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Cement manufacturing is energy intensive requiring an average of 5.2 mmbtu per metric ton. The construction material, concrete, which typically contains only 10 to 15% of cement as a binder is not energy intensive.

Profile of the US Cement Industry

There are 118 cement plants dispersed over 37 states. Ranked on the basis of cement grinding capacity, the 10 major producing states account for 65% of capacity.

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The cement industry is regional with about 60% of shipments being to destinations within 150 miles of the plants. Plants are located to minimize transportation of raw materials and finished products. In most cases this has meant construction of plants adjacent to a suitable limestone deposit and as close as possible to major markets. However, if it is sited on navigable water, a plant can receive raw materials by water from remote quarries and can distribute its products by vessel to a more widely dispersed market.

As an example, a 1.1 million metric ton plant on the Mississippi river system is 75 river miles from its quarry and not near any major cement market. The plant's economics hinge on the use of barges to receive materials and ship its products. It operates two dedicated barge tows which deliver limestone from the quarry to the plant at the rate of about 5,000 metric tons per day. Other raw materials and fuels, coal and petroleum coke, also arrive by water. About 90% of its products are distributed by barge to a terminal network in Pennsylvania, Texas, Louisiana, Tennessee and Illinois. In times of peak demand when the plant was short of product, clinker meeting the necessary quality standards, has been imported by boat and delivered to the plant by barge from Turkey, North Africa, and South America. This clinker is ground at the plant and

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

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