub-sectors of the industry is also in the works for 44 percent of respondents, with the power sector (54 percent), water-related activi- ties (28 percent), and mining (27 percent) being the leading areas for planned investment. "The power sector is, without question, presently attracting the most interest," said Armstrong. "With the increase in economic activity and hyper-focus on energy security, it stands to reason that many players will see opportunity in this area. Power, as well as water, mining, and other resources will increasingly become a critical priority of the business agenda in this industry." KPMG conducted the survey through face-to-face interviews with 165 senior leaders, many chief executive officers, from leading engineering and construction companies in 29 countries worldwide. Respondent rep- resentation was spread across the Americas (20 percent), EMEA (52 per- cent), and AsPac (28 percent). 40 • March 2014 VIP Show Guide U854.indd 40 2/14/14 12:11 PM

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