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Home arrow News arrow Business arrow Ash Grove Cement Co. weathers economic storm

Ash Grove Cement Co. weathers economic storm

Demand for cement drops, but production shift helps Durkee plant


Ash Grove Cement’s plant in Durkee is one of Baker County’s larger private employers. (Baker City Herald/Ed Merriman)
Ash Grove Cement’s plant in Durkee is one of Baker County’s larger private employers. (Baker City Herald/Ed Merriman)
Despite plunging demand for cement due to the nationwide housing slump and global economic downturn, the Ash Grove Cement Co. plant in Durkee is benefitting from a shift in production from an older plant in Idaho.

Terry Kerby, manager of Ash Grove’s Durkee plant about 25 miles southeast of Baker City, said production of clinker material used to make cement is being shifted from the Inkom, Idaho, plant to Durkee.

That shift in production will help keep the Durkee plant running closer to its optimum capacity and keep the plant’s 116 workers on the payroll earning base pay of $19 to $26 an hour, or $32 to $40 per hour with benefits, Kerby said.

Most of those workers live in Baker County, with a smaller number commuting from neighboring Malheur County.

Jackie Clark, public relations manager at Ash Grove’s headquarters in Overland Park, Kan., said the Portland Cement Association, which tracks the cement market worldwide, is reporting demand for cement declining 10 percent in 2007, 13 percent expected this year, followed by another 12 percent decline projected for 2009, marking “the strongest cement decline in history” for members of the association.

Despite those projected declines, Clark said the Inkom plant is the only one of the company’s nine plants nationwide where a partial closure and layoffs are planned.  

“We don’t anticipate any changes in staffing at our plant,” Kerby said, adding that the Durkee plant is one of the largest, newest and most efficient cement plants operated nationwide by Ash Grove Cement Co.

“We run three shifts. Nothing here will change, other than we will operate more (with less down time),” Kerby said.

Don McLean, the Durkee plant’s night shift supervisor, said he has been with the company for nearly 37 years, starting out as a laborer and working his way up.

 “The past year has been pretty slow. They could have laid some people off for a couple of months, but you gotta give Ash Grove credit, they kept everybody going. They kept everybody working,” McLean said. “This is a good company to work for. Good pay. Good benefits.

“I wouldn’t have stayed 37 years if this wasn’t a good company to work for,” said McLean, who lives in Huntington.

Don Garrison, control room operator, said he has been making the nearly 60-mile round trip from his home in Baker City to Durkee for 14 years because it’s a good job with good pay, he likes the people he works with, and the plant is in Northeastern Oregon, where the fishing, hunting, boating, skiing and other outdoor recreation is great.

Garrison also started as a laborer. In two years he advanced to a job in the control room, where he and other employees watch computer screens that monitor and control nearly every aspect of the cement plant’s operation, including videos of the fire burning inside the kilns that heat clinker materials as part of the cement-manufacturing process.

Over the years, McLean said Garrison has earned a reputation as one of the top control room operators, and has been called on to help with the startup of new cement plants built by Ash Grove in other areas.

While the commitment of Ash Grove and other large private employers in Baker County to maintain staffing levels has helped keep unemployment and job losses in this area relatively low, McLean said after nearly four decades in the cement manufacturing business, he’s seen enough recessions come and go that he knows a sharp decline in cement sales signals a recession, and improving cement sales indicate things are getting better.

Kerby has also seen cement sales rise and fall with the economy. 

“In 2008, as a result of the downturn in construction and the housing market, our plant will run at 51.5 percent uptime,” Kerby said. “We like to run at 89 to 92 percent uptime, with down time limited to scheduled maintenance.”

On Jan. 1, when the old, inefficient clinker production line at the Inkom plant shuts down, Kerby said clinker production at the Durkee plant should pick up to 80  to 90 percent uptime in 2009.

Clinker is an intermediate product in the cement manufacturing process. McLean said it takes a thermal heating and cooling process to produce clinker powder from a meal comprised of shale, clay and limestone.

  Kerby said about 200,000 tons a year of clinker material is being shifted to the Durkee plant, where clinker production has dropped from a high of more than 900,000 tons a year when worldwide concrete demand exceeded supplies a few years ago, to around 600,000 tons in 2008.

That shift will boost clinker production at the Durkee plant to at least 800,000 tons and maybe more in 2009, Kerby said.

After Jan. 1, a portion of the clinker material produced at Durkee will be shipped to the Inkom plant to be ground into the concrete mix. A press report from Ash Grove’s head office said about a third of the Inkom plant’s 68 workers will be laid off when the clinker line shuts down, but by continuing to operate a grinding mill in Inkom, about 20 workers at the plant will remain.

Clark said the company is negotiating with union representatives to determine which employees and the exact number who will remain to work the grinding and load out operations at the Inkom plant.

“This was an especially tough decision that we had to make in response to the sharp economic downturn that is adversely affecting the cement industry and the entire U.S. manufacturing sector,” said Ash Grove Chairman and CEO Charlie Sunderland. “Our Inkom employees are an integral part of the Ash Grove family, and we will do our best to support them during this difficult transition.” 

Kerby said demand for cement has dropped with the decline in the housing market and commercial construction.

Demand for concrete also has declined in China and other countries, Kerby said.

He said it’s interesting that the current downturn in demand comes just a few years after one of the most severe cement shortages in history, when demand soared due to construction of everything from housing and skyscrapers to the world’s largest dam and an industrial revolution in China, India and other countries.

During that boom period that peaked between 2004 and 2006, Kerby said U.S. cement production hit 100 million tons annually, but that fell short of the U.S. demand that reached 110 million to 130 million during that time.

“Demand was so high domestic plants couldn’t keep up, and China was buying everything available on the international markets,” Kerby said. “Right now, those tides have turned.

“Everywhere housing has slowed down; the high rises have slowed down. Even some of the federal highway jobs seem to be cutting back,” Kerby said.

“In the long run, we are optimistic about the future, but we aren’t expecting the economy to make much of a recovery until 2010,” Kerby said.

In the meantime, he said he expects cement demand to begin edging upward next year, with President-elect Barack Obama and Oregon Gov. Ted Kulongoski proposing investments in transportation and other building projects to create jobs and help lift the state and the nation out of recession.

“Any time a highway goes in or any kind of construction goes on it helps us,” Kerby said. 

 
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