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shipped to customers through its distribution network. In the 1980's, when the U.S. dollar value was high relative to a number of trading partners, clinker could be imported to the plant more cheaply than the plant could make it.

Because cement demand is closely tied to construction activity, production is both seasonal with peak shipments in summer months, and cyclical concurrent with the business cycle. Since cement kiln output cannot be scaled back to any great extent, kilns and plants are shut down in periods of low demand.

The degree of concentration of production capacity is moderate. Forty four companies operate 118 plants with 207 kilns. The ten biggest companies control 56.7% of production. Twenty nine companies, accounting for 64.1% of clinker capacity are affiliated with foreign firms. Twenty of the 29 are affiliated with European cement companies.

Products. Distribution Patterns and Customers

There are five main categories of products which are used in different applications. Of these, general use and moderate heat of hydration cements account for 87.5% of the market. All the products are made in rotary kilns with the different properties resulting primarily from changes in the composition of the raw mix and the fineness of the finished cement. With the exception of masonry cement which consists of up to 50% interground limestone, all have similar energy requirements.

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The primary customer, accounting for 60% of shipments, is the ready-mix concrete industry which supplies concrete, mixed to customer specifications, to construction sites. The second largest at about 11% is the concrete products manufacturing segment. Other major customers are building material dealers, government agencies and contractors.

About 70% of cement is shipped directly from the plant to the customer. The remainder is distributed though terminals which are supplied from cement plants primarily by rail, or barge and boat. About 90% of shipments are delivered to the end user by truck.

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Though the manufacturing process has basically remained the same, the US cement industry has undergone considerable change over the past 20 years in response to the rising cost of process inputs. Fifty four older plants have shut down and the number of kilns in operation has dropped by 50% since 1975. However, during this period total installed clinker capacity only decreased by 10% because of replacement of old facilities with new larger capacity preheater and precalciner kilns. Average kiln capacity increased from 199,000 metric tons per year in 1975 to 363,000 metric tons in 1994.

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Employment

The increase in scale linked with major investments in automation has increased productivity from 1.17 metric tons per employee hour in 1972 to 2.31 in 1994, a gain of 97.4%. The combination of fewer plants and greater productivity has led to a decline in the number of people employed in the industry. The current level is 17,800, down from the recent high of 32,700 in 1979.

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Cement demand is driven by construction activity. An average of about 57% of cement consumption is for building construction. Close to 40% is for public works and about 3% is for non-construction uses such as oil wells and mining.

Construction activity as a percentage of GDP has been progressively dropping, going from 11.2% in 1973 to 7.8% in 1994. Additionally, the ratio of cement to construction, expressed as metric

tons of cement per $1000, has declined slightly from 0.224 to 0.206 over the same period. The overall result is sluggish growth in cement demand which is a major issue facing the industry.

Another factor which relates cement usage to economic activity is per capita consumption of cement. There has been no obvious trend in this measurement. It has remained relatively constant since 1975 ranging between 0. 247 metric tons in the 1982 recessional troughs to 0.334 metric in the 1987. Similarly Portland cement consumption per construction worker has hovered around 16 metric tons per year.

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Total consumption of Portland and masonry cement in 1994 was 85.5 million metric tons. This is only 4.4% more than consumption in 1973 and 1.6% greater than that in 1987. Compounding the situation is the fact that most of the growth that has occurred has been taken up by imports so that 1994 shipments of 77.1 million metric tons by domestic producers were 2.2% below the 1973 level.

The imports can either be as finished cement or as clinker. In 1994, of the 11.3 million metric tons of total imports, 80% was cement which could be sold directly to the customer. Clinker is an intermediate product which must be ground into cement before sale. This is done at domestic cement plants which have excess grinding capacity and then shipped through the plant's

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