Higher costs and delays in obtaining basic construction materials are beginning to significantly affect Tucson's and Arizona's main economic engine: home building.
Cement shortage grows worse
Marana plant problem cuts supplies further, slows building, causes layoffs
By Joseph Barrios and Thomas Stauffer
ARIZONA DAILY STAR
11.20.2005
A long-standing shortage of cement turned much worse for Tucson's construction industry this month, leading to layoffs of workers and delays in projects.
The shortage hasn't been this bad since the 1970s, when some companies simply couldn't get cement, said Terry Carson, owner of Benchmark Concrete Co.
Cement is the main ingredient in concrete, an essential construction material that literally forms the foundation of new buildings, among other uses.
"Everybody's stressing on the deal," Carson said, because in construction "everything revolves around the concrete."
Carson said the shortage forced him to lay off six of his 48 workers. Other companies also foresee layoffs.
Among other projects, large and small, delayed by the shortage is the new Alvernon bridge across the Rillito River, intended to relieve congestion on North Swan Road and North Campbell Avenue.
Over the last few weeks, workers had begun pouring sections of the bridge, but now they have stopped because available supplies of concrete have been cut in half, said Brian Andrews, project manager for Ashton Construction.
In the meantime, some workers find themselves with less than 40 hours of work per week because there aren't enough supplies to work with.
"A lot of our people have been moved around to try and keep them busy," Andrews said. "If this keeps up, we'll have no choice but to stop and send people home."
Another victim of the shortage is Richard Marschner, a buyer of a house at Franklin Court, a new development Downtown at West Franklin Street and North Court Avenue.
Builder Michael Keith originally installed a concrete sidewalk to Marschner's garage, but the slope was a bit severe, so Keith agreed to redo it, Marschner said.
Workers removed the existing sidewalk to make room for the new one, Marschner said. But "the concrete never showed up," he said. "It's just dirt."
The "pour" of Marschner's sidewalk is now scheduled for Nov. 29, about a month late.
Said Carson, of Benchmark Concrete: "I've been having conversations with my customers and telling them, 'If you miss a scheduled pour date, then it's going to be weeks before we can get back to pour it.' Right now, I'm scheduling into January."
The problem comes after the price of cement had already more than doubled from March 2002 to March 2005, from $200 per cubic yard to $450.
"Costs have risen dramatically over the last year," said Tommy Roof, president of T.L. Roof & Associates Construction Co.
That's contributed to the higher prices customers are paying for new homes, analysts have said.
Kiln shut down
The immediate cause of the shortage was the Nov. 1 shutdown of the main kiln at Arizona Portland Cement in Marana. The brick lining of the kiln, a 150-foot-long rotating oven that bakes raw materials to turn them into cement, had to be replaced, said Craig Starkey, senior vice president for the company.
That kiln returned to production just two days later.
But the damage was already done, creating a backlog that will likely last for weeks, Carson said.
Arizona Portland Cement, 11115 N. Casa Grande Highway, is the supplier of cement for most of the concrete used in Tucson-area construction. It is also one of two facilities in Arizona that together produce most of the cement used in the state. The other is near Clarkdale in Northern Arizona.
Supplies are supplemented by shipments from California and Mexico.
The Marana plant runs non-stop and produces about 1.4 million tons of cement a year, Starkey said. But it had nearly exhausted its inventory when the kiln was shut down.
The problem is not limited to Arizona, said John Bloom, chief economist for Cemex of Mexico's U.S. operations. Cemex is one of three Tucson-area suppliers of ready-mix concrete.
"All producers are sold out, and inventories are at rock-bottom levels. Whenever you have a disruption at a plant, it's very difficult to meet the demands in the short term," Bloom said.
Demand for cement in Arizona is up 13 percent this year over last, Bloom said, citing U.S. Geological Survey statistics. Growth in other countries, especially China, had already worsened the shortage here. China uses roughly 800 million tons of cement a year, he said, compared with 119 million tons used in the United States.
Two factors could help
Construction-industry officials point to two possible moves that could help alleviate the backlog.
One is an expansion of Arizona Portland Cement. The company has wanted to expand since 1998 but has not been able to get approval from federal and state officials because of environmental concerns.
The company is "getting closer" to making a proposal that might prove successful, said Starkey of Arizona Portland Cement.
The other issue is a 55 percent tariff imposed on cement imported from Mexico. U.S. officials imposed it after accusing Mexico of "dumping" cement on the U.S. market at below-cost prices.
"You can't really separate the shortage from the dumping dispute," said Rick Shapiro, executive vice president of public affairs for Cemex in the U.S.
Cemex, which produces cement in Mexico, has been lobbying the governors of Western and Southern U.S. states, urging them to support rescinding the tariff. If the tariff is lifted, Cemex would likely ship more cement from its plant in Hermosillo, Sonora, to this country.
Last month, New Mexico Gov. Bill Richardson met with U.S. Commerce Secretary Carlos Gutierrez to urge that the tariff be lifted.
Cemex officials have also asked Arizona Gov. Janet Napolitano to sign on, but so far she has not.
Spokeswoman Jeanine L'Ecuyer said the governor generally supports free trade and lower tariffs but also wants to protect "Arizona interests," which include some tribes that hold interests in cement companies.
The cement shortage is leading builder Keith to seek out alternatives to concrete.
"My thoughts for the next project are that I'll go with wood floors. I'll go back to the way they built the Cheyney House, where you have wood floors about eight inches off the dirt," Keith said, referring to a 100-year-old Downtown home.
"Strangely enough, it may get to the point where wood floors are cheaper than concrete, and it may even have already gotten to that point."