Cement customers begin feeling pinch

Cement customers begin feeling pinch
Published: 18 August 2005

GCC produces around one million tons of cement a year for distribution in South Dakota and surrounding states. The Rapid City plant operates 24 hours a day, 365 days a year, said Steve Zellmer, the company’s vice president of sales. "We’re producing as fast and as hard as we can - just like every other cement company in America," he said. The problem is, that’s not enough anymore.

A cement shortage that has been spreading across the United States in recent years reached South Dakota last month when GCC, the state’s only cement plant, announced it would begin allocating its product to current clients. About 23 states have tight cement supplies, according to a survey by Portland Cement Association, which represents cement companies in the United States and Canada. South Dakota is not one of the states considered under tight supply.

Cement use increased by 6.8 per cent in 2004 and jumped another 7 per cent during the first quarter of 2005 because of a strong construction industry. Gov. Mike Rounds was one of several governors who this month requested help in loosening tariffs on Mexican cement. Although the state has several transportation projects under way, there has been no indication there will be any delays due to the shortage, Laura Schoen, communications manager for the state Department of Transportation, said.

The Rapid City plant once was a state-owned facility but was sold for US$252m in 2000 to Mexico-based GCC of America. At the time of the sale, South Dakota was the only state in the nation that owned and operated a cement plant. Some question whether there would be a shortage if the state plant hadn’t been sold several years ago. "At the time, I’m sure a cement shortage was the last thing on Governor Rounds’ mind," South Dakota Senate Minority Leader Gary Moore said in a recent press release. "Now, in the peak of the construction season, his eagerness to do a deal ends up hurting hard-working South Dakotans." Rounds, who was state Senate Majority Leader at the time of the sale, said the shortage is worldwide and has little to do with the ownership of the company.