Cycling with Cement

CYCLING WITH CEMENT "THE WHEEL IS COME FULL CIRCLE" Shakespeare's King Lear Act V, Scene 3, Line 176 The time clock of the cement industry has been turned back to the early 1950s. After the trials and tribulations of the decade of the Sixties, the hands now stand where they did just over twenty years ago. Cement shipments have steadily increased, with a record 419 million barrel level (78.8 million tons) being reached last year. Plants are operating at average utilization rates in excess of 85 percent of rated capacity. The spread between supply and demand has narrowed to where a definite shortage of cement now exists within the industry. The notable and unfortunate difference between the two periods however is that, back then, cement's returns were a respectable 14 to 18 percent, whereas today they stand at less than half those levels. Insufficient return forms the present foundation of the U.S. cement industry. This lack is destined to have a cumulative effect. Just as the industry's balance between supply and demand is returning to favorable proportions, promising a period that has historically and now should generate those profit levels required to modernize and provide for capacity addition, cement instead finds itself frozen by federal price controls into the semi-depressed condition that has existed for over a decade and from which it was just starting to emerge. Capital is not attracted to continued low returns, and increasingly restrictive pollution control measures are necessitating great non-productive expenditures be made as definite costs to stay in business. Even a clouded crystal ball would reveal that additional cement plant closings can be expected.