Cement, Concrete and Construction Material
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Industry Overview
The US cement, concrete, and construction material industry has annual revenue of about $50 billion. Major companies include Martin Marietta Materials and Vulcan Materials, as well as the US operations of foreign companies such as CRH (Ireland), LaFarge (France), Holcim (Switzerland), Cemex (Mexico), and FCC (Spain). Foreign companies own a majority of US cement capacity. The industry includes about 110 cement manufacturers, nearly 2,000 local sand and gravel quarrying companies, and more than 2,500 ready-mix concrete operators. About 800 companies make concrete pipes, bricks, and blocks; 500 produce asphalt, and 200 make gypsum products.
Competitive Landscape
Demand is determined by construction rates for public infrastructure, as well as for housing and nonresidential buildings. The profitability of individual companies is strongly dependent on efficient operations, as products are commodities and companies compete chiefly on price. Large companies enjoy economies of scale in purchasing and the ability to invest in technologies that improve efficiency. Small manufacturers can compete through superior customer service and by serving small or rural markets.
Products, Operations & Technology
Cement and other mineral construction materials are used mainly to construct buildings, roads, bridges, sewers, and other types of infrastructure. Because of the limited processing required to produce these materials, most companies that mine the raw material also make and distribute the finished product. Raw materials, like sand, gravel, shale, gypsum, and limestone, are quarried from open pits or mined in capital-intensive operations using drills, explosives, and heavy machinery. Kilns for making cement and plaster are fired with oil, gas, or coal dust; increased energy and transport costs of up to 30 percent in recent years have affected profit margins for some cement manufacturers.
Cement is made from limestone that is crushed, finely ground, mixed with clays, and heated to nearly 3,000 degrees in large rotary kilns. The heat-treated material, called "clinker," is ground to powder and mixed with a small amount of gypsum. Cement of various qualities can be made by adding other ingredients. The most common type of cement produced is called portland cement.
Concrete is made by mixing cement with sand and rock (called "aggregate"), and water. The proportions of these ingredients, and the types of aggregate, determine the concrete's physical characteristics. Concrete begins to set within a few hours after being mixed, although total curing takes many days. Cement is often sold to "ready-mix" operators who custom-mix and deliver batches of liquid concrete to construction sites, but some cement manufacturers make their own ready-mix concrete.
Bricks are made from shale rock that is crushed, mixed with various additives for color and other characteristics, and fired in kilns at 2,000 degrees. Gypsum is quarried, crushed, and heated in rotary kilns to form plaster, which is mixed with water and other additives and sandwiched between layers of paperboard to make gypsum board. Asphalt is made by mixing bitumen, a waste product of crude oil refining, with crushed stone ("aggregate").
