Transcript Welcome to Carter - Portland Cement Association

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Cement Outlook: 2009
Ed Sullivan, Chief Economist PCA
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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.
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Net Job Creation (Loss)
- Annual Change, Thousand Net Jobs
4,000
3,000
2,000
1,000
0
1999
2001
2003
2005
2007
2009
-1,000
-2,000
-3,000
-4,000
Job Loss 2009 = 4.1 Million
-5,000
Job Loss 2010 = 1.8 Million
Unemployment Peaks at 10.5% Early-2010
2011
2013
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Economic Policy Actions
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No Stimulus Job Loss Estimates
Million Jobs
2008
2009-2010
2009-2010
Obama
Economists
PCA
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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.
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“Stimulus Timeline
Policy Tool
Objective
2009
Job Saving
Phase I
Phase II
Phase III
Tax Cuts,
Entitlement
Spending,
State Aid
Shovel
Ready
Projects
Long Term
Investments
Stabilize
Economy,
halt adverse
momentum
Job
Creation
Job
Creation,
Address
Structural
Economic
Issues
2010
2011
Job Creating
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Economic Growth Outlook
Percent Change, GDP Growth Rate
Recession
Scenario: With
Stimulus
Recession Scenario:
No Stimulus
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Change in
GDP From No
Stimulus
Scenario
Stimulus: GDP Impacts
Obama
Economists
PCA
2009-2010
2009-2010
GDP 4th Q 2010:
$12.2 Trillion
GDP 4th Q 2010:
$11.6 Trillion
Note: Stimulus in PCA Outlook Overlaid upon
weaker Fundamentals.
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Stimulus: Job Creation Estimates
Million Jobs
Obama
Economists
PCA
2009-2010
2009-2010
Unemployment:
7.0%
Unemployment:
8.8%
Job Estimates have large impacts on
Cement/Concrete recovery assessments.
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“Shovel Ready” Timeline
Jan
Feb
March April
May
June
July
August
House Bill
Obama
Inaugurated
Senate
Passes &
Bill Signed
Federal
Paperwork
State
Paperwork
Bid Letting
Bid Review
Contractor
Paperwork
Construction
Begins
Job Creation May
Come Later Than
Many Expect
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Stimulus: Infrastructure Job Creation Estimates
Percent Job Premium
Compared to A
Resurfacing
Reconstruction,
Capacity
New Bridge
Major Widening
New Route
Bridge
Replacement
Concrete Intensive Projects Create More Jobs Than Resurfacing
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Portland Cement Outlook
Thousand Metric Tons
Projections With
Stimulus
Projections
Without Stimulus
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Beyond the Crisis
Stimulus Payback in context of Global Recovery
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Introduction: Overview
 Cyclical correction is temporary.
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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!
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Cement Consumption: Long Term
Million Metric Tons
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Single Family Housing– United States
000 Starts
Pent-Up Demand
Interest Rates low, Decline in Home Price, Job
Recovery Translate into Improved Affordability
Excess Inventories Worked Off
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Per Home, Lifetime C02 Savings ICF Home Over Frame
Co2 Metric Tons, Per Home
100
90
Total Heating & Cooling C02
Saving: 92 Tons per Home
80
70
60
50
40
Additional C02 Emitted
by Cement Production
30
20
10
0
2007
2012
2017
2022
2027
2032
2037
2042
2047
Conservatively Assumes 50 Year Life of Home
2052
2057
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Potential “Green” Gains: ICF & Related Systems
Incremental Gains in Cement Consumption, Metric Tons
9,000,000
30%
8,000,000
25%
7,000,000
6,000,000
20%
5,000,000
4,000,000
3,000,000
10% of Total
Housing Starts
2,000,000
1,000,000
0
2007
2012
2017
2022
2027
2030: Housing Starts Average 1.9 Million Annually. ICF & Related Systems Reach 30% Market Share
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Highway Lane Miles
Thousands of Miles
11,000,000
10,000,000
9,000,000
8,000,000
Just to Maintain Current Highway
7,000,000
Congestion
Levels, Federally Aided
Highways Must Expand Nearly 25%
by 2030 . Given 49 Million Additional
6,000,000
Licensed Drivers.
1996 2000 2004 2008 2012 2016 2020 2024 2028
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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
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Announced New Coker Installations
Cumulative: Thousands of Barrels Per Day
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Liquid Asphalt Supply
Thousands of Barrels
44 Million
Barrel Decline
by 2011
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Projected:
Life Cycle Concrete Vs Asphalt Paving Costs
Per Two Lane Road Mile - Urban
Asphalt
Concrete
Concrete Advantages Materialize in Fiscal 2009
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Cement Outlook: 2009
Ed Sullivan, Chief Economist PCA