1. Connect With Concrete Cement Outlook: 2009-2013 Ed Sullivan, Chief Economist PCA PCA Committee Meetings Summer 2009

2. Connect With Concrete Introduction: Overview  Economic fundamentals are improving.  Conditions remain weak.  Recovery will be gradual  Strong-Moderate Growth still a year away.  Private Sector no longer drives demand  Residential & Nonresidential recoveries are not expected to materialize anytime soon.  Outlook shaped by policy actions.  ARRA reveals bureucratic delays  Tilts impact even more so to 2010-2011

3. Connect With Concrete Portland Cement Consumption Thousand Metric Tons - 50 MMT

4. Connect With Concrete Capacity Expansion: Delays Thousand Metric Tons Stated Capacity Expansions: Fall 2008 Stated Capacity Expansions: Spring 2009

5. Connect With Concrete Introduction: Conclusions  Stimulus will provide some relief….  …but hardship facing the industry will not be avoided…  Further plant actions may materialize in the context of market imbalances.

6. Connect With Concrete Economic Outlook Introduction

7. Connect With Concrete Sub-Prime Financial Crisis Energy Labor Markets 2006 2008 2007 2009 2010 State Deficits Economic Adversity Abates Mid-2010

8. Connect With Concrete Job Recovery: Past Recessions - Change, Thousands of Jobs 1980-1982 Recession 2000-2001 Recession 1990-1991 Recession Current Recession

9. Connect With Concrete Bank Charge-Offs versus Unemployment Rate - % Loans Charged-Off, % Unemployed 10

10. Connect With Concrete Economic Outlook: Consumers Sustainable, strong consumer spending growth will not materialize until labor markets recover. Job losses and high unemployment rates depress income growth. Bank write-downs continue, delays an easing in Lending Standards Consumer sentiment is improving from record low levels. Consumer Spending is now saving.  Economic and pychological reasons.  Parodox of Thrift

11. Connect With Concrete Economic Outlook: Investment Declines in Residential softening  Becomes a neutral contributor to growth near term Low expected ROI hinders recovery in business investment. Access to credit remains an issue. Business Investment likely to be a significant drag on economic growth for another year. Inventories will add strength….but probably less than many think

12. Connect With Concrete Inventory-to-Sales Ratio - Total Betting on Inventory Accumulation to Spur Near Term Growth May Be Premature.

13. Connect With Concrete “Stimulus Timeline Tax Cuts, Entitlement Spending, State Aid Phase I Stabilize Economy, halt adverse momentum 2009 2011 2010 Phase II Phase III Shovel Ready Projects Long Term Investments Policy Tool Objective Job Saving Job Creating Job Creation Job Creation, Address Structural Economic Issues Bureaucratic Delays have Diminished the Potential Stimulatory Impact of ARRA

14. Connect With Concrete Economic Growth Outlook Percent Change, GDP Growth Rate

15. Connect With Concrete Residential Outlook Take-off in mid-2010

16. Connect With Concrete New Home Sales Outlook - Number of Homes, SAAR Forecast

17. Connect With Concrete New Home Inventory Outlook - Months Supply Forecast

18. Connect With Concrete Nonresidential Outlook Dramatic Declines Ahead, Recovery Begins in late-2011

19. Connect With Concrete Public Outlook ARRA Impact Delayed

20. Connect With Concrete Discretionary State & Local Highway/Street Spending - Millions of Real $ (estimated) Job Losses Generate Deficits –Pushing Discretionary Spending Down State Discretionary Highway Spending Will Act as a Powerful Drag on Total Highway Construction Activity in 2009-2010

21. Connect With Concrete “Shovel Ready” Timeline House Bill Senate Passes & Bill Signed Obama Inaugurated Federal Paperwork State Paperwork Jan March Feb April May Bid Letting June JulyAugust Bid Review Contractor Paperwork Construction Begins

22. Connect With Concrete ARRA – Weekly Highway Outlays - Dollars Only 2.5% of All ARRA Highway Dollars have been spent through July. 40% of this spending has occurred during the last two weeks of July

23. Connect With Concrete ARRA – Weekly Highway Construction Spending - Dollars (Trend – No Seasonal Consideration) History Forecast

24. Connect With Concrete ARRA – Weekly Highway Construction Spending - Dollars (Trend – No Seasonal Consideration) History Forecast

25. Connect With Concrete 2004-2009 SAFETEA-LU: Composition of Work

26. Connect With Concrete 2012 New Highway Bill: Composition of Work

27. Connect With Concrete After the Economic Crisis Medium Term Outlook

28. Connect With Concrete After the Crisis  Stimulus spending must be paid for…resulting in higher interest rates, higher taxes and potentially higher inflation….  …and…American consumer..the engine of US economic growth may show significantly different spending patterns…  …combining for the potential of slower longer term economic growth (50 basis points).

29. Connect With Concrete After the Crisis  Slow Sustained Recovery (Baseline) = 45%  Early Double Dip = 30%  Late Double Dip = 25%

30. Connect With Concrete Units Housing Permits Pent-Up Demand

31. Connect With Concrete Projected: Initial Bid Concrete Vs Asphalt Paving Costs Per Two Lane Road Mile - Urban Concrete Asphalt Parity Achieved in Fiscal 2009

32. Connect With Concrete Portland Cement Consumption Thousand Metric Tons 2009-2014: +43 MMT

33. Connect With Concrete Regulatory Impacts Most Significant Threat To Domestic Cement Production in History

34. Connect With Concrete Economic Growth, Policy Initiatives, Regulations  Population & Demographic Drivers  Add 60 million more persons by 2030  Add 50 million more drivers  Schools, Residential, Retail, Hospitals  Energy independence  Renewable energy  Wind, Hydro, Nuclear CO2 Reduction  Road congestion  Residential – ICF Homes  Nonresidential Manufacturing Base Erosion  Import Dependence, Port Infrastructure Concrete Plays A Critical Role in Achieving Broad National Economic & Environmental Policy Objectives

35. Connect With Concrete Economic Growth, Policy Initiatives, Regulations  How Do you Reconcile These Issues with Regulatory Reform? NESHAP Emissions Climate Change Leads to Dependence on Foreign Sourcing  Policy Inititiatives Captive to International Conditions

36. Connect With Concrete U.S. Supply Balance: No New Capacity Expansion Plans Million Metric Tons Cement Consumption Supply Gap: 25 MMT Cement Production

37. Connect With Concrete U.S. Supply Balance: EPA Mercury Impacts Million Metric Tons Cement Consumption Imports: 47 MMT Cement Production EPA: Hg Impact

38. Connect With Concrete U.S. Supply Balance: Mercury & Climate Change Million Metric Tons Cement Consumption Imports:60 MMT Cement Production

39. Connect With Concrete Cement Outlook: 2009-2013 Ed Sullivan, Chief Economist PCA PCA Committee Meetings Summer 2009