1. Ed Sullivan, Chief Economist PCA
Cement Outlook: 2009
Ed Sullivan, Chief Economist PCA

2. Introduction: Overview
Economic fundamentals are deteriorating quickly.
Outlook shaped by policy actions.
Details and size of the stimulus plan are fluid and still subject to considerable change….adds risk to PCA projections.

3. Net Job Creation (Loss) - Annual Change, Thousand Net Jobs=
Job Loss 2009 = 4.1 Million
Job Loss 2010 = 1.8 Million
Unemployment Peaks at 10.5% Early-2010

4. Economic Policy Actions

5. No Stimulus Job Loss Estimates
Million Jobs
2008
Obama Economists
PCA

6. Introduction: The Need for Stimulus
Obama’s $775 billion plan may not be enough.
Obama economists expect an additional 2.8 million jobs lost. And plan aimed at creating /saving 3.7 million jobs.
PCA estimates that 8.5 million jobs may need to be created/saved.
Stimulus plan required = $1.2 trillion.
House Appropriations = $825 billion – size of stimulus increasing in recognition of greater economic adversity.
More increases required… but …taxpayer backlash may hinder size and hence economic outcomes.

7. “Stimulus Timeline Phase I Phase II Phase III 2011 2009 2010
Policy Tool
Objective
2009
2010
2011
Job Saving
Job Creating
Tax Cuts, Entitlement Spending, State Aid
Stabilize Economy, halt adverse momentum
Phase I
Shovel Ready Projects
Job Creation
Phase II
Job Creation, Address Structural Economic Issues
Long Term Investments
Phase III

8. Economic Growth Outlook
Percent Change, GDP Growth Rate
Recession Scenario: With Stimulus
Recession Scenario: No Stimulus

9. Stimulus: GDP Impacts 2009-2010 2009-2010
Change in GDP From No Stimulus Scenario
Obama Economists
PCA
GDP 4th Q 2010:
$12.2 Trillion
GDP 4th Q 2010:
$11.6 Trillion
Note: Stimulus in PCA Outlook Overlaid upon weaker Fundamentals.

10. Stimulus: Job Creation Estimates
Million Jobs
Obama Economists
PCA
Unemployment: 8.8%
Unemployment: 7.0%
Job Estimates have large impacts on Cement/Concrete recovery assessments.

11. “Shovel Ready” Timeline
Jan
Feb
March
April
May
June
July
August
House Bill
Obama Inaugurated
Job Creation May Come Later Than Many Expect
Senate Passes & Bill Signed
Federal Paperwork
State Paperwork
Bid Letting
Bid Review
Contractor Paperwork
Construction Begins

12. Stimulus: Infrastructure Job Creation Estimates
Percent Job Premium Compared to A Resurfacing
Reconstruction, Capacity
New Bridge
New Route
Major Widening
Bridge Replacement
Concrete Intensive Projects Create More Jobs Than Resurfacing

13. Portland Cement Outlook Thousand Metric Tons
Projections With Stimulus
Projections Without Stimulus =

14. Stimulus Payback in context of Global Recovery
Beyond the Crisis
Stimulus Payback in context of Global Recovery

15. Introduction: Overview
Cyclical correction is temporary.

16. Payback & New Realities
Stimulus Initiatives:
$700 billion financial bailout.
$800 billion fiscal spending/tax cuts.
Tax increases & higher long term interest rates are likely outcomes during 2012 and beyond.
Global recovery implies increases in oil prices.
EIA expects oil prices to reach $126 per barrel by 2013.
Green is coming!

17. Cement Consumption: Long Term
Million Metric Tons

18. Single Family Housing– United States
000 Starts
Pent-Up Demand
= Housing Peaked January 2006
2007: -29% : -37% : 0.0% :+34%
Interest Rates low, Decline in Home Price, Job Recovery Translate into Improved Affordability
Excess Inventories Worked Off

19. Per Home, Lifetime C02 Savings ICF Home Over Frame
Co2 Metric Tons, Per Home
Total Heating & Cooling C02 Saving: 92 Tons per Home
Additional C02 Emitted by Cement Production
Conservatively Assumes 50 Year Life of Home

20. Potential “Green” Gains: ICF & Related Systems
Incremental Gains in Cement Consumption, Metric Tons
30%
25%
20%
10% of Total Housing Starts
2030: Housing Starts Average 1.9 Million Annually. ICF & Related Systems Reach 30% Market Share

21. Highway Lane Miles Thousands of Miles
Just to Maintain Current Highway Congestion Levels, Federally Aided Highways Must Expand Nearly 25% by Given 49 Million Additional Licensed Drivers.

22. Gasoline - Asphalt Margin Per Barrel Differential - Net Threshold of $14 Per Barrel Price Differential Per Barrel
Threshold Differential = $14 per barrel Estimated on a Ten Year Payoff for Coker Investment

23. Announced New Coker Installations Cumulative: Thousands of Barrels Per Day

24. Liquid Asphalt Supply Thousands of Barrels
44 Million Barrel Decline by 2011

25. Concrete Advantages Materialize in Fiscal 2009
Projected: Life Cycle Concrete Vs Asphalt Paving Costs Per Two Lane Road Mile - Urban
Asphalt
Concrete
Concrete Advantages Materialize in Fiscal 2009

26. Ed Sullivan, Chief Economist PCA
Cement Outlook: 2009
Ed Sullivan, Chief Economist PCA