By Michael Mcsweeney
A Sustainable Industry - The case for a fair and equitable competitive environment
By Michael Mcsweeney
Concrete is ubiquitous in the modern world. Globally, about three tons
of concrete per year is produced for every man, woman and child on this
Concrete is ubiquitous in the modern world. Globally, about three tons of concrete per year is produced for every man, woman and child on this earth. Only water is used in greater volume. That makes cement the active ingredient that binds water, sand and gravel together to make concrete an essential commodity.
Cement manufacturing is capital intensive – a new cement plant can cost between a half billion and a billion dollars and requires a long-term investment horizon. When cement manufacturers choose to build a plant, they do so knowing that this plant will be in service for some 100 years and that ongoing significant investments will be needed through the years to finance maintenance and process improvements, product innovation as well as other priorities such as maximizing operating efficiency and reducing greenhouse gases.
The Canadian industry is typical in this regard. The first cement plants in Canada appeared near the turn of the century. Today, Canada boasts 16 cement plants across the country and about 20 per cent of total capacity is located in Quebec. While Canada’s cement industry is well over a century old, its plants are among the most modern and efficient in the world. This commitment to continuous technology and process improvements continues today, with energy efficiency and GHG mitigation being the focus of substantive R&D and capital investments. One recent and notable achievement is the introduction three years ago of a new lower carbon cement called Contempra to the Canadian market. Referenced in the National Building Code under the name of Portland-limestone cement, Contempra reduces CO2 emissions by 10-12 per cent, while producing concrete with an equivalent level of strength and durability to concrete produced with regular Portland cement.
Canadian cement manufacturers have continued to forge ahead with such investments in the service of innovation despite being affected by the global economic crisis of 2008 and the still relatively slow economic recovery at home and in the United States, our main export market. We recognize that doing so is central to the long-term competitiveness and sustainability of the industry as a whole.
This also explains the industry’s commitment to working with government to achieve regulations and decisions that provide a fair and equitable competitive environment.
Government decisions that do not take this into consideration can have unfortunate, unintended consequences.
An example is the recent decision by the government of Quebec to provide financial support of nearly half a billion dollars to a new cement plant project in the Gaspé region proposed by a company with no history in the cement industry. Further, it appears the government of Quebec will exempt this extensive development from the scrutiny of the province’s rigorous environmental analysis and consultation process (BAPE). This not only distorts the level playing field of competition in the province’s cement industry, it also comes at a time when the cement market in Quebec and the Northeastern United States is saturated. Quebec’s four cement producers are operating at just 60% of their production capacity, with 30% of their output being exported to the Northeastern U.S. – precisely the market for which the new plant’s production is intended. In fact, an independent economic forecast shows that the Northeastern U.S. market is unable to absorb additional cement production, and it will remain that way for the foreseeable future. Instead of creating new business opportunities and new jobs, the massive government subsidy will likely simply displace employment from one region of the province to another.
Quebec, like the rest of Canada, has enjoyed the benefits of a strong, competitive, progressive and self-reliant cement market for decades. Government intervention risks disrupting this healthy dynamic, displacing private capital and jobs while putting public dollars needlessly at risk.
Michael Mcsweeney, President and CEO, Cement Association of Canada