September 25, 2012 Fiscal Cliff Scenarios

Overview PCA expects cement consumption will grow 6.9% in 2012, 5.7% in 2013 and accelerate thereafter. High political risk is attached to PCA’s baseline forecast. Tax increases of $400 billion, coupled with $200 billion in federal spending cuts, are scheduled by law to commence in January 2013. This is referred to as the “fiscal cliff”. Given the fragile state of the economy, such fiscal actions could prompt a recession. Whether a recession ensues will be determined by the actions of Congress to avert the fiscal cliff. In this flash report PCA presents three potential outcomes for the fiscal cliff and its impact on the economic and construction activity as well as cement consumption. These scenarios include: 1) the rational Congress scenario, 2) the dysfunctional Congress scenario, and 3) the Congressional impasse scenario. For each scenario, preliminary cement consumption projections on a state-by-state basis are provided. While PCA offers three potential outcomes, a myriad of outcomes are possible. The actual outcome will probably reflect a blending of two scenarios. The “rational Congress” scenario is considered to be the closest to what will likely unfold and serves as PCA’s baseline forecast. The Congressional impasse is considered the least likely to unfold. The purpose of the flash report is to provide near-term risk planning

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Rational Congress(Baseline)

Dysfunctional Congress

Congressional Impasse

Total U.S. Cement Consumption

Source: PCA

Thousands of Metric Tons

Contact: Ed Sullivan, VP & Chief Economist, 847.972.9006, esullivan@cement.org Dave Zwicke, Manager & Senior Economist, 847.972.9188, dzwicke@cement.org

scenarios for cement executives. The guidance offered in this flash report suggests that cement companies should plan for modest growth next year, but have contingency plans ready in the wings given the political uncertainties and the potential implications for cement consumption. What is the Fiscal Cliff? The “fiscal cliff” came about from dual economic objectives reflecting the need to inject fiscal stimulus into an inert economy, and the need to deal with burgeoning federal debt. This prompted Congress to pass into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Acts of 2010. The law extended some fiscal stimuli for two years, but required action to reduce the long-term federal debt levels. Lacking action by Congress, automatic deficit reduction measures will go into effect in January 2013 under the Budget Control Act of 2011. Under current law, increase in taxes and to a lesser extent, reductions in spending, will reduce the federal budget deficit dramatically during 2013—a development that some observers have referred to as a “fiscal cliff”. This will dampen economic growth in the short-term. A recent study by the Congressional Budget Office (CBO) estimates that the combination of polices under the current law will reduce the federal budget deficit by $607 billion, or 4.0 percent of gross domestic product (GDP), between fiscal years 2012 and 20131. The resulting weakening of the economy will lower taxable income and raise unemployment, generating a reduction in tax revenues and increase in spending on such items as unemployment insurance.

Fiscal Deficit reduced from $1.17trillion in 2012 to $612 billion in 2013.

Revenue Adjustments:• Expiration of income & estate taxes “Bush Tax Cuts” (Dec. 31, 2012) $221 Billion• Expiration of Payroll Tax Holiday (Dec. 31, 2012) $ 95 Billion• Other Expiring Provisions (Dec. 31, 2012) $ 65 Billion• Taxes Included in Affordable Care Act “Health Care Law” $ 18 Billion• Total $ 399 Billion

– Spending Adjustments:• Automatic Enforcement of Spending Cuts “Sequestration” $ 65 Billion• Expiration of extended unemployment benefits $ 26 Billion• Reduction in Medicare pay to Doctors $ 11 Billion• Other reductions $ 105 Billion• Total $ 207 Billion

– Total Revenue & Spending $606 Billion or Roughly 4% of US GDP• Moody’s Calculates the revenue & spending cuts at $728 Billion or roughly 4.6% of US GDP

The “Fiscal Cliff”: CBO

At the time, the laws seemed very reasonable. The two-year extension of fiscal stimuli, it was thought, would give Congress enough time to reach an accord on the issue, and give the economy time to gain enough strength to endure the impact on growth associated with the fiscal drag of debt reduction. 1 Congressional Budget Office, “Economic Effects of Fiscal Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013.” May 2012.

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Unfortunately, Congress has yet to act, and the economy has yet to gain enough momentum to stand strongly on the private sector’s shoulders. When Will Congress Act? According to PCA’s Washington D.C. office, it is unlikely that the fiscal cliff crisis will be addressed by Congress during the election season. The legislation is frankly just too hot-to-handle during the Congressional and presidential election season. While there are a myriad of outcomes that could occur, PCA presents three potential outcomes for the fiscal cliff and its impact on the economic and construction activity as well as cement consumption. These scenarios include: 1) the rational Congress scenario, 2) the dysfunctional Congress scenario, and 3) the Congressional impasse scenario. A myriad of outcomes are possible. The actual outcome will probably reflect a blending of two scenarios. The “rational Congress” scenario is considered to be the closest to what will likely unfold and serves as PCA’s baseline forecast. The Rational Congress Scenario PCA’s Market Intelligence Group has always assumed that Congress eventually acts rationally given what is at stake for the economy. This assumption implies that an agreement on the fiscal cliff would be reached immediately after the election—during the lame duck session. Further, PCA assumes that such an accord would minimize the short-term costs to narrowing the deficit and enact a somewhat more aggressive longer-term combination of tax and fiscal spending policies that would avert troubles now facing several European economies. Given these assumptions, the near-term disruptive economic aspects associated with the fiscal cliff are significantly reduced and real GDP growth would be only marginally impacted during the forecast horizon.

Rational Congress Scenario: Baseline

2012 2013 2014 2015 2016 2017

Total Cement Consumption (000 MT) 74,788 78,983 87,896 97,284 106,136 111,190 - Percent Change (%) 6.9% 5.6% 11.3% 10.7% 9.1% 4.8%

Real GDP Growth (%) 1.9% 2.1% 3.1% 3.4% 3.0% 2.8%

Employment (000) 133,735 135,180 137,620 140,570 143,191 145,734Job Creation (000) 1,549 1,445 2,440 2,950 2,621 2,543Oil Price ($ Per Barrel) 91.15 88.26 98.33 109.15 114.60 120.33

Total Construction Growth (%) 5.5% 5.0% 9.5% 9.8% 8.7% 4.5%

Residential Starts 745 877 1,138 1,341 1,504 1,568 - Percent Change 21.9% 17.7% 29.8% 17.8% 12.2% 4.3% Single Family 518 622 845 1,026 1,168 1,224 Multi Family 227 255 293 315 336 344

Nonresidential Growth (%) 11.7% 7.5% 12.2% 12.3% 10.4% 7.0% - Office Vacancy Rates 17.0 17.2 16.7 15.5 14.2 13.6

Public Construction Growth (%) -6.9% 0.3% 4.9% 5.1% 4.6% 4.4% - State Fiscal Balances ($ Billion) -62 -22 1 48 87 118

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According to this scenario, the economy grows slowly during the remainder of 2012 and through 2013 with real GDP averaging 2% annually. Roughly 1.5 million jobs are created this year and next. Structural impediments to a construction recovery gradually heal in the context of slow job growth. Housing starts record large percentage gains, but in the context of gains off near historic lows. Nonresidential continues to achieve meager volume gains. Gains in the residential and nonresidential sectors more than offset expected public sector drags. Economic momentum gains strength by late 2013 and carries through 2014 and beyond. Pre-recession employment levels (December 2007) are reached in mid-2014. Real GDP grows at an average annual rate of more than 3% annually. Job growth averages more than 2.5 million jobs annually. Stronger U.S. and global economic growth translates in to higher oil prices – stealing some economic growth momentum, but resulting in an enhancement in concrete’s competitive position against asphalt. The key economic impediments to a construction recovery, namely foreclosure activity, high vacancy rates and weak state fiscal conditions gradually subside. These conditions, coupled with the release of pent-up demand, prompt a construction recovery in all residential, nonresidential and public sectors. Cement consumption achieves double digit growth 2014-2016.

Dysfunctional Congress Scenario

According to PCA’s Washington D.C. office, action by Congress during the lame duck session may be overly optimistic. Congress is extremely polarized, perhaps dysfunctional. An agreement may not be reached until after the automatic tax and spending cuts go into effect and the resulting harsh impacts on the economy. Depending on whether an accord is reached in March versus June will impact the severity of the dysfunctional scenario. An early first quarter resolution may more closely resemble the rational Congress scenario. A late second quarter resolution may more closely resemble the “complete Congressional impasse” scenario.

Dysfunctional Congress Scenario

2012 2013 2014 2015 2016 2017

Total Cement Consumption (000 MT) 74,788 68,094 77,942 90,037 101,339 107,160 - Percent Change (%) 6.9% -9.0% 14.5% 15.5% 12.6% 5.7%

Real GDP Growth (%) 1.9% 0.1% 2.2% 3.2% 3.5% 3.3%

Employment (000) 133,735 133,779 135,334 137,945 140,550 143,197Job Creation (000) 1,549 44 1,555 2,612 2,604 2,647Oil Price ($ Per Barrel) 91.15 80.00 84.00 95.00 112.00 119.00

Total Construction Growth (%) 5.5% -2.6% 6.5% 10.1% 11.3% 8.1%

Residential Starts 745 748 964 1,201 1,407 1,531 - Percent Change (%) 21.9% 0.3% 28.9% 24.6% 17.2% 8.8% Single Family 518 520 650 868 1,054 1,169 Multi Family 227 227 314 333 354 362

Nonresidential Growth (%) 11.7% -4.9% 6.9% 18.5% 21.8% 7.1% - Office Vacancy Rates 17.0 17.6 16.9 15.8 15.0 14.4

Public Construction Growth (%) -6.9% -5.7% 4.5% 7.2% 6.9% 4.7% - State Fiscal Balances ($ Billion) -62 -79 -28 -14 48 93

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PCA assumes an accord is reached in March. First quarter real GDP growth declines 1.5%. Given the adverse momentum generated, first quarter adversities translate into near zero growth during the second quarter and tepid growth during the remainder of 2013 – leaving overall real GDP growth near zero. Even the meager job gains the economy is now achieving are replaced by job losses during the first half of 2013, near zero growth in the third quarter, followed by modest job creation in the fourth quarter. The gradual recovery from the first half 2013 contraction is expected to continue through 2014 – resulting in modest economic growth. Shaken consumer confidence gradually improves. Corporate profits and business sentiment also slowly mend. Job creation, as a result, manages only tepid growth – similar to that experienced in 2012. Pre-recession employment levels (December 2007) are achieved in mid-2015 – one year later than the rational Congress scenario. Structural impediments to a construction recovery are worsened during the first half of 2013 as job losses materialize. Foreclosure activity increases compared to the rational Congress scenario. The emerging housing starts recovery now underway is put on hold and remains near 2012 levels. Vacancy rates increase. Leasing rate competition accelerates. Expected ROI on commercial properties recede. Banks

renew its concerns of lending to commercial real estate projects. State deficits worsen with the increase in unemployment and reduction in revenue growth. Defense budget cuts will have noticeable impact on states such as Virginia, Maryland, and Hawaii which have large military installations. In addition, states such as Arizona, Wisconsin, and Missouri also are exposed due to reliance on large defense contracts. According to this scenario, cement consumption declines 9.9% in 2013 to 67 MMT. Momentum is regained in 2014 as the fiscal cliff impact dissipates and the economy once again regains its footing. Cement consumption grows 14% to 77MMT. While the growth rate in 2014 is stronger than the rational Congress scenario, volume lies 10 MMT below the rational Congress scenario.

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Source: PCA

Exposed MarketResilient Market

Dysfunctional Congress Scenario

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Expected State Impacts on Cement Consumption Relative to National Trends

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Complete Congress Impasse Scenario

Although it may be very unlikely, political ideology could overwhelm near-term economic need resulting in no action undertaken by Congress during 2013. A resolution is assumed for early 2014. The full brunt of the fiscal cliff, however, comes to realization in 2013. Automatic budget spending reductions and tax increases take effect in January 2013 and are maintained throughout the year. Given the fragile state of the economy, a severe recession ensues. According to this scenario, the economy contracts 2.2% in 2013. Tepid economic and job growth follows in 2014. Stronger growth materializes in the out years of the forecast. Roughly 3.0 million jobs are lost in 2013. Meager job growth follows in 2014. Structural impediments to a construction recovery are worsened. Foreclosure activity regains momentum. Nonresidential vacancy rates increase. Large state deficits re-emerge. Pre-recession employment levels (December 2007) are achieved in late 2016 – two years later than the rational Congress scenario. This causes further delay in the healing of structural impediments facing the construction industry.

The emerging housing recovery is reversed. Housing starts decline 24% in 2013 and lay 100,000 units below 2012 starts level in 2014. Former housing bubble states are particularly vulnerable as foreclosures are yet to clear the market. Nonresidential vacancy rates rise and leasing rates decline. Nonresidential construction activity declines in the context of weak NOI and renewed bank hesitancy to offer commercial real estate loans. With job losses, states are encumbered with additional safety net spending and a reduction in revenues. Mandatory federal spending cuts are amplified at the state level. Public construction activity declines 7% in 2013. State deficits characterize the landscape through fiscal 2016.

Complete Congressional Impasse Scenario

2012 2013 2014 2015 2016 2017

Total Cement Consumption (000 MT) 74,788 62,079 68,200 82,607 94,943 103,452 - Percent Change (%) 6.9% -17.0% 9.9% 21.1% 14.9% 9.0%

Real GDP Growth (%) 1.9% -2.2% 1.5% 3.4% 3.7% 3.5%

Employment (000) 133,735 130,691 131,305 134,934 137,905 140,490Job Creation (000) 1,549 -3,044 614 3,629 2,971 2,585Oil Price ($ Per Barrel) 91.15 73.00 77.00 85.00 100.00 107.00

Total Construction Growth (%) 5.5% -4.8% 5.7% 15.8% 6.2% 8.3%

Residential Starts 745 565 650 980 1,251 1,421 - Percent Change (%) 21.9% -24.1% 15.1% 50.6% 27.7% 13.6% Single Family 518 353 405 707 955 1,116 Multi Family 227 212 246 273 297 305

Nonresidential Growth (%) 11.7% -15.0% 5.2% 7.4% 29.9% 23.7% - Office Vacancy Rates 17.0 18.7 18.3 17.2 16.1 15.3

Public Construction Growth (%) -6.9% -7.1% 2.3% 7.9% 5.5% 2.5% - State Fiscal Balances ($ Billion) -62 -109 -72 -47 -21 25

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According to this scenario, cement consumption retreats to past recession trough levels and decline 16% in 2013. Given the re-opening of structural wounds that are just now beginning to heal, the recovery process is delayed two years compared to the rational Congress scenario. Through a mixed combination of sluggish economies, persistent deficits, reliance on national defense expenditures, and legacy housing bubble impacts, Mississippi, Alabama, Illinois, Arizona, and Virginia may be at most risk to the Congressional Impasse Scenario.

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2010 2011 2012 2013 2014 2015 2016 2017Alabama 1,003 1,000 1,028 1,109 1,267 1,425 1,567 1,686Arkansas 757 736 808 887 984 1,064 1,176 1,255Arizona 1,469 1,476 1,561 1,805 2,083 2,426 2,781 3,030California 6,305 6,889 7,403 8,099 9,249 10,385 11,525 12,110Colorado 1,467 1,400 1,566 1,621 1,881 2,131 2,391 2,539Connecticut 469 477 517 538 620 676 740 761District Of Columbia 109 178 221 182 183 188 202 221Delaware 172 171 150 166 193 210 224 231Florida 3,519 3,405 3,598 4,057 5,062 6,441 7,590 8,330Georgia 1,679 1,645 1,768 1,973 2,409 3,000 3,484 3,727Hawaii 262 260 261 279 309 346 371 395Iowa 1,431 1,598 1,758 1,739 1,835 1,972 2,083 2,126Idaho 387 375 352 376 450 519 627 644Illinois 2,433 2,436 2,575 2,695 3,046 3,358 3,689 3,886Indiana 1,482 1,491 1,684 1,799 1,953 2,075 2,144 2,214Kansas 1,172 1,156 1,319 1,314 1,374 1,452 1,515 1,588Kentucky 852 926 999 1,028 1,078 1,167 1,273 1,300Louisiana 2,742 2,478 2,153 2,236 2,300 2,395 2,491 2,567Massachusetts 679 732 826 864 964 1,075 1,176 1,235Maryland 888 966 1,010 1,065 1,157 1,268 1,408 1,467Maine 185 183 191 218 253 273 295 302Michigan 1,554 1,470 1,609 1,576 1,628 1,775 1,954 2,006Minnesota 1,200 1,212 1,355 1,361 1,511 1,694 1,877 1,935Missouri 1,563 1,408 1,509 1,686 1,901 2,108 2,305 2,388Mississippi 774 761 742 787 897 1,028 1,106 1,164Montana 259 273 301 312 328 359 379 391North Carolina 1,581 1,690 1,789 1,961 2,243 2,467 2,663 2,799North Dakota 408 595 801 764 672 637 622 626Nebraska 988 1,034 1,131 1,156 1,206 1,258 1,285 1,320New Hampshire 185 193 204 221 250 273 296 307New Jersey 1,123 1,073 1,159 1,178 1,283 1,397 1,550 1,544New Mexico 604 550 584 637 706 773 826 867Nevada 838 927 1,013 1,066 1,321 1,532 1,737 1,809New York 2,302 2,318 2,516 2,595 2,711 2,867 3,030 3,129Ohio 2,352 2,530 2,801 2,937 3,195 3,449 3,735 3,838Oklahoma 1,432 1,510 1,609 1,599 1,615 1,663 1,723 1,786Oregon 609 653 583 673 827 933 1,007 1,048Pennsylvania 2,415 2,518 2,668 2,730 2,901 3,171 3,357 3,502Rhode Island 93 107 109 117 130 142 155 165South Carolina 931 956 1,029 1,100 1,208 1,360 1,480 1,527South Dakota 447 468 512 515 525 547 571 588Tennessee 1,229 1,213 1,306 1,378 1,529 1,720 1,899 2,001Texas 10,106 10,461 11,450 11,915 12,814 13,706 14,471 15,124Utah 1,023 1,156 1,255 1,308 1,391 1,484 1,569 1,634Virginia 1,368 1,448 1,573 1,664 1,882 2,126 2,345 2,447Vermont 103 101 111 116 131 139 147 155Washington 1,324 1,356 1,366 1,571 1,789 1,923 2,066 2,193Wisconsin 1,431 1,525 1,598 1,670 1,761 1,918 2,074 2,130West Virginia 426 487 517 544 569 583 606 641Wyoming 322 301 310 336 364 399 427 446United States 68,449 70,272 75,258 79,524 87,941 97,279 106,012 111,122

Total Portland Cement Consumption (000 Metric Tons)Baseline Forecast

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2010 2011 2012 2013 2014 2015 2016 2017Alabama -9.7% -0.4% 2.8% 7.9% 14.3% 12.5% 9.9% 7.6%Arkansas 3.4% -2.8% 9.8% 9.8% 11.0% 8.1% 10.6% 6.7%Arizona -14.9% 0.5% 5.8% 15.6% 15.4% 16.4% 14.7% 8.9%California -3.3% 9.3% 7.5% 9.4% 14.2% 12.3% 11.0% 5.1%Colorado 4.5% -4.6% 11.9% 3.5% 16.0% 13.3% 12.2% 6.2%Connecticut -1.9% 1.7% 8.4% 4.0% 15.3% 9.0% 9.5% 2.8%District Of Columbia -15.6% 63.1% 24.0% -17.4% 0.5% 2.6% 7.2% 9.4%Delaware 8.6% -0.8% -12.2% 10.9% 16.1% 8.7% 6.4% 3.4%Florida -5.1% -3.3% 5.7% 12.7% 24.8% 27.3% 17.8% 9.7%Georgia -9.5% -2.0% 7.5% 11.6% 22.1% 24.5% 16.1% 7.0%Hawaii -14.4% -0.6% 0.4% 6.7% 10.9% 12.0% 7.1% 6.6%Iowa -1.2% 11.7% 10.0% -1.1% 5.5% 7.5% 5.6% 2.0%Idaho 5.4% -3.0% -6.2% 6.8% 19.8% 15.4% 20.7% 2.7%Illinois -5.6% 0.1% 5.7% 4.7% 13.0% 10.2% 9.9% 5.4%Indiana 2.0% 0.6% 13.0% 6.8% 8.6% 6.2% 3.4% 3.2%Kansas 3.5% -1.4% 14.1% -0.4% 4.6% 5.7% 4.3% 4.8%Kentucky -2.1% 8.8% 7.8% 2.9% 4.8% 8.3% 9.1% 2.1%Louisiana 28.4% -9.6% -13.1% 3.9% 2.8% 4.1% 4.0% 3.0%Massachusetts -3.3% 7.9% 12.8% 4.6% 11.5% 11.6% 9.3% 5.0%Maryland -1.5% 8.7% 4.6% 5.4% 8.7% 9.6% 11.0% 4.2%Maine 0.1% -1.6% 4.6% 14.0% 16.3% 8.0% 7.8% 2.4%Michigan 12.2% -5.4% 9.5% -2.0% 3.3% 9.0% 10.0% 2.7%Minnesota 5.7% 1.1% 11.8% 0.4% 11.0% 12.1% 10.8% 3.1%Missouri -9.6% -9.9% 7.1% 11.7% 12.8% 10.9% 9.3% 3.6%Mississippi -3.6% -1.7% -2.4% 6.0% 14.0% 14.7% 7.6% 5.2%Montana 1.5% 5.2% 10.2% 3.7% 5.4% 9.2% 5.8% 3.1%North Carolina -1.9% 6.9% 5.8% 9.7% 14.4% 10.0% 8.0% 5.1%North Dakota 8.8% 45.9% 34.8% -4.6% -12.1% -5.2% -2.4% 0.6%Nebraska -3.0% 4.6% 9.4% 2.2% 4.4% 4.3% 2.1% 2.7%New Hampshire -6.4% 4.1% 6.1% 7.9% 13.5% 9.0% 8.7% 3.5%New Jersey -2.5% -4.4% 8.0% 1.7% 8.9% 8.8% 10.9% -0.4%New Mexico 13.2% -8.9% 6.2% 9.1% 10.8% 9.5% 6.9% 5.0%Nevada -16.8% 10.6% 9.2% 5.2% 24.0% 15.9% 13.4% 4.2%New York -5.3% 0.7% 8.5% 3.2% 4.5% 5.7% 5.7% 3.3%Ohio 5.4% 7.5% 10.7% 4.9% 8.8% 7.9% 8.3% 2.7%Oklahoma 7.0% 5.4% 6.6% -0.6% 1.0% 3.0% 3.6% 3.6%Oregon -8.2% 7.3% -10.7% 15.5% 22.8% 12.8% 7.9% 4.1%Pennsylvania 10.8% 4.3% 6.0% 2.3% 6.3% 9.3% 5.9% 4.3%Rhode Island -12.0% 14.8% 1.7% 7.9% 10.8% 9.7% 8.7% 6.5%South Carolina 13.4% 2.7% 7.6% 6.9% 9.8% 12.6% 8.8% 3.2%South Dakota -0.8% 4.8% 9.3% 0.7% 1.9% 4.2% 4.4% 3.0%Tennessee 0.8% -1.3% 7.6% 5.5% 10.9% 12.6% 10.4% 5.4%Texas 5.4% 3.5% 9.5% 4.1% 7.5% 7.0% 5.6% 4.5%Utah -3.4% 13.1% 8.5% 4.2% 6.4% 6.7% 5.7% 4.2%Virginia -10.4% 5.9% 8.6% 5.7% 13.1% 12.9% 10.3% 4.3%Vermont 8.5% -1.9% 9.4% 4.9% 13.2% 6.2% 5.6% 5.1%Washington -7.9% 2.5% 0.7% 15.0% 13.9% 7.5% 7.4% 6.2%Wisconsin 1.5% 6.6% 4.8% 4.5% 5.5% 8.9% 8.1% 2.7%West Virginia 5.9% 14.4% 6.1% 5.2% 4.7% 2.5% 4.0% 5.7%Wyoming -7.5% -6.6% 2.8% 8.4% 8.5% 9.6% 7.0% 4.5%United States 0.0% 2.7% 7.1% 5.7% 10.6% 10.6% 9.0% 4.8%

Annual Percent ChangeBaseline Forecast

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2010 2011 2012 2013 2014 2015 2016 2017Alabama 1,003 1,000 1,028 929 1,065 1,236 1,417 1,648Arkansas 757 736 808 742 844 969 1,108 1,183Arizona 1,469 1,476 1,561 1,465 1,676 2,077 2,518 3,091California 6,305 6,889 7,403 6,269 8,011 9,580 11,245 11,621Colorado 1,467 1,400 1,566 1,446 1,704 1,985 2,325 2,508Connecticut 469 477 517 460 522 602 705 701District Of Columbia 109 178 221 169 172 187 199 220Delaware 172 171 150 145 177 203 221 229Florida 3,519 3,405 3,598 3,550 4,440 5,871 7,046 8,672Georgia 1,679 1,645 1,768 1,713 2,013 2,568 3,197 3,625Hawaii 262 260 261 239 271 321 358 392Iowa 1,431 1,598 1,758 1,631 1,799 1,986 2,111 2,124Idaho 387 375 352 333 404 488 622 638Illinois 2,433 2,436 2,575 2,186 2,572 3,020 3,478 3,775Indiana 1,482 1,491 1,684 1,464 1,660 1,882 2,046 2,075Kansas 1,172 1,156 1,319 1,218 1,295 1,396 1,465 1,552Kentucky 852 926 999 883 976 1,124 1,277 1,294Louisiana 2,742 2,478 2,153 1,985 2,191 2,325 2,405 2,395Massachusetts 679 732 826 701 789 941 1,076 1,117Maryland 888 966 1,010 903 976 1,170 1,404 1,489Maine 185 183 191 173 203 236 268 279Michigan 1,554 1,470 1,609 1,326 1,400 1,626 1,878 1,773Minnesota 1,200 1,212 1,355 1,142 1,296 1,546 1,766 1,808Missouri 1,563 1,408 1,509 1,356 1,594 1,888 2,169 2,212Mississippi 774 761 742 649 720 855 980 1,107Montana 259 273 301 268 307 354 382 399North Carolina 1,581 1,690 1,789 1,615 1,941 2,277 2,556 2,747North Dakota 408 595 801 671 661 651 641 634Nebraska 988 1,034 1,131 1,121 1,153 1,228 1,256 1,240New Hampshire 185 193 204 180 204 240 278 278New Jersey 1,123 1,073 1,159 1,002 1,134 1,311 1,520 1,478New Mexico 604 550 584 575 641 730 785 850Nevada 838 927 1,013 922 1,187 1,304 1,595 1,739New York 2,302 2,318 2,516 2,344 2,431 2,590 2,790 2,791Ohio 2,352 2,530 2,801 2,425 2,790 3,201 3,632 3,601Oklahoma 1,432 1,510 1,609 1,475 1,522 1,659 1,712 1,722Oregon 609 653 583 603 729 835 936 982Pennsylvania 2,415 2,518 2,668 2,468 2,645 2,971 3,260 3,398Rhode Island 93 107 109 95 110 131 150 161South Carolina 931 956 1,029 900 993 1,191 1,350 1,400South Dakota 447 468 512 488 512 545 560 581Tennessee 1,229 1,213 1,306 1,201 1,351 1,591 1,792 1,903Texas 10,106 10,461 11,450 10,664 11,971 13,157 13,878 14,483Utah 1,023 1,156 1,255 1,090 1,221 1,389 1,530 1,568Virginia 1,368 1,448 1,573 1,323 1,571 1,953 2,266 2,340Vermont 103 101 111 99 118 133 145 152Washington 1,324 1,356 1,366 1,308 1,573 1,808 2,039 2,109Wisconsin 1,431 1,525 1,598 1,383 1,520 1,761 1,987 1,974West Virginia 426 487 517 489 534 563 596 653Wyoming 322 301 310 308 353 383 420 448United States 68,449 70,272 75,258 68,094 77,942 90,037 101,339 107,160

Total Portland Cement Consumption (000 Metric Tons)II. Dysfunctional Congress Scenario

10

2010 2011 2012 2013 2014 2015 2016 2017Alabama -9.7% -0.4% 2.8% -9.6% 14.7% 16.0% 14.6% 16.4%Arkansas 3.4% -2.8% 9.8% -8.2% 13.8% 14.8% 14.3% 6.8%Arizona -14.9% 0.5% 5.8% -6.2% 14.4% 24.0% 21.2% 22.7%California -3.3% 9.3% 7.5% -15.3% 27.8% 19.6% 17.4% 3.3%Colorado 4.5% -4.6% 11.9% -7.7% 17.8% 16.5% 17.1% 7.9%Connecticut -1.9% 1.7% 8.4% -11.1% 13.6% 15.3% 17.1% -0.6%District Of Columbia -15.6% 63.1% 24.0% -23.3% 1.4% 9.1% 6.3% 10.8%Delaware 8.6% -0.8% -12.2% -3.6% 22.4% 14.7% 8.5% 3.7%Florida -5.1% -3.3% 5.7% -1.3% 25.0% 32.2% 20.0% 23.1%Georgia -9.5% -2.0% 7.5% -3.1% 17.5% 27.6% 24.5% 13.4%Hawaii -14.4% -0.6% 0.4% -8.6% 13.3% 18.5% 11.8% 9.3%Iowa -1.2% 11.7% 10.0% -7.2% 10.3% 10.4% 6.3% 0.6%Idaho 5.4% -3.0% -6.2% -5.4% 21.5% 20.7% 27.3% 2.6%Illinois -5.6% 0.1% 5.7% -15.1% 17.6% 17.4% 15.2% 8.5%Indiana 2.0% 0.6% 13.0% -13.1% 13.4% 13.4% 8.7% 1.4%Kansas 3.5% -1.4% 14.1% -7.7% 6.4% 7.8% 4.9% 6.0%Kentucky -2.1% 8.8% 7.8% -11.5% 10.4% 15.2% 13.6% 1.3%Louisiana 28.4% -9.6% -13.1% -7.8% 10.4% 6.1% 3.4% -0.4%Massachusetts -3.3% 7.9% 12.8% -15.1% 12.5% 19.2% 14.4% 3.8%Maryland -1.5% 8.7% 4.6% -10.6% 8.1% 19.9% 20.0% 6.0%Maine 0.1% -1.6% 4.6% -9.3% 17.3% 16.0% 13.6% 4.3%Michigan 12.2% -5.4% 9.5% -17.6% 5.6% 16.2% 15.5% -5.6%Minnesota 5.7% 1.1% 11.8% -15.8% 13.5% 19.3% 14.3% 2.3%Missouri -9.6% -9.9% 7.1% -10.1% 17.5% 18.4% 14.9% 2.0%Mississippi -3.6% -1.7% -2.4% -12.6% 11.0% 18.8% 14.6% 13.0%Montana 1.5% 5.2% 10.2% -10.7% 14.6% 15.1% 7.8% 4.6%North Carolina -1.9% 6.9% 5.8% -9.7% 20.2% 17.3% 12.2% 7.5%North Dakota 8.8% 45.9% 34.8% -16.2% -1.6% -1.5% -1.5% -1.0%Nebraska -3.0% 4.6% 9.4% -0.9% 2.8% 6.6% 2.3% -1.3%New Hampshire -6.4% 4.1% 6.1% -11.9% 13.4% 17.3% 15.9% 0.0%New Jersey -2.5% -4.4% 8.0% -13.5% 13.1% 15.7% 15.9% -2.8%New Mexico 13.2% -8.9% 6.2% -1.6% 11.5% 13.9% 7.5% 8.3%Nevada -16.8% 10.6% 9.2% -9.0% 28.8% 9.8% 22.4% 9.0%New York -5.3% 0.7% 8.5% -6.8% 3.7% 6.5% 7.7% 0.0%Ohio 5.4% 7.5% 10.7% -13.4% 15.0% 14.7% 13.5% -0.9%Oklahoma 7.0% 5.4% 6.6% -8.3% 3.2% 9.0% 3.2% 0.6%Oregon -8.2% 7.3% -10.7% 3.4% 20.8% 14.6% 12.1% 4.9%Pennsylvania 10.8% 4.3% 6.0% -7.5% 7.1% 12.3% 9.7% 4.2%Rhode Island -12.0% 14.8% 1.7% -12.9% 16.1% 19.0% 14.4% 7.7%South Carolina 13.4% 2.7% 7.6% -12.6% 10.3% 19.9% 13.4% 3.6%South Dakota -0.8% 4.8% 9.3% -4.6% 4.9% 6.4% 2.8% 3.8%Tennessee 0.8% -1.3% 7.6% -8.0% 12.5% 17.8% 12.6% 6.2%Texas 5.4% 3.5% 9.5% -6.9% 12.3% 9.9% 5.5% 4.4%Utah -3.4% 13.1% 8.5% -13.1% 12.1% 13.7% 10.2% 2.5%Virginia -10.4% 5.9% 8.6% -15.9% 18.8% 24.3% 16.0% 3.3%Vermont 8.5% -1.9% 9.4% -10.1% 19.0% 12.7% 8.8% 4.5%Washington -7.9% 2.5% 0.7% -4.3% 20.3% 14.9% 12.7% 3.4%Wisconsin 1.5% 6.6% 4.8% -13.4% 9.9% 15.8% 12.8% -0.6%West Virginia 5.9% 14.4% 6.1% -5.4% 9.2% 5.4% 5.9% 9.5%Wyoming -7.5% -6.6% 2.8% -0.5% 14.7% 8.5% 9.5% 6.9%United States 0.0% 2.7% 7.1% -9.5% 14.5% 15.5% 12.6% 5.7%

Annual Percent ChangeII. Dysfunctional Congress Scenario

11

2010 2011 2012 2013 2014 2015 2016 2017Alabama 1,003 1,000 1,028 825 916 1,118 1,307 1,618Arkansas 757 736 808 690 736 888 1,035 1,117Arizona 1,469 1,476 1,561 1,231 1,334 1,762 2,226 3,091California 6,305 6,889 7,403 5,598 7,006 8,774 10,665 11,260Colorado 1,467 1,400 1,566 1,323 1,499 1,832 2,191 2,418Connecticut 469 477 517 414 441 537 650 654District Of Columbia 109 178 221 147 152 173 189 207Delaware 172 171 150 130 153 184 204 214Florida 3,519 3,405 3,598 2,948 3,463 4,941 6,236 8,653Georgia 1,679 1,645 1,768 1,397 1,552 2,104 2,828 3,468Hawaii 262 260 261 227 242 300 340 383Iowa 1,431 1,598 1,758 1,506 1,617 1,872 1,996 1,972Idaho 387 375 352 312 365 461 619 640Illinois 2,433 2,436 2,575 2,007 2,254 2,765 3,273 3,690Indiana 1,482 1,491 1,684 1,312 1,432 1,705 1,882 1,920Kansas 1,172 1,156 1,319 1,115 1,137 1,290 1,378 1,509Kentucky 852 926 999 797 838 1,015 1,197 1,212Louisiana 2,742 2,478 2,153 1,918 2,099 2,330 2,405 2,406Massachusetts 679 732 826 660 713 887 1,030 1,104Maryland 888 966 1,010 807 829 1,049 1,301 1,432Maine 185 183 191 155 173 211 249 266Michigan 1,554 1,470 1,609 1,250 1,242 1,506 1,782 1,643Minnesota 1,200 1,212 1,355 1,015 1,083 1,358 1,598 1,644Missouri 1,563 1,408 1,509 1,210 1,361 1,696 1,992 2,055Mississippi 774 761 742 609 649 805 929 1,114Montana 259 273 301 255 287 346 376 399North Carolina 1,581 1,690 1,789 1,416 1,654 2,043 2,334 2,614North Dakota 408 595 801 635 625 650 633 635Nebraska 988 1,034 1,131 998 978 1,097 1,167 1,131New Hampshire 185 193 204 164 172 211 254 255New Jersey 1,123 1,073 1,159 920 997 1,206 1,431 1,389New Mexico 604 550 584 521 558 667 725 816Nevada 838 927 1,013 749 949 1,120 1,427 1,653New York 2,302 2,318 2,516 2,277 2,276 2,534 2,748 2,777Ohio 2,352 2,530 2,801 2,255 2,486 2,983 3,431 3,399Oklahoma 1,432 1,510 1,609 1,384 1,409 1,614 1,656 1,641Oregon 609 653 583 557 650 779 885 949Pennsylvania 2,415 2,518 2,668 2,327 2,414 2,842 3,182 3,371Rhode Island 93 107 109 90 99 123 142 160South Carolina 931 956 1,029 801 849 1,060 1,229 1,334South Dakota 447 468 512 449 465 519 534 561Tennessee 1,229 1,213 1,306 1,049 1,123 1,395 1,615 1,792Texas 10,106 10,461 11,450 10,156 10,864 12,487 13,238 14,084Utah 1,023 1,156 1,255 1,029 1,115 1,327 1,470 1,531Virginia 1,368 1,448 1,573 1,161 1,313 1,722 2,079 2,179Vermont 103 101 111 94 108 127 140 149Washington 1,324 1,356 1,366 1,192 1,401 1,688 1,926 2,030Wisconsin 1,431 1,525 1,598 1,255 1,318 1,602 1,847 1,842West Virginia 426 487 517 459 488 538 572 635Wyoming 322 301 310 284 318 364 401 434United States 68,449 70,272 75,258 62,079 68,200 82,607 94,943 103,452

Total Portland Cement Consumption (000 Metric Tons)III. Congressional Impasse

12

2010 2011 2012 2013 2014 2015 2016 2017Alabama -9.7% -0.4% 2.8% -19.8% 11.1% 22.0% 16.9% 23.8%Arkansas 3.4% -2.8% 9.8% -14.6% 6.6% 20.7% 16.6% 8.0%Arizona -14.9% 0.5% 5.8% -21.1% 8.3% 32.1% 26.4% 38.8%California -3.3% 9.3% 7.5% -24.4% 25.1% 25.2% 21.5% 5.6%Colorado 4.5% -4.6% 11.9% -15.6% 13.3% 22.2% 19.6% 10.4%Connecticut -1.9% 1.7% 8.4% -19.9% 6.4% 21.9% 20.9% 0.7%District Of Columbia -15.6% 63.1% 24.0% -33.3% 3.0% 14.1% 9.3% 9.6%Delaware 8.6% -0.8% -12.2% -13.6% 18.3% 20.1% 10.7% 4.7%Florida -5.1% -3.3% 5.7% -18.1% 17.5% 42.7% 26.2% 38.8%Georgia -9.5% -2.0% 7.5% -21.0% 11.1% 35.5% 34.5% 22.6%Hawaii -14.4% -0.6% 0.4% -13.2% 6.8% 23.8% 13.6% 12.6%Iowa -1.2% 11.7% 10.0% -14.4% 7.4% 15.7% 6.7% -1.2%Idaho 5.4% -3.0% -6.2% -11.4% 16.9% 26.5% 34.2% 3.4%Illinois -5.6% 0.1% 5.7% -22.1% 12.3% 22.7% 18.4% 12.7%Indiana 2.0% 0.6% 13.0% -22.1% 9.2% 19.0% 10.4% 2.0%Kansas 3.5% -1.4% 14.1% -15.5% 2.0% 13.5% 6.8% 9.5%Kentucky -2.1% 8.8% 7.8% -20.2% 5.2% 21.1% 17.9% 1.2%Louisiana 28.4% -9.6% -13.1% -10.9% 9.5% 11.0% 3.2% 0.0%Massachusetts -3.3% 7.9% 12.8% -20.1% 7.9% 24.4% 16.2% 7.1%Maryland -1.5% 8.7% 4.6% -20.1% 2.8% 26.5% 24.1% 10.0%Maine 0.1% -1.6% 4.6% -18.5% 11.2% 21.8% 18.3% 6.6%Michigan 12.2% -5.4% 9.5% -22.3% -0.7% 21.3% 18.3% -7.8%Minnesota 5.7% 1.1% 11.8% -25.1% 6.7% 25.4% 17.7% 2.9%Missouri -9.6% -9.9% 7.1% -19.8% 12.5% 24.6% 17.4% 3.2%Mississippi -3.6% -1.7% -2.4% -18.0% 6.6% 24.0% 15.5% 19.9%Montana 1.5% 5.2% 10.2% -15.0% 12.4% 20.6% 8.5% 6.2%North Carolina -1.9% 6.9% 5.8% -20.8% 16.7% 23.5% 14.2% 12.0%North Dakota 8.8% 45.9% 34.8% -20.7% -1.7% 4.0% -2.7% 0.3%Nebraska -3.0% 4.6% 9.4% -11.8% -1.9% 12.1% 6.4% -3.1%New Hampshire -6.4% 4.1% 6.1% -19.8% 4.6% 23.2% 20.1% 0.6%New Jersey -2.5% -4.4% 8.0% -20.6% 8.3% 21.0% 18.6% -2.9%New Mexico 13.2% -8.9% 6.2% -10.9% 7.2% 19.6% 8.7% 12.6%Nevada -16.8% 10.6% 9.2% -26.1% 26.7% 18.1% 27.4% 15.9%New York -5.3% 0.7% 8.5% -9.5% 0.0% 11.3% 8.4% 1.0%Ohio 5.4% 7.5% 10.7% -19.5% 10.3% 20.0% 15.0% -0.9%Oklahoma 7.0% 5.4% 6.6% -14.0% 1.8% 14.5% 2.6% -0.9%Oregon -8.2% 7.3% -10.7% -4.6% 16.7% 19.9% 13.6% 7.3%Pennsylvania 10.8% 4.3% 6.0% -12.8% 3.7% 17.7% 12.0% 5.9%Rhode Island -12.0% 14.8% 1.7% -17.4% 10.5% 23.9% 15.8% 12.6%South Carolina 13.4% 2.7% 7.6% -22.2% 5.9% 24.9% 15.9% 8.5%South Dakota -0.8% 4.8% 9.3% -12.2% 3.4% 11.6% 3.0% 5.0%Tennessee 0.8% -1.3% 7.6% -19.7% 7.1% 24.3% 15.7% 11.0%Texas 5.4% 3.5% 9.5% -11.3% 7.0% 14.9% 6.0% 6.4%Utah -3.4% 13.1% 8.5% -18.0% 8.3% 19.0% 10.8% 4.2%Virginia -10.4% 5.9% 8.6% -26.2% 13.1% 31.1% 20.7% 4.8%Vermont 8.5% -1.9% 9.4% -15.1% 14.8% 17.9% 9.8% 6.4%Washington -7.9% 2.5% 0.7% -12.8% 17.6% 20.5% 14.1% 5.4%Wisconsin 1.5% 6.6% 4.8% -21.5% 5.0% 21.6% 15.3% -0.2%West Virginia 5.9% 14.4% 6.1% -11.3% 6.4% 10.3% 6.2% 11.1%Wyoming -7.5% -6.6% 2.8% -8.2% 12.0% 14.3% 10.3% 8.3%United States 0.0% 2.7% 7.1% -17.5% 9.9% 21.1% 14.9% 9.0%

Annual Percent ChangeIII. Congressional Impasse

13