Mr. Keith Jones

GLG News^SM Analyses by Keith Jones

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Construction Materials Industry Has a Long Road to Recovery

November 25, 2009

Analysis of:Falling aggregates and cement sales points to deeper recession | www.cnplus.co.uk

The United States construction materials industry has likely finally hit bottom, but the ride down has taken its toll. Industry players in cement, ready mix, aggregates, asphalt and contracting are operating at a fraction of their usual total capacity. Stimulus funds have not flowed fast enough to be of any true benefit this construction season and the majority of these funds will rollover into 2010. The upcoming seasonal lull will have a continued negative impact on revenues and profits.

Cemex Pricing Increase Overly Optimistic

September 3, 2008

Analysis of:Cemex Hikes Cement Prices By $25 Per Cubic Yard | www.aggregateresearch.com

Cemex announced an across-the-board $25/yard price increase for ready mixed concrete for all its operations in the U.S.  This increase is an overly simplistic plan for improving the profitability of the company in the U.S.  Cemex ignores the economics of supply and demand and the specific dynamics of each of its markets by attempting this overall increase. Even if one were to give Cemex credit for attempting to be the market leader in ready mix concrete, a price hike does nothing to change the existing market conditions in each market.  Demand will not increase in any given market nor will this price increase reduce demand.  The end result will be to drive existing Cemex customers to other ready mix producers that are competitors in each market.  These competitors will price ready mix, in actuality just a commodity, below Cemex to get the sale.  Consumers in the market are more driven by price than company loyalty.  This same price consciousness can also overcome customer service.

Multinational Cement Companies Continue Consolidation

September 3, 2008

Analysis of:Europe Slowdown Could Crumble Cement Makers | www.forbes.com

Acquisitions within the construction materials industry have continued in strong fashion, with multinational cement producers leading the way.  Bigger and bigger deals are being put together by the world's largest cement producers, both in the U.S. and abroad.  These producers are locked in a battle to become ever larger and diversified to keep pace with their competitors.   The U.S. is in a downward construction cycle, creating large reductions in tonnage volumes for most producers in the U.S., both domestic and foreign.  The lack of supply in many markets and the logistics of transporting these products have worked to maintain strong pricing increases.  These pricing increases have almost offset tonnage reductions to kept revenues and profits level or only slightly reduced. Whether these same conditions will carryover into other markets around the world are yet to be seen.  The reduction in share price of these public companies though will only fuel continued consolidation.