Cement and concrete giant Cemex USA is building a distribution terminal in Bell to meet skyrocketing demand for construction materials as Los Angeles goes through a development boom.
Cemex USA, a subsidiary of Cemex of Monterrey, Mexico, plans to open the rail distribution terminal during the fourth quarter to begin receiving cement and construction aggregate – stone, sand, and gravel – by rail from the company’s quarry in Victorville.
Construction starts in Los Angeles and Southern California have soared over the last couple of years.
The total value of construction projects that broke ground in Los Angeles County last year topped $16.8 billion, up 23 percent from 2015, according to figures collected by Dodge Data & Analytics of New York. Construction continues at a breakneck pace this year despite heavy winter rains, with $7.7 billion worth of projects breaking ground during the first four months of this year, a 124 percent jump from the first four months of last year.
Included among the high-profile construction projects underway are Korean Air Lines Co.’s Wilshire Grand Center downtown, the Metro Purple Line along Wilshire Boulevard, and, most recently, Stan Kroenke’s stadium in Inglewood that will host the Los Angeles Rams and Chargers football teams.
Cemex is supplying concrete to the Purple Line, which currently ranks as the company’s largest local project. Over the past couple of years, it has supplied concrete for the Village at Howard Hughes Center in Culver City, the Columbia Square and La Brea Gateway Apartments in Hollywood, and the almost-completed Waldorf Astoria Hotel project in Beverly Hills.
The demand has strained supplies.
A skyscraper requires 5,000 to 60,000 cubic yards of concrete, depending on the number of floors and the amount of parking; a midrise hotel 15,000 to 25,000 cubic yards; an apartment building 10,000 to 45,000 cubic yards; and a stadium 25,000 to 80,000 cubic yards, according to Jason Sperry, concrete general superintendent with Morley Construction, a subsidiary of Morley Builders of Santa Monica.
Sperry said during the first quarter, Morley has poured roughly 100,000 cubic yards of concrete, up from roughly 60,000 cubic feet for the same period last year. And with the projects the company has lined up, he said an additional 100,000 to 150,000 cubic yards of concrete will be poured in the coming months.
“Concrete demand has definitely been building for the last year or so,” he said. “We’re seeing price premiums for cement and aggregate of 25 percent.”
Especially in demand, Sperry said, is high-strength concrete, which has become the material of choice for skyscrapers and other massive structures. High-strength concrete contains a higher proportion of cement than traditional concrete, giving it the ability to withstand more weight and pressure. (Cement, made of calcined lime and clay, can be mixed with water to form mortar; concrete is a mixture of aggregate cement and water.)
Business spreads
Cemex is not the only local building materials manufacturer benefitting from the boom. CalPortland Co. of Glendora is also enjoying robust sales.
“We just concluded our best quarter since before the recession,” said Steve Regis, CalPortland senior vice president.
Regis said the company recently purchased and is in the midst of a $60 million upgrade and expansion of a cement plant in Victorville. CalPortland’s total investment in the facility will ultimately be close to $400 million.
But Regis interjected a note of caution: He said that while construction is booming in and around Los Angeles, construction activity has been slower in other parts of the state. A slower economic recovery elsewhere and an increasing amount of government regulations have combined to keep a lid on construction projects, he said.
“All the California Environmental Quality Act challenges and more air- and water-quality regulations add costs and risks and time,” he said. “You often can’t schedule things because you don’t know when that final permit will arrive.”
But Regis said he hopes the recent strength of the local construction market will survive the challenges.
“The local construction market appears to finally have hit its stride and we are hoping that more very good quarters lie ahead,” he said.
Solid demand
Cemex’s new terminal is part of its calculation that demand will remain high.
Once the cement and aggregate arrive at the Bell facility, trucks will distribute them to several local ready-mix plants in the region that combine the components to create concrete. Among those facilities are a 93-year-old plant on La Brea Avenue in south Hollywood and a plant in Inglewood.
Cemex is also expanding the company’s Victorville quarry, increasing its capacity to produce cement that can be used to make high-strength concrete.
Eric Wittmann, regional president with Cemex, said the company is not disclosing the cost of these two projects, other than labeling it a “very long-term commitment to the region’s future.”
Wittmann said one factor that prompted this investment is a long-planned closure of a Cemex quarry in Azusa, which will shut down when its permit runs out at the end of this year. That quarry is not able to produce the material necessary for high-strength concrete, one reason Cemex chose not to seek a permit renewal.
Cemex has already obtained all the permits it needs for the Bell terminal, he said, so construction is set to begin within the next few weeks.
“This Bell facility will make it easier to get component products to our ready-mix plants and also directly to our third-party clients, chiefly other ready-mix concrete companies,” he said.
