Two symbolic developments this past month spotlight heavy building materials' wide-ranging contributions: to urbanization across the world as well as the portfolio of an operator in the business for the long haul.
In a "Have You Hugged a Concrete Pillar Today?" blog post, Microsoft founder Bill Gates took stock of Making the Modern World: Materials and Dematerialization, the latest work from his favorite author, historian Vaclav Smil: "He argues that the most important man-made material is concrete, both in terms of the amount we produce each year and the total mass we've laid down."
"Concrete is the foundation (literally) for the massive expansion of urban areas of the past several decades, which has been a big factor in cutting the rate of extreme poverty in half since 1990. In 1950, the world made roughly as much steel as cement (a key ingredient in concrete); by 2010, steel production had grown by a factor of 8, but cement had gone up by a factor of 25," wrote Gates, who opened his post referencing the 15,000 tons of concrete that support the four miles of surface streets between his home and office.
The post-war cement and steel consumption contrast set the stage for a second symbolic development for cement and concrete interests. S&P Dow Jones switched indices for two New York Stock Exchange-traded companies: Martin Marietta Materials Inc. shifting from the MidCap 400 to the S&P 500, replacing a former contemporary in cement production, United States Steel Corp. Through at least the mid-1960s, Martin Marietta was a top 10 powder producer, with nine plants and nearly 5 million tons' capacity. U.S. Steel's Universal Atlas business maintained a top five position, running 10 plants with 5 million-plus tons' capacity. Much more recently, U.S. Steel exited a partnership in northern Michigan's massive Presque Isle Quarry-now one of Lafarge North America's prized assets.
The S&P Dow Jones index transitions reflect current market capitalization levels representative of the S&P 500 and MidCap 400, respectively: Martin Marietta, $8.75 billion, following the Texas Industries, Inc. merger; U.S. Steel, $3.8 billion. After its shares are exchanged for newly issued Martin Marietta stock, TXI will be removed from the S&P SmallCap 600, and exit the New York Stock Exchange after 50 years.
The shuffling tells a tale of two industries where foreign-based operators have established major North American footholds. One has battled overcapacity and imports for at least three decades, the other has resolved smaller scale skirmishes over imports and dumping claims, and weathered cycles where plant utilization dropped to 50 percent or less. In Senate Committee on Finance testimony late last month, U.S. Steel CEO Mario Longhi weighed in on global market conditions that have taken a heavy toll on one the 20th century's industrial icons: "The approach and manner in which foreign companies are dumping thousands of tons of products into the U.S. market leads business leaders such as me to conclude that American steel companies are being targeted for elimination."
Martin Marietta counterpart, Ward Nye, has returned his company to the cement business via TXI, whose principal assets are Hunters and Midlothian, Texas, and Oro Grande, Calif., mills-combining for 6 million tons' capacity. On its home turf especially, TXI enjoys a vertically integrated cement, aggregate and ready mixed concrete business model a domestic steel producer could only dream of. Through solid management and an evolving portfolio of secure assets in strong markets, Martin Marietta has emerged as a U.S. heavy building materials bellwether equal to the S&P 500 and leadership in a mature, but hardly low-tech, business of which Bill Gates has taken note.