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Cement firm plans big expansion

Houston, February 23, 2005

Copyright 2005 Houston Chronicle

CEMEX staked its claim in the U.S. market more than four years ago when it bought Houston-based Southdown. The Monterrey, Mexico-based cement company slashed costs, increased sales and now has 5,000 U.S. workers on its payroll, including 700 in Houston.

CEMEX is now hoping it can make another successful acquisition with its $5.8 million purchase of Britain's RMC Group.

Gilberto Perez, the president of U.S. operations for CEMEX, recently talked with Chronicle reporter Jenalia Moreno about the latest acquisition and the company's challenges in the U.S. market, such as its Construmex concept of selling cement to Mexican immigrants to build homes in Mexico.

CEMEX is also working to end a trade complaint, now more than 14 years old, that Mexican cement companies engage in dumping, selling their products here cheaper than they cost to make.

CEMEX has appealed to the U.S. Department of Commerce, a North American Free Trade Agreement panel and the World Trade Organization to end hefty duties it pays to export cement to the United States from Mexico.

Q: What's the status of CEMEX's appeals to lift the dumping complaint against Mexican cement?
A: I would not dare say the dumping issue would be resolved in the near future, but I would say that we are closer than we ever have been before.

What we're saying is that there has been a change in circumstances. We have invested more than anybody else in this marketplace. I think it's a little bit ridiculous for anybody to think that CEMEX would do anything to harm this market.

Q: Why is it important to lift the antidumping measure?
A: Right now there is a shortage. There are 30 or 40 states affected by this, including Texas. In Houston, most cement is imported from Korea. We could bring it in from Tampico. It would give us more flexibility to serve our customers' needs.

Q: How responsive has the Mexican immigrant market in Houston been to CEMEX's Construmex division?
A: Frankly, I think we are going to have to provide more promotion for the immigrant community. It's a great service. It's a great idea. Nevertheless, we compete with other needs and demands the immigrant has. People don't always have the need to send money for construction.

Q: What are some of your greatest challenges in the U.S. market?
A: Being able to attract and retain the best talent. We compete with the IBMs of the world, with the oil industry, with industries that have worked a long time on their image. They have a much more sophisticated image than the cement industry. Also politics - having our voice heard in Washington as a subsidiary of a Mexican company.

Q: What will the acquisition of RMC mean for the U.S. cement industry and for the Houston market?
A: If the largest cement producer is going to be vertically integrated with the largest ready-mix provider, we're going to become a net buyer of cement - so some of my competitors are going to be some of my suppliers. We're going to become the largest cement and ready-mix producer in Houston.