Georgia Construction Aggregate Association Management Workshop February 17, 2009 Daniel M Harrington

2 AGENDA  Global Cement Industry  North American Cement Industry  North American / Georgia Key Statistics  Challenges and Solutions

Global Cement Industry

4 World Cement Consumption Source: US Geological Survey

5 World Production, 2006

6 World Cement Consumption Source: U.S.G.S., U.S. Census Bureau, International Cement Review, Statistics Canada.

7 World Cement Consumption Source: US Geological Survey

Scenario-Lower cement consumption across the globe

Scenario – Major Export & Import Regions

10 Major Trends in International Cement 2009  China is slowing down more than expected – Exportable surplus acc. To BNP is 60 Million tons  Global market has become a “Buyers’ market” again, after four years  FOB prices are declining around the world  More cement will hit mature markets with low freight costs and overcapacity  Africa and NAM will be threatened by low-cost cement imports  Surplus management will become a major issue

North American Cement Industry

12 Estimated Clinker Capacity (2002 – 2010)

13 North American Clinker Capacity (2008 Estimate) Source: 2007 PCA Labor Energy Input Survey Units: 000 Metric Tons

14 Capacity Expansion Thousand Metric Tons Stated U.S. Capacity Expansions Stated Southeast Capacity Expansions Share of U.S. Expansions 2008: 0.0% 2009: 0.0% 2010: 42.9% 2011: 61.7% Source: PCA

15 Portland Cement Consumption (MMT) Source: PCA

16 Cement Consumption Source: PCA

17 Cement and Clinker Imports (MMT) Source: PCA

18 Cement & Clinker Imports by Census District Source: PCA

19 Cement Intensity Ratio (000 Tons per $ Billion Constructing Source: PCA

North American / Georgia Key Statistics

21 U.S.A. Total Construction (Billions 000$)

22 Projected Peak-to-Trough Decline Single Family Permits ME RI MA VT NH AL GA SC TN FL MS LA TX OK NM KS MN IA MO AR WY CO ND SD NE WA ID MT OR NV UT AZ CA WI IL IN MI OH KY WV VA NC MD DE PA NY CT NJ HI 0% to -51% -52% to -61% -62% to -75% -76% > Projected Peak-to-Trough Decline Single Family Permits Source: PCA

23 Deficit Share of Total Expenditures State Fiscal Health ME RI MA VT NH AL GA SC TN FL MS LA TXTX OK NM KS MN IA MO AR WY CO ND SD NE WA ID MT OR NV UT AZ CA WI IL IN MI OH KY WV VA NC MD DE PA NY CT NJ AK HI No Shortfall Source: PCA 0% to 1% 1.1% to 3.6% 3.7% + State Fiscal Health Deficit Share of Total Expenditures Source: PCA

24 As of October, 2008 States in Recession ME RI MA VT NH AL GA SC TN FL MS LA TX OK NM KS MN IA MO AR WY CO ND SD NE WA ID MT OR NV UT AZ CA WI IL IN MI OH KY WV VA NC MD DE PA NY CT NJ AK HI Recession At Risk Growing Source: PCA States in Recession Source PCA

25 ME RI MA VT NH AL GA SC TN FL MS LA TX OK NM KS MN IA MO AR WY CO ND SD NE WA ID MT OR NV UT AZ CA WI IL IN MI OH KY WV VA NC MD DE PA NY CT NJ HI No Deficit 0-10% 11%-15% 16% Fiscal Deficits Deficit % Share of Total Expenditures Source: PCA/Census

26 FISCAL HEALTH - GEORGIA Surplus/Deficit Index, 2005=100 Surplus Deficit Source: PCA

27 Georgia Construction Permits Units Source: PCA

28 Georgia Housing Permits Units Source: PCA

29 Public Residential Nonresidential Cement 2005 Cement Composition - Southeast Source: PCA

Cement Consumption Source: PCA

Challenges and Solutions

32 Challenges and Solutions  We’re in a recession and the local governments have no money  Economy recovery plan

33

34 Portland Cement Consumption Peak (2005)-to-Trough (2009) Decline: 40 MMT (Worst in History) (On a Percentage Basis: -32%) Declines Continue Through Source: PCA

35 Construction Turning Points – U.S = 100 Source: PCA

36 Portland Cement Consumption Declines Continue Through Peak (2005)-to-Trough (2009) Decline: 40 MMT (Worst in History) (On a Percentage Basis: -32%)

37 Cement Consumption: U.S. Long Term Million Metric Tons Source: PCA

No Stimulus95.6 MMT81.1 MMT74.7 MMT79.4 MMT - Percent Change-13.2%-15.1%-8.0%+6.3% With Stimulus95.6 MMT87.4 MMT92.1MMT97.4 MMT - Percent Change-13.2%-8.6%+5.3%+5.8 Stimulus Impact MMT+17.4 MMT+18.0 MMT - Percent Increase %+23.3%+22.6% Stimulus Impacts Source: PCA

39 Cement Consumption – Georgia (000) Metric Tons Source: PCA

40 Challenges and Solutions  Industry has downsized, consolidated and globalization will continue to occur  Federations of associations  Regulatory concerns will intensify (whether water, air, or solid)  Manufacturing and engineering solutions to environmental needs

41 Labor Resources Employee Hours per 000 Tons Produced (US & Canada Source: PCA

42 Energy Resources Million BTUs per 000 Tons Produced Source: PCA US & Canadian Labor –Energy input survey

43 Challenges and Solutions  The Greening of America  Sustainability / Environmentally friendly issues will rise  Promotion  New products into old markets and Old products into new markets

44 Competitive Opportunity? Producer Price Index, 2003 =100

45 More Solutions  Political Action – Grass roots  Embrace the “Green Opportunities”  Stakeholders  Employees  “Pull through” marketing  Cost Leadership

46 New Cement Based (Aggregate) Products Gaining Popularity in Southeast

47 Roller Compacted Concrete - RCC

48 Cement Treated Agg Base Construction

49 Inverted Base Construction Asphaltic Concrete Paving For Protection of GAB Layer Graded Aggregate Base Cement Treated Agg Base Subgrade 2008 Georgia

50 Pervious Concrete holds up and cools runoff When used as a Stormwater system in GA, needs an Aggregate recharge bed 6-12” Typically 6” pervious in parking areas High density ABG pavers/Pug mill opportunity Pervious Concrete Pavement “Green Movement”

Cobb Co Airport – 7 “ Concrete Overlay (vs 5” asphalt) Concrete Overlays

52 Currently SE – 6 active RCC contractors (TN, GA, SC,AL) Add at least two more for CTAB Plus public agencies performing Tests: GDOT, TDOT, & the city of Chattanooga Steady Increase in Projects for 5 Years