Concrete, Gypsum, and Plaster Products
SIC 3270
NAICS 327
Companies in this industry process and manufacture materials mostly for use in construction. The five major subsets are
concrete blocks and bricks
general concrete products
ready-mixed concrete
lime
gypsum products
Production of cement, a key ingredient in concrete, is discussed in greater detail under the heading Cement, Hydraulic.
The world's volatile building materials markets follow the trends set by the broader construction industry. In the late 1990s and early 2000s, the steel industry started losing revenue to the concrete industry when engineers and contractors more often chose concrete for their infrastructure needs. In the commercial and residential markets, new building construction and renovation drive global demand for the various concrete, lime, and gypsum products. Manufacturers of these products, like manufacturers of most building materials, are realizing the benefits of offering buyers more choices. In both the commercial and residential markets, buyers are looking for customized options. By 2004, innovations like self-consolidating concrete (SCC) allowed builders to make more elaborate concrete shapes by using forms and molds that were more elaborate than those used with traditional concrete.
China's economy was experiencing explosive growth in the mid-2000s. As China's economy boomed, the nation's demand for construction-related materials caused shortages in other world markets—including the United States. Material shortages occurred for concrete, as well as gypsum products like drywall. While this shortage was partially attributed to a squeeze on available container ships, which slowed import activity worldwide, a considerable share of the shortage stemmed from the massive amount of construction materials China was consuming. By 2004 and into 2005, these factors caused all U.S. states, except Alaska, to experience shortages of the cement needed to make concrete. Shortages were especially pronounced along the East Coast and in Florida, where the residential construction market was booming. Coupled with the prospect of rising interest rates, some observers expected a slowdown in Chinese demand for construction materials. These factors had the potential to correct the industry's material shortages later in the mid-2000s.
Owing to convention and prohibitive transportation costs, international trade in most kinds of building materials remains quite small compared to the value of production. Nonetheless, in such places as the United Kingdom and the United States, imports account for a growing share of consumption, and this trend is expected to accelerate.
Environmental concerns affect the building materials industry more every year. Pressure from advocacy groups and legislators, along with the emerging technologies that result from that pressure, are making environmentally safe materials more available and affordable. In the gypsum industry especially, strides are being made to utilize recycled materials.
The industry's output, which constitutes a significant share of the world's nonwood, nonmetal building materials, comprises a number of diverse product categories. Most industry participants specialize in a few of these categories rather than producing the entire breadth of industry goods. A number of major companies operate in multiple stages of their products' supply chains, however, such as quarrying stone, processing it into cement, and then adding self-supplied aggregate (sand or gravel) to create concrete—the finished product—for customers. In this sense, some of the industry's largest firms are more vertically integrated than horizontally. Still, many building materials manufacturers obtain all of their raw materials from other firms.
While technological innovations in these building materials occur regularly, most are considered low-profit commodities best suited for mass production. Some technological entry barriers exist, however, for participation in world class materials production. Certain material processing equipment requires significant capital investment, and hence cost precludes smaller firms from participating in those segments of the industry.
In essence, concrete is a mixture of powder cement, water, and coarse or fine aggregate (gravel or sand, respectively). Its production is thus wholly dependent on the production of cement, which means that many of the leading cement companies (see Cement, Hydraulic) also produce concrete. Other concrete companies source their raw materials from unaffiliated manufacturers and perform their own mixing.
Concrete is used in diverse applications that cross virtually all subsets of the construction industry—some construction firms even manufacture their own. Leading uses include roads, bridges, airports, and buildings. To meet these end needs, concrete products may be delivered to customers as ready-mixed concrete to be poured on site or as preformed structures to be installed. Because of its widespread use in public structures such as roads, the concrete segment is more dependent on government public works spending than are other parts of the industry. Still, private construction demands a major share of the world's concrete as well.
The mineral by-product lime derives from quarried limestone, dolomite, and similar stones. Manufactured lime has numerous uses outside of construction, especially applications in the chemical and steel industries. In construction, lime is used to make mortar and plaster. Such construction uses account for a relatively small share of the world's lime production.
As with lime, gypsum comes from processed minerals. Unlike lime, however, the vast majority of gypsum is used for construction purposes, primarily in the fabrication of wallboard (also known as drywall or plasterboard). Over the course of the twentieth century, wallboard supplanted plaster in industrial countries to become the key material in residential walls, with a strong presence in nonresidential buildings as well. In addition, gypsum is sometimes used in plaster and other building materials. Gypsum plasters are, in actuality, a type of cement that is used widely in construction materials such as wallboard, slabs, flooring, and decorative moldings. These are made of a combination of gypsum and a dehydrated form of gypsum known as anhydrite. In addition, other chemicals can be added for properties needed in particular applications. For example, sulfate salts are added to some construction plasters to speed up the setting of the compound.
More so than in other building materials segments, gypsum product manufacturing is dominated by a handful of major producers that hold large shares of the market. In the late 1990s, for example, the largest U.S. wallboard maker controlled nearly a third of the U.S. market.
The raw materials from which building products are derived have been with humanity throughout the ages. Ancient Egypt first used gypsum as a building material 5,000 years ago. After heating, crushing, and remixing it with water, it was used as plaster on walls. Ancient cultures also combined these materials to make forms of cements and other types of plasters that could be used in conjunction with other common construction materials. The pyramids in Egypt, for example, were constructed of gypsum. Raw materials were plentiful and inexpensive and the products based on these minerals proved to have natural fire retardant properties.
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