We promise to grow to our core
business by demonstrating the
Taiheiyo Cement Group's synergy
in the U.S. market, where large
scale and high growth coexist.
Managing Executive Officer and Deputy General Manager
of the International Business Division
President of TAIHEIYO CEMENT U.S.A.,Inc.
Tsuyoshi Hara
From the medium-term perspective, the U.S. cement market has lots of topics that should stimulate its demand, such as the chronic shortage of new housing, the Infrastructure Investment and Jobs Act, and the 2028 Los Angeles Olympics. It is also an extremely attractive market in the long term.
Due to its nature, it is not easy for the cement industry to create new demand by itself, for example through the introduction of innovative technologies or products, etc., so, in the long term, the economic power of the country or region itself is a major factor in determining demand. Therefore, there is a strong correlation between U.S. real GDP and cement demand.
Based on this premise, the characteristics and attractiveness of the U.S. economy from the perspective of the cement industry can be summarized as "a combination of the attributes of an industrialized country (large scale), a country continuing to develop (high growth), and a resource-rich country (stability)." Growth, growth arising from change in particular, is attractive. While everyone anticipated a decline in cement demand under the spread of COVID-19, "changes" such as the increase in e-commerce logistics bases and housing demand due to the rapid expansion of teleworking pushed up demand, thus enabling growth after 2020.
Also, being a "resource-rich country and a self-contained economy (the ratio of exports and imports to GDP is relatively low)" is important, and even during the soaring coal prices after 2021, our U.S. business was not significantly affected and was able to generate stable profits.
Furthermore, looking at the U.S. cement market situation, supply is falling short of demand, and the shortfall is being met by imports. Therefore, as described later, the attractiveness of the U.S. market lies in the fact that our international supply network and the value chain of our U.S. business can create synergy.
| Characteristics and attractiveness of the U.S. economy | Impact on the cement industry | |
| Huge economic scale and high growth rate | Accounting for more than 1/4 of the world's GDP Continued growth exceeding the global average | Continued high demand and high growth in demand |
| Huge population size and high growth rate | 3rd in the world, 30% increase in 30 years | Creation of housing-related demand |
| Growth through embracement of changes | Growth rising from changes in economic structure | Creation of new demand through scrap and build |
| Self-contained economy | Low ratio of exports and imports to GDP | Small impact from geopolitical risks |
We are developing a "general building materials business from upstream to downstream" in the U.S. through the CalPortland Company (hereinafter referred to as CPC). The business area covers the entire West Coast, and we have been developing and expanding cement, aggregate and ready-mixed concrete businesses, mainly with cement plants in the Southwest region - California, Arizona and Nevada State, and import cement terminals in the Northwest region - Washington and Oregon State. Operating income for the fiscal year ending March 2025 is expected to account for about 50% of our consolidated operating income.
We plan to actively expand our business while optimizing our business portfolio in consideration of the combination of regions and products.
The source of our strengths in our U.S. business lie in providing high-quality products and services along with the strong customer base, business development of a wide range of large scale and optimal cement plant and terminal locations built through M&A, etc., and our Group's capabilities.
Wide-ranging, large-scale, and optimal business development
- In the U.S., cement is mainly delivered at the shipping location. Users tend to prefer to pick up their orders at plants or terminals near the demand area, taking into account transportation costs and, especially in recent years, securing human resources, which creates our strength.
- Risk diversification - stable Northwest, high-growth Southwest - is also our major strength.
- We have built a stable and highly profitable model by developing a ready-mixed concrete business in areas where we have cement shipping bases.
- The U.S. has only gone without protectionist trade measures for about a third of the past 100 years and is traditionally a country with strong protectionist tendencies. Having a production base in the country has great value in enabling stable business continuity over the long term.
The Taiheiyo Cement Group's strength
- CPC has achieved high operation ratios and cost reductions at cement plants through collaboration with the Taiheiyo Cement Production Department and Maintenance & Engineering Department, etc.
- CPC has high technological development capabilities through collaboration with the Taiheiyo Cement Central Research Laboratory, etc., and are accelerating initiatives such as towards achieving carbon neutrality (CN).
- CPC has built a strong supply chain by stably importing highquality cement through the Group's overseas network.
Aiming for our Future Vision of "enhancing corporate value to become a well-known company throughout the U.S. by 2050," we will work on the 26 Medium-Term Management Plan as follows.
Promotion of blended cement and expansion of cementitious materials business (CN initiatives)
- The use of blended cement, low carbon product, is rapidly spreading in the U.S. Both Taiheiyo Cement's and CPC's central research laboratories will collaborate to develop the next generation of even lower-carbon blended cements to prepare for further increases in demand. In addition, we will also collaborate on the development of innovative technologies towards achieving carbon neutrality.
●Trends in demand for blended cement (mainly limestone cement) in the U.S.2021 2022 2023 January-
May 2024Five states on the West Coast 3.0% 2.5% 12.7% 17.9% Nationwide 5.6% 23.7% 50.2% 54.7% - On the other hand, one of the challenges for our U.S. business is the difficulty in procuring cementitious materials such as slag and fly ash in the West Coast region. We will make the compatibility of CN and profit expansion a growth strategy and utilize our overseas network to procure cementitious materials and work on business expansion. We will expand import terminals for that purpose.
- We will also introduce the business know-how of utilizing cementitious materials gained in the U.S. to Japan and Southeast Asia.
Business area expansion
- Through M&A, etc., we aim to expand the cement business regionally and expand the highly profitable aggregate and ready-mixed concrete businesses.
Supply chain strengthening
- We will realize high-quality and stable cement imports from Semen Indonesia Group and Nghi Son Cement (Vietnam).
Establishment of CPC University (tentative name)
- Aiming to strengthen human capital, we will proceed with the establishment of CPC College (tentative name) within the current CPC Central Research Laboratory. With lecturers from the company, we will not only conduct in-house training, but also plan to demonstrate the appeal and attractiveness of the cement industry and measures for CN through open lectures, etc., and work to improve the recognition of the entire industry. The college is scheduled to open in the second half of 2025, and we also aim to incorporate it into the curriculum of general universities in the future.
