In this exclusive interview with Cement Americas, the new PCA Chairman discusses the potential industry impact of the nation’s economic “Fiscal Cliff,” the growing popularity of sustainable designs and construction, emphasizing resilience in building, and the association’s increased focus on advocacy and government affairs.
Since 2005, Cary Cohrs has been president of the newly established American Cement Co., LLC, a joint venture of CRH’s Oldcastle Materials Inc., and Trap Rock Industries Inc., based in Sumterville, Fla. He has decades of experience in the cement industry. In 2000, he was appointed vice president of operations for Florida Rock Industries, where Cohrs also served as plant manager and construction manager. He also was a corporate project manager for Essroc Materials Inc., responsible for the installation and commissioning of capital projects in six cement plants and two grinding plants.
In addition to being a long-standing member of the PCA Board of Directors, Cohrs served as co-chair of the Manufacturing Technical Committee. He was also the local chairman for the 2002 IEEE/PCA Technical Conference and has been an active member of the Florida Concrete and Products Association, serving as a member of its Board of Directors and Executive Committee.
Cohrs earned bachelor’s degrees in Industrial Engineering and Business Management from Florida State University and an MBA from the University of Tennessee.
Cement Americas: What is your general sense regarding the state of the U.S. cement industry right now?
Cary Cohrs: Clearly we’re in a period of transition. We’re ready to grow, there’s no question about that. The market is primed for growth. We think in general the environmental issues we’ve been facing over the past couple of years; on the horizon, we have solutions for and will be able to move forward beyond 2012. We all believe things are going to move in the right direction. The recession has been around for much longer than anybody anticipated. In 2005, we shipped about 128 million tons of cement, and that has declined to 70 million tons in 2010, so we’re down more than 45 percent. But we’ve seen 16 consecutive months of growth in the U.S., which is a positive sign, and we expect this year, we’ll be up 7.5 percent.
But like anything, what’s going on in politics—both in Washington and at the state level—gives us some uncertainty. In 2013, we hope that uncertainty is removed. We are all are very positive regarding the next couple of years. [PCA Chief Economist] Ed Sullivan has done a phenomenal job forecasting, but if we don’t get past this fiscal cliff and it actually comes about, then the assumption of 6 percent growth [in 2013] would drop off dramatically, possibly to a 2.7 percent decrease in consumption.
That is a big factor in what’s going to happen in the beginning of 2013 and would set the trend going forward. If we come out of the gate slow, you can imagine the back end is going to continue to develop slowly as well. Beyond that, the U.S. is a great place to be for business, as everyone knows. Our demographics are excellent, and we expect the population to grow. The numbers out there say we’ll add another 78 million people by 2035. Part of that is due to internal birth, and another portion is attributable to immigration.
As everyone knows, as population grows so does construction because the demand for homes goes up, the demand for apartments goes up, schools, commercial buildings, infrastructure, you name it. It’s going to continue to rise. We also feel that as population grows and the country continues to develop, concrete and concrete products are very well positioned and should be a major part of that growth pattern.
We’ve seen higher oil prices. There may be some long-term shift in that, but in the short run, we expect that to continue to be a problem. As a result, concrete becomes a lot more competitive in its position versus other materials such as asphalt. Probably just as important, the higher oil prices require us to be much more energy efficient, not only in our roads but in our homes, buildings, and all phases of construction. We’re also seeing moves toward alternative energy requirements, and the nice part about windmill construction is that they use quite a bit of concrete [for the base] in that process; that’s very helpful to us. We’ll see how nuclear construction continues to develop, because those are extremely heavy users of concrete. The shale gas technology also requires a good bit of cement, either through full-depth reclamation of trucking routes or around the extraction process.
I think we’re seeing some real benefits coming down the road, especially since sustainability has become everyone’s focus. Concrete is poised to be absolutely the most sustainable material out there, and we’re doing everything we can to promote that to let the general public know that our product will be the most sustainable in the long run.
Cement Americas: Are there any new promotional endeavors PCA has in terms of making sustainability a top message?
CC: Green construction as a whole is one part of that sustainability equation. If you look at a lot of the activities that are under way at [the] MIT [Concrete Sustainability Hub], which are geared toward the concepts of sustainability and energy efficiency. PCA and its members have been very active in the sustainability trend, which is here to stay. Across the board, you’ll continue to see an emphasis in that arena.
Cement Americas: You mentioned that most of the regulatory issues over the last couple of years have been dealt with. Are there any issues that are still lingering that members need to keep an eye on?
CC: At this point, we’ve addressed the NESHAP regulations in a very proactive manner in the way we cooperated with the federal EPA. They have been working with PCA, and our Washington office has done an outstanding job in keeping in touch and moving this forward. We don’t see anything in the short-term horizon that might possibly be addressed quickly. All of our focus has been in the areas where we’ve needed to be focused, and I think we got through that ok.
Cement Americas: One helpful step forward of late was the passage of the new highway bill that provides funding for two more years, which means the Obama administration and Congress will have another opportunity to renew it. Are member companies happy with the highway bill that just passed? Do they see more potential in a couple of years?
CC: The passing of a highway bill is always great for construction. All of the various construction industries benefit from that. We always need to continue to push on growing the highway bill as best we can, primarily because the U.S. infrastructure is clearly not as strong as it was at one time and it needs some focus and effort. We see opportunities when there’s more money available for infrastructure. We believe that gives our industry some opportunities for paving, especially in light of the work that’s being done at MIT to promote rigid pavements. Any news coming out of Washington that adds to the possible dollars available for infrastructure is something we support 100 percent.
Cement Americas: When we were talking about the outlook for the industry as a whole, are you seeing a slightly different outlook for your company in Florida?
CC: Generally, there are three or four states that were impacted quite heavily during the recession, and those are the states that had a lot of speculative building going on, so we’re lumped in with those. We expect we’ll be a little bit behind the curve as these things mature and the housing market begins to recover. But overall, we’re following some of the same growth patterns, maybe not as quickly as some parts of the country. Like everybody else, we expect the economy in this state will return, and when it does, we’ll be in great shape to capitalize on that.
Cement Americas: You mentioned green building earlier. I saw a report in the last couple of days that said green building is booming, even as the various other construction markets are lagging behind. Is PCA redirecting promotional efforts toward green building?
CC: We look at it and say “This green movement is what we’re all about.” Our product is geared toward energy efficiency, and when you start comparing what concrete does to other competitive products, people start to see that concrete is the way to go. This goes along with people seeing recent natural disasters and that forces them to re-evaluate construction. This recent catastrophe along the New Jersey shoreline [Hurricane Sandy] makes me believe that when reconstruction starts there, it will be in a different manner. Of course Florida has already experienced that, and construction along the coast of Florida is quite different than it was 30 years ago.
On the green side, the efficiency portions are what we’re getting into in a big way. PCA is working diligently on trying to get building codes, standards and even legislation that really emphasizes energy efficiency and allows more cost-effective construction programs. Of course, with MIT, that work continues to develop looking at different structures, how concrete plays into the whole green process. They’ve made great strides in looking at life-cycle cost assessments and analyses. All of that is really movement by the PCA to keep promoting and pushing our products.
Cement Americas: When you talk about certain structures built to resist these weather events, you’re talking about resiliency.
CC: Interestingly enough, these weather events have been going on forever. We just haven’t focused on if we’re going to build in certain locations, are we going to build to withstand these phenomena that occur? Ultimately, once the weather has passed, we want everything to still be standing, and the best way to make that happen is to build with concrete.
Cement Americas: Plant closings have essentially stopped, but is the industry prepared for a turnaround and double-digit consumption gains, as Ed Sullivan has forecast for the near future? Will the capacity be there? Are companies prepared to start investing once again and keep imports at bay for a bit longer?
CC: I, for one, love new plants and new plant construction. I’ve been fortunate in my career to have been involved in a couple of them. The current utilization rate is something everyone is familiar with, and for several years now, we’ve been dealing with this uncertainty when it comes to environmental regulations, along with a reduction in demand. But there is a vision out there of nearly 11 million metric tons of new clinker capacity that could be added in the future. I know that this industry and its members are constantly looking at when and where the demand would come and how do they satisfy that demand.
In 2005, many companies were right in the middle of increasing capacity to meet demand, but some projects were put on hold with the downturn. I would expect that every one of them is continuing to evaluate those prospects. There are plans for more than 7 million metric tons of added clinker capacity that could come online in 2015-16 if things turn in the regulatory and political worlds. By 2025, we would expect to be fully stressed on our capacity even if we add all of these prospects for capacity that are coming down the road. Is the industry ready? We’re long ready. There’s no question about that. Are we ready to invest? I think this industry has shown it is always ready to invest. We just need the sun to rise again to get off and running. We’ll see people easily putting money back into this industry and moving forward.
Cement Americas: In terms of the recent election results and the changes in Congress, is PCA anticipating things going any differently in the coming four years than in the last four years? A lot of these regulatory battles came out of the Obama administration. Does it seem that they’ve been educated on the benefits of concrete enough to be more productive in the coming years?
CC: I can only assume and hope that President Obama wants to walk away from his second term with a positive legacy, in that he would want to be a vital component in turning the economy into a strong, healed, well-oiled machine. We expect that many of the same issues will be debated because we do have a Democratic President and a Democrat-controlled Senate and Republican-controlled House. These things related to immigration, tax reform, we think those will still be out there. We have found that the EPA has been willing to sit down and talk to our industry knowing that we do represent a pivotal role in the economy and the growth of the country. And I believe I read somewhere that President Obama said that we’re not talking about climate change until this economy rolls again. That’s positive for us, and we hope that sort of mentality continues on through his second term.
Cement Americas: Beyond green building, are there other types of projects and markets that you believe will lead the charge in terms of recovery once it kicks in?
CC: We all know the residential market will return at some point. What we have to do is contribute to the growth across the board. We believe there are opportunities in the paving markets. Currently, concrete is about 6 percent of the overall paving market, but what we’re looking at is what is the right paving to be done—not so much our product over anybody else’s, but what type of pavement should go into certain situations. It’s been fascinating to watch MIT work through that question and this process. Overall transportation policies will hopefully help increase the size of airports and give us some more infrastructure work related to bridges. Those opportunities will continue to present themselves, and we’ll have to take advantage every chance we get.
Cement Americas: I just read a report yesterday about how desperately the water infrastructure needs an overhaul, and concrete pipe could play a big role there.
CC: Anytime you neglect infrastructure in this country, unfortunately as we have for the last five to 10 years, you have to look at how to we upgrade bridges and water systems. The opportunities are there, and it’s just a function of getting the economy rolling and the funds being made available to get up and running.
Cement Americas: Are there any completely new areas that the industry is looking at?
CC: Moving to the forefront of that list is anything related to clean energies—shale exploration is taking place in the Dakotas and Pennsylvania. We’re seeing consumption in those sort of applications. Windmill construction is a growing area; there is about 650 cu. yd. of concrete for the base. PCA has estimated that at some point, probably around 2035, that could represent about 2.3 million metric tons of cement for that market. And again back to nuclear power, if it goes, it will be a huge consumer of concrete as a result of the construction requirements of building those facilities. That could add a lot more demand for cement and concrete. There’s a number out there that says there could be 24 nuclear plants commissioned by 2035. That may seem like a long ways out, but we build cement plants for 100-year lives, so 30 years is a short-term horizon for us.
Cement Americas: How important lately have the regional promotion groups been in getting the word out about the sustainability of cement and concrete? What is their role in this process?
CC: They clearly are the backbone of our promotion efforts, and we continue to look for ways for these groups to take the lead in bestowing the virtues of concrete products. There’s no question regarding their importance to the promotional effort. They are the lead effort in getting the message from MIT to the various states. And we know a lot of the decisions on things like infrastructure development activities are done at the state level. It is almost always a topic of conversation when we meet at the PCA meetings on how to make them more effective and giving them more support. They are instrumental. Their effectiveness is like anything else; it’s based on the members and how committed they are. We think they are making great strides in certain areas where they are being heard. In other areas, we have to figure out how we get them heard.
Cement Americas: Do you have any passion projects that you’d like to move ahead in your two years as PCA chairman?
CC: First of all, it was an unexpected honor for the members to ask me to be chair of this organization. My passion is to get all members aligned and go out there with a strong, unified voice and maintain excitement for this business. It is a unique, fun and challenging business. I don’t really have anything I’d like to leave as a “legacy.” There are a lot of people who leave certain positions, and their legacy is left behind just by what they accomplished while they were there. If I have a legacy, I hope it’s that somebody looks back and says, “He was pretty effective during that time.”
Cement Americas: You hope that you leave the place better off than it was when you moved in.
CC: [laughs] That is so true. When you walk away, you want to be able to look back and say, “That looks better than it did when I got there.”
Cement Americas: For a while, the importance of getting new blood into the industry was critical. Is that still an issue for PCA, and how is that being addressed?
CC: For all of us charged with leading companies, personnel is the number one issue. We spend a great deal of our time looking at personnel and figuring out how we can continue to develop. We have seen a great decline in personnel in our organizations as a result of cutbacks, retrenching, and savings. However, we all recognize that, and there is constant discussion at this moment within PCA as to how it will begin to support the regeneration of quality people within our industry.
There are a lot of learning tools that are available through PCA, and now we have to go back one step further and ask ourselves, “Where can PCA help train people to develop more knowledgeable and skilled personnel to help us grow?” There’s an absolute shortage of quality people in our industry, and that’s got to change quickly because if the markets turn and we don’t have people in place, the companies will suffer.
It’s a very interesting and exciting time for us. I’m thankful that at least the vision for the next two years is actually going up and not down. You always want to be on the upside; it makes it a lot more fun and easier to get people energized as you’re starting out of the recession. We’re going to give it a whirl and see what happens.