A Conversation with PCA Chairman Aris Papadopoulos, CEO, Titan America


Papadopoulos140x196In this exclusive interview with Cement Americas, the new PCA Chairman discusses sustainability initiatives, emphasizing resilience, oppressive regulations, the politics of doing business, and when he believes the industry will emerge from the recession.

Aris Papadopoulos is CEO of Norfolk, Va.-based Titan America, the U.S. subsidiary of Titan Cement Group of Athens, Greece. He is a member of Titan Group’s Executive Committee. Papadopoulos began his career with Titan in 1992 to develop its U.S. business. In 1994, he became CEO of Titan Atlantic, which became Titan America in 2000, following the acquisition of Tarmac America.

Prior to joining Titan, Papadopoulos held engineering and management positions in the power-generation and petroleum industries. All totaled, he has 30 years industrial experience. He earned Bachelors and Masters degrees in Chemical Engineering from the Massachusetts Institute of Technology (MIT) and an MBA from Harvard University. Papadopoulos is a member of the Board of Directors of PCA and the CTLGroup, having served as PCA’s Vice Chair and Chair of its Sustainability and Communications committees. He also chairs the concrete industry’s Joint Sustainability Initiative (JSI).

Cement Americas: Let’s begin with a discussion of the state of the industry. When I was going over my conversation with Enrique Escalante [President & CEO of GCC of America, Inc., and the previous PCA Chairman] two years ago, the industry was just at the beginning of this downturn. We were all a bit more optimistic at the time than we are right now about how quickly things are going to turn around. Where do you see things going in the next year, and when do you hope companies will companies will feel like they are through the worst of this recession?

Aris Papadopoulos: I know what you mean. I was asked, “How are you guys doing?” when I was met by several people outside our industry over the last couple of months. And I said, “The important thing is, we’re still here.” I think we’re a pretty hardened industry, and overall, a lot of our companies are multi-generational and have seen good times and bad times over multiple cycles, and even situations like world wars. This is an industry of proven survivors, and a product that survives generations. So, we’re still here as both an industry with the strength of the people we have—and that’s not just limited to the cement industry. We’re looking at people that make concrete products, the construction workforce, which has suffered the most in this downturn. Hopefully, we haven’t lost it, because we’re going to need it when things come back. That’s the driving horse of the entire industry.

This is the fifth year of our downturn. In terms of down cycles historically, this is probably the longest the industry has ever been seen. I feel personally that the sentiment pervades that we’ve hit bottom. I mentioned at a meeting recently that if this isn’t bottom, then God have mercy on us. I don’t expect things to improve much in 2011. I think there are a lot of macroeconomic and policy issues that are still constraining this economy. I just came back from Washington, and I think the U.S. seems to be going through an identity crisis—I don’t know if you’d call it a mid-life crisis or not—as to what kind of society, what kind of economy we’re going to be. And some of these basic issues are affecting industries like ours. There are questions up in the air that pervade a lot of industries about how we’re going to pay for things, what should the role of government be, how much regulation do we really want or need.

I don’t see any improvement in 2011, maybe toward the end of the year if these things get sorted out and people see that there is a blueprint for the future in this economy and feel more confident. Only then will we start seeing investment happening. I think it will be more private driven than public driven, because the public economy is bankrupt. If they used the same accounting rules that we all have to use in private industry, it would be very clear to everyone. I don’t expect that the driving force will be the public sector. I think it’s going to be private initiative, private investment, and obviously driven by private confidence in the system that will help us get back on our feet as an economy and as a sector.

Cement Americas: Have you noticed much of a difference between business at Titan America and what you’re seeing on the national level? And have you had to make any major adjustments in the last five years as a result?

AP: Obviously, there have been a lot of adjustments. We’ve realized what it means to get by with less. And some of those lessons are useful for the future, because during high-growth times, you do develop some wasteful practices and maybe don’t focus on efficiency and effectiveness as much as you should. So, these times help companies and individuals look back and ask, “Do I really need this? Can I do this is a better or more effective way?” And I think a lot of those lessons and practices will continue beyond this downturn. There is a positive from all of this, and we’re probably a stronger, more efficient company and industry than we were six or seven years ago, when things were growing so quickly we were trying to catch up with demand.

Cement Americas: You mentioned in your speech after being elected PCA Chairman back in November 2010 that you were not satisfied with the idea of simply climbing out of another economic cycle. Are there some initiatives in place that you believe will speed up the improvements for the industry?

AP: Most definitely. I think that is our biggest challenge. If we’re just here to ride the cycles up and down, I don’t think we’re adding much value to our companies or our industry. The things I’m going to mention are things that no one individual company can do alone; we need to act collectively as an association. Beyond that, we need to work closer with all of the other industry groups that comprise our supply chain. This extends from raw materials through the cement, ready mixed, concrete products, engineering, and construction segments. We’re a product that people need and use daily but forget about. This below-the-radar mentality of the past is one that is hurting us today.

This touches on one of our initiatives: our whole image to the outside world. We’ve been good about communicating between each other—cement people talking to ready mixed people, ready mixed people talking to contractors, contractors talking to engineers—but we really have ignored the outside world of the ultimate decision makers who need the structures we create, the policy makers who create policies that affect us, and the end users, which is everybody, the general public. Our focus today and in the future will be more of communicating our messages to these audiences in an easy-to-understand way on what social values our industry provides. To me the Concrete Joint Sustainability Initiative (JSI) is a great step forward, long overdue, for our industry. If each segment of our industry—and there are over two-dozen segments and associations trying to do the same thing—work independently, trying to develop our own language and efforts in the area of communicating our sustainability and social values, we’re not going to be very effective. We are such a small industry when you look at it overall, compared to the petroleum sector, utilities, chemical sector, that if we are divided even further, we’re going to be lost. And beyond that, if each of us communicates a different message, people aren’t going to understand or believe us, or they’re going to think we don’t know what we’re talking about.

This initiative picked up very quick momentum—it started with three anchor groups, PCA, NRMCA, and ACI, coming together—and has become a group of about 27 industry associations, essentially sitting around a table with the goal of having a common language and set of messages when we talk about sustainability to the outside world and what value we provide to society. There’s a common website that’s been developed, and we’ve tried to combine our resources in areas of communication, shows, and interaction with outside audiences. And let’s see where we have overlaps and can eliminate duplication and stop moving in opposite directions from each other. To me, that’s a critical step in our industry, recognizing that we’re all in the same boat and that our image to the world is our end product, which is concrete structures and the value these structures bring to society. How do we communicate more effectively this value and continue to enhance this value?

There are basically eight social values that were agreed upon among all these groups. In simple language, they communicate what we’re all about. Why do we exist as an industry? What is the value that society gets from everything we do? That’s a very big step that this industry has taken in the last year and a half. We realize that we need to combine our image effort. If you want to read about them—and you definitely should if you’re in this industry—check www.sustainableconcrete.org.

If you look at the Titan America website today, you’ll see a totally different picture of the world than what you saw a year or so ago. It’s much more focused on the public and external audiences. I told our people, we all love from the inside to look at our plants and heavy equipment, but that’s not what the world outside is interested in seeing. Let’s not just satisfy ourselves; let’s communicate what we actually do for people. That will help develop our image, which is important. When you don’t develop and manage your own image, one is created for you. Unfortunately, what is created for you is often the lowest denominator. Wherever we’re challenged—if the company is trying to get a permit to modernize a plant or open a quarry—what gets thrown out there publicly is the image of a smokestack or a dusty area. In the absence of an image, one is created for us. In areas where we are challenged, we don’t even start below zero. Zero seems lucky. We often expend a lot of effort just to get to neutral.

Again, this is not something that any individual company can achieve on its own. I’ve also communicated and come to my own conclusion over 20 years of trying to do this, that the image of any single company in this industry cannot stay above the image of the industry as a whole. You may try to get a little bit above, but you’re going to fall back to the overall industry image. And I’m not just talking about cement. It could be something that happens to one of the other supply-chain sectors. It could be a structural engineer who does something positive or negative that affects the whole supply chain. This is a long-term effort, obviously.

Part of it has be adopting a common tagline to our overall communication efforts, which is the “Think Harder” slogan. That came out of discussion among a team of many of these associations and their member companies, as well as people outside the industry, and it expresses a smart way to say that our product requires some thinking. If you just want to keep doing the same thing you’ve been doing before, you’re not going to improve things. Whether you’re thinking about how to make structures, paving, or infrastructure better, it requires some thinking and innovation, trying new ideas. So we’re inviting ourselves and those who are in charge of the selection of products and materials and the ultimate users to think a little harder, think about life cycle, think about resilience. These are both key elements of this future strategy.

As a society, we’ve have a very short-term, first-cost oriented mindset. We see where that has led us, where the biggest part of DOT’s money is spent on maintaining things that were probably poorly designed to start with. This whole idea of thinking harder about the future, especially in these hard times, is part of the direction that we all need to go in. We adopted that slogan as our version of “Got Milk?” for the future. I often like to parallel the milk industry, which is a successful example of an image campaign, because the whole “Got Milk?” imaging is not about what about happens to the cow or at the farm. I’m sure when you go to a farm and see what cows go through, you’re going to see a lot of issues and problems. The life of a cow is not that great. [laughs] But the image is about that wholesome, healthy benefit that the consumers of milk get enjoying milk. Every industry has its warts.

Cement Americas: The focus on life cycle and sustainability has been a long-time passion of yours, long before you became chairman. When did that first come to light for you?

AP: Not just mine, but the industry’s. I don’t think I can pinpoint the beginning. And it isn’t just our industry that’s been thinking about it. I was reminded recently that the military has been trying to tackle this issue for decades, building life-cycle analysis into its decisions. It’s not an easy issue to deal with, and trying to apply it successfully, especially in public-sector decision making is difficult. We try to do it in our private decisions and investments. And you can’t talk about life cycle or sustainability unless you talk about resilience, another theme that is important for our future. A lot of costs today happen because durability and resistance to hazards are not considered in the initial decisions of what designs and materials are selected. We see the consequences when catastrophes happen—hurricanes, tornadoes, floods, earthquakes. Unfortunately, resilience is the invisible benefit.

When people look at buying a home, they look at the cabinets, the kitchen, the family room, but resilience is something you don’t see. It’s hidden behind the walls. How do we bring that more to the forefront? One of the industries we’re trying to link up closer with is the insurance industry, which is very keen on the same topic. For years, they’ve been trying to convince state regulators that codes need to be strengthened, that they need to differentiate the premiums based on the resilience of structures. The states have consistently been pushing back, thinking that the insurance companies are using this as a way to jack up their rates.

Just recently, this past fall, the insurance industry through the Institute for Building & Home Safety, that they’re all members of, funded a $30 million, one-of-a-kind test wind tunnel in South Carolina, about an hour south of Charlotte. They will be able to test, side by side, entire structures. I saw a video of two homes, side by side, one built to Kansas state code and the other built to a stronger code. This wind tunnel can go up to a Category 2 or 3 hurricane, and they separately can add rain, hail, and wildfires. At 90 mph, the first home was just blown off its base. They plan to take this to the regulators and say, “We don’t need to talk to you; come and see the proof.” Today’s codes don’t adequately protect structures or people. And it’s not the insurance companies trying to jack up the rates. They are using this to create a system of ratings for structures that will be viable—kind of like a Good Housekeeping seal of resilience—and those structures will be rewarded with discounts on insurance. I think that’s an important change in the way the system works and one that we are very interested in being a part of. When we asked them, “Why don’t you put a concrete home next to it?” They said they’d do it, but it’s not very interesting because we know what will happen.” Check out their latest news at www.disastersafety.org.

This resilience direction is very important for our future. It ties into the improvement concept that up until now—you’ve heard about LEED and the green construction movement—hasn’t been driven by codes, but driven by market appeal. The fact that many people are willing to voluntarily go the extra mile in order to have that emblem on their building and promote it to their customers, employees, and communities. But you can be Platinum today and flat tomorrow. LEED does not consider at all if a building is durable and resilient. Although we and the insurance industry have tried to get LEED to expand their thinking, they are resisting that. I’ve personally come to the conclusion that it shouldn’t be in the same basket, unless it’s considered a prerequisite to getting any LEED rating. How do you trade off a bike rack—one of the LEED score elements—with something that will affect human life? You can’t put those two things in the same rating system. “I didn’t put in windows that wouldn’t break and hurt people, but I put in a bike rack.” Otherwise, we need a separate rating system for resilience. So, a truly sustainable structure should be both green and have parallel resilience recognition to it. We have to redefine “sustainable” to include both.

Cement Americas: Is there an effort under way to get such a rating in place?

AP: I think the insurance companies have taken the lead here. You’re going to be hearing about their Fortified program, and I think you’re going to see more people becoming a part of that and wanting to get on that bandwagon.

Cement Americas: Green building was one of the few areas that grew in 2010, and that helped the cement industry to some degree. Will PCA aim its promotion efforts more in that direction in the coming years?

AP: Very much so. We’ll be at all of the major conferences that present the benefits of concrete in green construction. As part of the JSI—with American Concrete Institute taking the lead, but working with all of the other associations—two books were published on using concrete for sustainable construction. One came out early in 2010 concerning strategies [The Sustainable Concrete Guide—Strategies and Examples] and another came out more recently that gets into more details on how you actually execute some of these ideas [The Sustainable Concrete Guide—Applications]. If you don’t have them already, you need to get them from ACI or PCA. We will participate in anything that enables people to make the right choices when it comes to sustainable construction. And the more people learn and think a little harder, the more they realize that concrete is the most sustainable material to build with. Definitely, the effort has been very strong in this area.

Cement Americas: The move toward sustainability and green building seems to be at odds with what you described in your speech last year as “aggressive regulations.” The administration seems to want to regulate an industry that it needs to forward any green building initiatives. Is there any companies can do to minimize the impact of these regulations on their operations, and what is the industry doing to counter the impact or educate the EPA?

AP: One of the goals I mentioned in my November acceptance speech was balanced regulation. As a company, an industry, and a society, we recognize the need for regulations. But like cholesterol, there’s good and bad cholesterol. And like medicine, taking too much of a drug can do more harm than good. It’s a question of, Can we work with public authorities to achieve balanced regulation that promotes continuous improvement, because in an unbalanced situation, you kill the goose. The issue is to have the goose produce better eggs, more nutritious eggs, without killing it. And in our case, killing the goose means essentially causing investment in the U.S. to become so unattractive that companies prefer to build offshore and import. And we’ve seen that happen in many other industries.

I don’t know if you’ve been following the news on “rare earths metals,” which are special metals used for electronics and telecommunication. The U.S. used to be a major producer, but over several decades, it regulated that industry so much that they essentially became uneconomic and shut down. The Chinese came, bought entire U.S. plants and moved them to China. And today China controls something like 85% or 90% of the world market in rare earth metals. And in the last year, China decided to cut back its exports to the world for whatever reason. And the U.S. is now scrounging and saying, “Maybe we need to find a way to get this industry back in the U.S.” So, this is the kind of unbalanced, short-sighted regulation that ends up killing the goose.

Unfortunately what we’ve seen, particularly with the EPA, and we’re very much focused on them through PCA’s Government Affairs efforts, is that the EPA seems to have veered away from its original mission and methods. When you look at the EPA of the ’70s and ’80s, it was addressing some very visual and factually evident issues—smog, Superfund sites, over-polluted rivers, spills. As the EPA solved these issues, they were driven by aggressive environmental groups to search for what I call “future issues.” But the way they’re trying to prove these future issues is through modeling, computer models that predict “This is how many people will be hurt.” So we’ve entered an era where we’re debating virtual reality, essentially, where the burden of proof is not based on facts and evidence. It’s based on, “Our model says you may hurt so many thousands of people, and therefore you need to spend hundreds of millions of dollars and increase your costs 20%.” And when we say, “The reality is we haven’t hurt anybody in the communities we’ve been operating in for half a century,” they don’t want to listen. The burden of proof has been loosened and reduced over the years, and it makes it difficult to debate and discuss the issue because on a lot of things they’re pushing now, there is no factual proof. We’re just debating the model, and their models just serve to fuel public anxiety. And I’m not just talking about CO2; I’m talking about all the other things, like mercury. We’ve created a system of regulation that contradicts our system of fairness and justice. This is the reason why investment and jobs are leaving the U.S.; the reason is not labor costs.

And the other thing that seems to have changed over the decades is that, what used to be called “best available control technology” and “proven commercially,” and there used to be a cost-benefit consideration for the EPA, today seems to have totally disappeared from their decision making. Today, once they say, “You’re hurting people,” they don’t care if the control technology is proven or not—even if somebody is still testing it in the lab—go ahead and do it, independent of the cost. That mindset is also threatening to kill the goose. It’s an issue that goes beyond just our industry. If this is the way that we’re going to move into the future, where’s it going to end up and when does it end? I see a need to restore EPA to its original mission somehow, maybe legislatively. Otherwise, we’re going to kill the industrial base of the whole country, which will impact jobs, even national security, if you consider that the U.S. will become dependent on outside nations for so many necessary strategic materials.

Cement Americas: Have you given any thought to why the cement industry has been targeted in this way?

AP: I haven’t compared whether the cement industry has been more targeted than others. Obviously, we are a heavy energy-intensive industry. I think that by itself puts us near the center of the radar screen. We do deal with raw materials that have varying chemistry; therefore, there could be plants that have extreme situations in their raw materials that are site specific. It’s not like a power plant where plants are much more similar. We’re dealing with a much broader base of raw materials, which creates a wider variation of other trace materials that can result in extremes. In other words, there may always be 5% of the plants that fall into one extreme or the other. So picking up on extremes, the regulators say, “We’re going to regulate the whole industry.” We have those kinds of idiosyncrasies as a product and that’s the nature of our process.

On the other hand, this industry has demonstrated excellent environmental and safety stewardship over its century-long history. We haven’t experienced the traumas of the oil, power, or chemical industries. We have become the largest recycler of industrial and urban byproducts, such as tires, waste fuels, biomass, and fly ash, often at the encouragement of officials. Now these regulations threaten to penalize us even for these initiatives and investments. We have invested tens of billions of dollars over recent decades modernizing and building state-of-the-art facilities that have been win-win for both business economics and environment. This is not a static industry, but one that has a deep commitment to continuous improvement and social responsibility. But now, regulators are changing the rules in ways that creates win-lose, which eventually becomes lose-lose. Unless the regulatory mindset changes from command/control to collaboration/cooperation, we’ll have loose-loose, and that price will be paid by the economy and jobs.

Cement Americas: In the last couple of years, plant closings have become a real issue, and according to PCA’s Chief Economist Ed Sullivan, more will follow if these regulations take hold. Do you see a time when capital investments, either for plant improvements or new plants, might return in the near future?

AP: I think that’s going to depend on the economic demand for the product and the regulatory environment. For example, our own company has been trying for five years to get permits for a plant in North Carolina, and because of local and even national issues, the process has dragged on that long. The ultimate outcome will depend on those two factors. Obviously, if we continue in the direction of the last few years, the idea of work going off shore will become a reality. And as you may remember from 2005 and 2006, we had a severe shortage of cement in the U.S., and we were importing one-third of our consumption. If this scenario were to play out—plants shutting down, no new plants coming onstream—the U.S. may be forced to import 50% of its cement needs in the next economic cycle. I don’t know if, practically, that can be done. There could be even worse shortages. If you look at the shipping logistics, the terminal logistics, and being an importer ourselves, we know that cement is the least desirable commodity that ships want to carry. So, after they have exhausted all of the other products, they’ll take cement volume. And even if shipping capacity is available, what is it going to cost? Where is the dollar going to be? The risk for the whole economy is that if this regulatory scenario played out, it could result in a big cost and penalty to U.S. consumers and economic development in a future cycle.
Cement Americas: When Sullivan laid out this scenario you’re talking about at the IEEE show last year, he said the nation could literally be in a situation where projects in need of cement simply wouldn’t have access to supply. That really frightened a lot of people.

AP: And it should frighten them to the point of becoming more politically involved. Let me put it that way.

Cement Americas: Will there come a point where someone in the government sees this situation and clearer heads will prevail?

AP: Nothing happens in the political system unless the people who are affected take action do take action., and one of our awakenings as individuals, companies, and associations is that we have to become more politically involved. I am spending more than half of my time on government affairs activities, both under the association banner and as the company head. I think this is pervasive today with most of the executives in the industry. We are trying to educate and engage our own employees, our vendors, our customers, our allies more in being part of the political process. For years, being mostly engineers and operators, we said, “If we make a good product, have a good cost, meet the laws, government will look after us.” Well, that doesn’t happen any longer in this new world. If you’re not involved, you risk being marginalized in the system. I think our wake-up call in the last couple of years has shown us that we need to take our future in our own hands.

We need to communicate with the political system at all levels—federal, state, and local—the importance this industry plays in the economy, in creating jobs, in providing value to society, and in national security. We have to make sure that the goose is not killed in the process. At Titan America, we are encouraging our employees to register to vote, we’re developing a program to keep them educated on the issues that affect our industry, and we encourage them to vote. Obviously, how they vote is up to them, but we want them to be engaged and educated. Most of them are saying, “Wow, we really want to do something.” When they realize what’s at stake and they understand what’s happening, they’re saying “We’re ready.” And this is where uniting all the industry segments is important, because it’s not just the employees in the cement industry. It’s everyone involved in the construction and creation of concrete structures, which is millions of people. The objective is to engage millions of people throughout the country through this campaign to bring about more balanced regulatory mindset and pro-jobs policies that will restore economic prosperity.

Cement Americas: When the Obama administration was first coming in two years ago, the hopes were pretty high that the nation’s infrastructure needs were going to be addressed in a way that, in the previous years, they had not been. How would you say the current administration is meeting those needs today?

AP: I think the word “stimulus” has been a misnomer. Unfortunately, the money that was appropriated went to pay government employees, straight and simple. And even the money that trickled down to state DOTs hardly replaced the reductions that the states made themselves. So overall, I don’t think our industry saw any stimulus and the little spent went mostly to repairs, which are not concrete intensive. I think the car industry survived based on help it got from the government, but when you look at our industry, the government did very little. One of the best-kept, shameful secrets is that—and I think everyone in our industry should know this—on the back of the stimulus bill, the EPA’s budget was increased by 35%, or $2.5 billion per year. The American public was sold on a job-creating stimulus bill, and what they got, in part, was a job-killing EPA increase. That’s a shameful truth that hardly anybody knows.

Cement Americas: With the recent change in the Congress, are you expecting any improvements in this area in the next two years?

AP: We’re involved in a huge ideological debate and tug-of-war here in the coming year, especially, in terms of what is the future model for the U.S. economy and society. Now, with one party controlling the House and the other controlling the Senate, it’s going to make that tug-of-war even more intense. I see the House trying to put the brakes on spending, and just in this week, they put infrastructure on the table and said, “Don’t take for granted all of this transportation money. We’re going to look at it and scrutinize it much more.” That kind of shocked our industry, but I think they did that to send a clear message that there are no sacred cows, and I’m sure there’s going to be much more scrutiny to come.

We used to have multi-year transportation bills that gave DOTs and industry the ability to plan ahead, but now we’re not even sure of current-year funding. That is an issue. Infrastructure is not like spending on entitlements; it’s an investment for the future. Our children will benefit from our investment in infrastructure. They won’t benefit from the entitlements we pay ourselves today. They will pay for the debt these entitlements create. That’s the sad truth.

That’s why I mentioned earlier, I don’t expect the public sector to drive the recovery. I see the House pushing toward less government, therefore less government spending. If the rules and economic blueprint become clear, this will bring back confidence to the private sector to say, “I see where the future is. I can make plans, therefore I can make investments.” If done properly, it could help stimulate private investment, which is personally what I believe will get us out of the bottom that we’re sitting in right now.

Cement Americas: Are there any particular types of projects that you think will lead the charge out of the recession?

AP: A lot of things will be dependent on regulation and the value of the dollar and what happens internationally. If you have a scenario of a much clearer and collaborative regulation, a low dollar, and an international demand for goods, U.S. manufacturing should grow and investment in manufacturing should lead the recovery. Obviously, manufacturing investment leads to jobs, a more stable housing environment, and a more stable commercial environment. To me, that’s one possible scenario—recovery through strengthened, export-driven manufacturing.

If you look at the most resilient economies in this global financial crisis, other than China—a lot of people like to say that China, as a society, is very different from Western societies and you can’t really compare China to the U.S.—look at Germany. Germany’s engine is its industry, which serves both domestic needs and exports. Instead of us going to Germany and saying, “You need to export less,” I think we should look at Germany and say, “What can we learn from Germany’s success?” Germany has an industrial policy, and the government tries to work with industry for win-win solution—not trying to strangle the goose. We should compare what the U.S. does to Germany and ask, “What are they doing differently, and how do we learn a few things from them?”

Cement Americas: Are there any PCA initiatives now geared toward tapping into some new markets or investing more in markets that are relatively new?

AP: I think the big initiative that I’ve left out of the discussion so far, and I believe you’re aware of, is the investment PCA and NRMCA jointly made for the MIT Concrete Sustainability Hub. That’s a first-of-its-kind, historic initiative that this industry has made, committing initially to a five-year, $10 million program to have MIT look at cement and concrete. The aim is to provide, both for our own internal continuous improvement efforts, but also for policy makers, an objective, technically sound base for looking at concrete-based applications compared to other applications, and looking at life-cycle analysis from both a cost perspective and an environmental footprint perspective. So, this MIT initiative will provide a blueprint and a hard-to-ignore, objective perspective on where concrete should be used more today and in the future. The two areas that they’re looking at in the life-cycle assessment are structures and pavements.

With structures, there has historically been a strong role for concrete, especially in the Southern states. But never before has this kind of analysis been done, where both economic and environmental footprint are looking at simultaneously on a life-cycle basis, taking into consideration the possibility that using concrete can reduce operating costs. Not to mention the resilience side, which they are going to try and incorporate through the actual life of the structure. I think it will become clearer what the benefits of concrete structures are. And if you look at the ACI books, you’ll see a lot of the idea on how to use concrete more creatively today to get the thermal mass effect, to design a zero-emissions building, to help make cooler cities or communities. We provide great solutions with these ideas, but until now, a lot of this analysis has been fragmented.

The big opportunity for new growth in our industry is pavements. The work of MIT will be very significant in this area, because a couple of things have happened in the last five or six years on the pavement side. Both the cost and supply of asphalt are moving in our favor—the cost has gone up because of oil, and the supply has been constrained because of increased conversion of asphalt into fuels at the refinery. So the initial cost premium that has kept concrete out of the market for decades is gone today. When the design is fair and level, concrete pavements are the same cost or less expensive. Unfortunately, the issue the industry still has is that a lot of the design criteria penalize concrete paving. In other words, they require the over design of concrete pavements when concrete is actually the more durable material.

It’s going to require a significant effort at both the federal and especially the state levels to change this archaic mindset that is costing the public and taxpayers dearly, at a time when finances are constrained. Most of the time, we’re going to have to work though the legislatures to get the agencies to change their way of thinking. We had to do that in Florida, which doesn’t produce a drop of oil, is the third-largest cement and concrete market in the U.S., and has almost zero concrete paving. For every dollar Florida spent on paving, half a dollar left the state. When you explain this to politicians in a crisis, how much of the Florida economy is dependent on materials, it’s a wake-up call to them. We pushed for legislative action, and only when we got close did the DOT come back to us and say, “Let’s talk.” So this is the kind of obstacle our industry faces that we’re going to have to work politically to solve. Unfortunately, the bureaucracy does not change easily. Rationality does not necessarily apply. Sure, there are a few people who take initiative and take the lead, but most people are stuck in the status quo of 20 years ago.

MIT is definitely going to give us a solid base, and they have told us that they will be objective. Not everything is going to be pro-concrete. They are going to tell us, “In these applications, you make sense; in these, you do not.” In pavement, they told us very clearly, “Concrete pavement makes great sense in high-volume-traffic applications.” In low-volume-traffic applications, asphalt makes more sense. We accept that. What we would like to get out in the open is debate on facts and not on perceptions. We’re not afraid to have that discussion publicly; the other side seems to be more comfortable with the status quo. Any discussion is a threat to them. I think at some point, they’ll wake up and realize that discussion is better than trying to defend something that is indefensible.

The other thing that MIT has done is tell is that on concrete paving, fuel consumption is actually 5% less than on asphalt, due to the slippage that occurs between tires and the asphalt road. That 5% on a high-volume pavement adds up to savings of billions of dollars and millions of tons of emissions over the years of use. That’s an important public consideration, beyond the issue of the frequency of maintenance and cost. This is the “holistic” thinking that we need going forward, because our fragmented style of thinking has led us to the present economic problems. These are very transformational years, for all of us. These years of crisis can result in a better future for our industry and our economy, because crises are periods of opportunity. As an industry, we’re committed to transforming ourselves and the environment that we exist in.

Finally, MIT is also doing research that will create longer-term opportunities and benefits to the industry and society. How do we formulate better cements and concretes that will have enhanced properties, require less concentrated use, and be produced with less energy and thus less emissions?  This is potentially breakthrough research that will need to go through many phases of modeling, lab testing, industrial testing, and scaling-up before becoming commercial. But it is part of the proactive commitment to continuous improvement our industry consistently shows, even in the most economically difficult of times. I truly wish our government would end its senseless regulatory attacks and become part of such win-win activities.

Cement Americas: Speaking of regulatory concerns, the issue of fly ash is rearing its head again in recent months. What are you hearing regarding this well-established part of the industry?

AP: Fly ash is, again, one of those regulatory things. There’s been a lot of discussion lately. Our industry is the biggest beneficial recycler of fly ash, at both the cement and concrete levels, that otherwise would end up in landfills. By substituting raw materials in cement and cement in concrete, we significantly reduce greenhouse gases. It’s also more economic making it a win-win. Again, the regulators are destroying a good thing. It all started with the Tennessee Valley Authority landfill spill incident—which, in fact, is a government-owned utility. The government created a problem that they are now trying to hurt the whole industry.

They’re threatening to classify the material as hazardous when the problem is that some of the landfills are substandard. In the process, creating uncertainty in the market. That’s the irony of all of this. What has been a beneficial, win-win solution is making people worried, “Will I have liability in the future if I use it?” This regulatory overreaction kills geese; it doesn’t create solutions. Again, we have narrow-minded thinking, driven by the anti-coal movement that a lot of environmental groups are a part of. We’re the bystanders caught in the crossfire between the opposing parties. Again, the industry is working hard to communicate win-win solutions to regulators and legislators.

Cement Americas: How are you empowering or involving the regional promotion groups in any of these efforts?

AP: So many of these issues are important on a regional basis. One of my focuses is going to be to try and help our regional resources organize more effectively, because a lot of our wins and executions have to be done at the state level. A lot of the obstacles exist at the state level, so becoming more effective—and not just the cement sector, but working with all the other industry segments—at the state level and having champions at that level such as business people with political connections that can talk to the policy makers and have the persistence to get us out of the inertia that we’re stuck in in many areas. I believe that local political advocacy is going to be the most important part of local promotion in the coming years.

Technically, we have the facts on a lot of things. I got together with a group a few months ago in Virginia—a cross-section of people from the industry—and I asked them, “The challenge we face, what percent of it is technical and what percent is political?” And the conclusion around the table was that it was about 85% political. We’ve been beating on the technical solutions for a long time, but that hasn’t gotten us very far. At this point, it’s political resistance and inertia that is preventing us from getting to the goal.

So, you can see my whole theme here is that we’ve got to be part of the political system and the regulatory process. We’ve got a great product that people need, that’s very sustainable, and can help solve many social issues, including building future communities that will be more resilient to climate change. We’ve shown for decades a commitment to continuously improvement in everything we do, from modernizing kilns from wet to dry, installing expert control systems, monitoring devices, GPS in trucks, the MIT Concrete Sustainability Hub all show that we are a dynamic, socially responsible industry.

We need incentives, not penalties: a win-win framework to preserve and grow essential industries, while protecting communities and the environment using real-world empirical data, not computer-model-generated fear. We’re not asking for handouts or a bailout; we are looking for a helping hand. But what we’ve been getting the last couple of years is a slapping hand. That doesn’t encourage people to stay and invest. That will only cause people to pick up and go somewhere else. Our ideas and actions aim to prevent this. Educating our industry and acting on these ideas is so important that success can be our only option.

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