PCA Economist Sullivan presents tepid residential outlook at IBS

Ed Sullivan, Portland Cement Association’s chief economist, presented his residential construction forecast and how it compared to the consensus of construction economists’ expectations at the 2011 International Builders’ Show on Jan. 12 in Orlando, Fla.

PCA expects tepid increases in residential construction activity to materialize during 2011, with more substantive gains expected in 2012 and beyond. PCA’s forecast projects 492,000 housing starts in 2011, a modest 3.4% gain compared to 2010 levels. This will increase significantly in 2012 with a 40% jump in start activity. In addition to tight lending standards, a high home inventory count and unstable housing prices are holding down the market. Foreclosure activity plays an important and direct role in determining timing of a recovery.

These projections lie well below the consensus of construction economists’ expectations. Unlike the construction economist consensus, PCA believes that the foreclosure environment, adding to inventories and depressing prices, will largely offset the favorable conditions arising from employment gains and affordability improvement expected in 2011.

A week laster, at World of Concrete, Sullivan a bigger-picture look at the construction industry, forecasting that cement consumption in 2011 will see a modest gain of 1.4% compared to 2010 levels, followed by a 4.0% increase in consumption in 2012. However, he expects pent-up demand across all sectors to cause cement consumption to grow in 2013 and beyond, starting with a 16.9% jump in 2013.

Industry backs Obama’s call for sensible review, oversight
In mid-January, President Barak Obama issued “Improving Regulation and Regulatory Review,” a presidential executive order aimed at addressing regulatory policy by federal agencies, including the U.S. Environmental Protection Agency (EPA). In the order, the President commits to a thoughtful review of regulations to identify those that are not necessary or unworkable and specifically explains that “our regulatory system must protect public health, welfare, safety and our environment while promoting economic growth, innovation, competitiveness, and job creation.”

The Portland Cement Association (PCA) applauded the President’s intent to impose reasonable regulation that will not limit economic growth and not only create jobs, but also preserve those that are currently at risk. According to PCA, current EPA regulations could result in the direct loss of 3,000 to 4,000 jobs in the cement industry and potentially another 12,000 to 19,000 direct jobs in the construction industry due to higher construction costs. These direct job losses could be amplified if up and downstream indirect impacts are considered. In total, more than 80,000 jobs could be lost due to EPA regulations.

“The cement industry, like several other manufacturing sectors, is facing regulations that will cost several billion dollars and push manufacturing off shore, causing the U.S. to lose a commodity that is indispensable to our country’s recovery,” Brian McCarthy, PCA president and CEO. “We welcome the opportunity to work with the Obama administration to ensure that regulations are based on science, preserve access to a strategic infrastructure asset, and most importantly, protect the sanctity of U.S. jobs. Without taking these elements into consideration, the administration is doing our nation a disservice.”

Buzzi Unicem USA purchases cement terminal in Illinois
Buzzi Unicem USA announced the acquisition of a 30,000-ton cement storage dome and distribution terminal from Ozinga Bros., Inc. The latest addition to its extensive river-based terminal network is located in Joliet, Ill. Buzzi Unicem will immediately begin shipping Type-I/II low-alkali cement by barge from the company’s newly expanded plant in Festus, Mo.

The Joliet terminal allows the company to significantly expand distribution in Illinois. Buzzi Unicem USA will continue to supply customers in the northern and central part of Illinois from its rail terminal located in Oglesby, Ill. This new distribution location will offer customers easy access from I-80 and I-55. Buzzi Unicem USA plans to install a self-service kiosk for 24-hour, 7-day loading by early spring 2011. The facility will be managed by Scott Richardson, a 10-year Buzzi Unicem USA employee.

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