Opportunities, challenges and choices

Published 23 April 2018

As chairman of the US Portland Cement Association (PCA), Allen Hamblen speaks with ICR about the upbeat expectations of the industry in view of recent domestic tax and regulatory reforms by the current US administration. In addition, the sector puts its faith in a fully-funded public infrastructure investment package.

Allen Hamblen, chairman of the Portland Cement Association and president/CEO of CalPortland Co

ICR: The US economy has been picking up and there seems to be greater optimism for the construction sector and cement demand going forward, but what is needed to get the industry back to pre-crisis levels of cement production?
Allen Hamblen (AH): There is little doubt that tax reform measures enacted by Congress and signed into law by President Trump are a huge development for the nation, and they will help our industry and so many others. Tax reform will help consumers as well. More disposable income will hopefully help stimulate greater demand for goods and services that rely on cement, such as housing construction.

But another major stimulus for cement demand is looming. If Congress and the administration can agree on a far-reaching infrastructure package to rebuild the nation’s highways, we would see a jump in the demand for cement across the country.

In recent years, federal infrastructure programmes have faced unprecedented challenges. In its 2017 Report Card, the American Society of Civil Engineers graded America’s infrastructure as a D+. Now is the time to address our nation’s failing infrastructure and for cement to play an essential role in revitalising that infrastructure.

ICR: How has the change of political administration impacted overall policy direction with regards to the US cement sector?
AH: The cement industry for years has pushed for tax reform, regulatory reform and an infrastructure package. The Trump administration and this Congress have been an ally in all three. Going forward, at the Portland Cement Association (PCA) we are hopeful that the administration is sympathetic to other policies we are seeking.

There has been a refreshing change in attitude among the top managers of various regulatory agencies. We are seeing much more cooperation with our industry resulting in reforms and initiatives that are good for the country. The new collaborative attitude with MSHA [Mine Safety and Health Administration] will properly place emphasis where it belongs – making sure all our people are safe every day. The pullback of the new WOTUS [Waters of the US] regulations has avoided a potential calamitous overreach. There are many more examples. The removal of regulatory shackles, while still enforcing the intent of the law, has been responsible for much of the recent economic growth.

The tax reform package will stimulate the economy and we are hopeful that a fully-funded infrastructure package will also be coming.

Need for further US policy improvements

ICR: Is the Trump administration doing enough to help the US cement sector thrive? Are there any key initiatives that will stimulate cement demand?
AH: First is a requirement for greater competition at the local level among types of pavements for infrastructure projects. What we want is for state DoTs [Departments of Transport] to conduct life cycle cost analysis (LCCA) for individual projects. This process not only assesses the cost of initial construction but also the future cost of maintenance and rehabilitation required during the life of the project. It evaluates the true cost of highway projects, helping contractors and states identify the best value option – whether it is a rigid or flexible pavement – with the desired performance at the lowest cost. Right now, there is very little competition nationwide and we believe an LCCA requirement will go a long way to allowing concrete to compete. Plus, the LCCA requirement will ensure greater value for American taxpayers, whichever pavement type is selected for any given effort.

Second is our industry’s push for more durable and resilient construction guidelines that will both save lives and taxpayer dollars. Resilient construction is an increasingly-pressing requirement as the country is buffeted by climate change and extreme conditions. All federal infrastructure spending measures should require resilient construction techniques. Resilient construction techniques are those that help infrastructure resist adversity and continue to serve their primary function following a disruptive event. The PCA’s view is that all federal infrastructure spending measures should require resilient construction techniques.

Why? Because extreme weather and wild fires are destroying record amounts of property. The Government Accountability Office (GAO) found that extreme weather and fire events have cost the federal government, meaning US taxpayers, over US$350bn in just the last decade, with the price tag expected to rise as the climate changes. The National Oceanic and Atmospheric Administration declared 2017 as the single-costliest year on record for weather and climate disasters.

Third, we are advocating for a long-term robust and sustainable funding mechanism that addresses the shortfalls in the highway trust fund. The nation needs durable solutions that both stabilise and increase critical highway investments to position America’s economy for future success. We think that the Trump administration is willing to entertain a range of possible solutions.

The US cement industry: challenges and choices

ICR: What do you feel are the main challenges for the US cement sector today?
AH: The architectural community’s emphasis over the last several years has promoted the construction of LEED [Leadership in Energy and Environmental Design]-certified buildings as the pinnacle of sustainability. However, considering extreme weather trends and their sweeping impact, this is the wrong point of view. It scarcely benefits the environment, and it hardly should be considered ‘green’, if a LEED building, damaged in a disaster, requires major reconstruction and, as a result, necessitates the release of additional carbon dioxide to produce more materials for reconstruction.

We in the industry believe that law- and policy makers need to overhaul and recalibrate the definition of green construction. The recalibrated view should be that the greenest building is the one left standing, the one reinforced by better materials, such as concrete, the one that does not require additional carbon release to produce extra materials necessary for repair. This ties back into our press for more resilient construction guidelines. The ‘Build with Strength’ campaign emphasises the benefits of resilient construction. Incorporating fire safety, energy efficiency, comfort and ease of use into structures is good policy as well as good engineering.

ICR: Do you think the US cement industry should be building more capacity or leveraging imports? What are the current barriers to this kind of large capex investment?
AH: The US cement manufacturing industry has sufficient production capacity and can readily scale up to meet any uptick in demand. That includes adequate domestic supply potential to feed even the most-optimistic infrastructure spending programme. Any imported cement will help supplement individual markets where spikes in demand exceed local production capacity.

Focus on CalPortland

ICR: It is always interesting to hear what individual plants and companies have achieved in terms of small investment projects and improving plant performance. As president and CEO of CalPortland Co, can you briefly explain a project that has been carried out at CalPortland in the last few years to improve operations or modernise your plants?
AH: Our Rillito cement plant in Arizona had a 45-year old, original, first-generation reciprocating grate cooler that was due for total rebuild. The remainder of the kiln line had been updated over time and had achieved increased throughput, but the cooler had not been updated. The original equipment supplier, the corporate engineering team and the plant personnel founded a strong partnership and worked together from project conception through to completion. We updated the clinker cooler to the latest-generation technology and successfully installed it during a kiln reline. Operational performance has shown significant savings in fuel and electrical energy consumption. Further, an increase in product strength has allowed for a reduction in Blaine targets for finished cement, helping to position the company to meet current and future market challenges and opportunities.

ICR: Now that you are the PCA chairman, what do you hope to achieve in your time in this position?
AH: I want to help our industry stay healthy and grow, and I want to lead the charge for the policies and legislation described above that will work to achieve it. But beyond that, during my tenure as chairman I want to begin a robust dialogue with national and state leaders about the need for resilient construction guidelines, considering extreme weather projections.

The GAO cited one particularly troubling projection in scientific literature. For 2020-39, GAO said that the US could sustain between “US$4bn and US$6bn in annual coastal property damages from sea level rise and more frequent and intense storms.” The same projection identifies the southeastern United States as bearing the brunt of coastal property damages.

I want to help spearhead an effort to re-educate our leaders that investing on the front end with cement/concrete in construction pays off over time. Researchers at the Massachusetts Institute of Technology’s Concrete Sustainability Hub have studied construction cost trends in areas prone to disasters. They’ve concluded that hazard-related maintenance costs “can be significant over the lifetime of a building. In fact, the costs of hazard-related repairs can exceed the initial building cost.”

Their case studies demonstrate that investing in greater hazard-resistant residential construction in certain locations is very cost-effective.

A personal look back

ICR: Can you tell me how you first got into the cement industry and what your expectations were then?
AH: I was in the booming oil production industry in Houston, Texas, in the early 1980s. Then in the mid-80s the oil production industry literally died. The city of Houston also became a ghost town as people left in droves. Lone Star Industries took advantage of the extremely-low office rental rates and decided to consolidate its functions across the US in Houston. The oil company I was working for went from 3000 employees to 100 in 12 months. I spoke with my wife and we decided that going to work for Lone Star Industries was the right choice for us. As a young married couple, we needed something concrete in our lives so we could start our family. I can assure you that this industry has exceeded all my expectations in many ways.

ICR: What would you say is your greatest achievement while working in the cement industry?
AH: I believe that my greatest achievement came as chairman of NRMCA [National Ready Mixed Concrete Association]. During my chairmanship, the NRMCA voted to double its annual dues to create the ‘Build with Strength’ programme, which is working to take back and protect concrete’s market share in the midrise building market. This is a core market for concrete in the US and what is good for selling more concrete is great for the cement industry.

This year’s IEEE-PCA conference

ICR: The PCA was founded in 1916 but the IEEE-IAS/PCA meeting started in 1957 and is celebrating its 60th anniversary this year. What are the main achievements of these meetings and how do they support the industry?
AH: The IEEE-PCA conference is the premier conference in the cement industry and provides the latest technical information and networking opportunities to a wide range of industry participants. The conference is organised by industry volunteers and is jointly sponsored by the PCA and IEEE. It includes high-quality technical paper presentations, panel discussions, tutorials, professional development training sessions and a "State of the Industry" presentation.

As many as 180 exhibits provide attendees with product information, available services and other market offerings.

The conference addresses topics that are critical to the industry, including new regulations, state-of-the-art technology, process improvements, safety, sustainability, best maintenance practices and many others. For example, when the industry was facing new NESHAP environmental regulations, this conference allowed attendees to better understand the regulations and learn about available mitigation technologies that would help them meet the standards.

A big priority of the conference is to encourage young professionals to attend and get involved in the cement industry. A student programme includes grants to attend the conference, a Cement 101 training class and, in some cases, a tour of a cement plant.

The organising committee has also created a “Young Professionals” subcommittee that is responsible for attracting young professionals to the event. The PCA also recently established a grant programme that subsidises up to 15 first-time cement producer attendees.

This article was first published in International Cement Review in May 2018.