The new President/CEO of the Portland Cement Association sat down with Cement Americas to outline his thoughts and strategies for the cement industry.
By Steven Prokopy
The cement industry and the man now in charge of guiding its interests in Washington D.C., and nationwide, find itself in a time of big, and mostly positive change. Gregory M. Scott officially took on the role of Portland Cement Association president and chief executive officer at the same time the organization moved its central offices from Skokie, Ill., to Washington D.C., to better represent the membership before Congress, regulatory agencies, the Administration and the White House.
Symbolically, the change in leadership also comes at a moment in the cement industry’s history when a serious move toward digging itself out of a years-long recession seems to be afoot, at least according to the latest forecast from PCA Chief Economist Edward Sullivan, who is anticipating double-digit cement consumption growth over the next several years at least, beginning as soon as the second half of this year.
Scott joined PCA in January 2012 as the senior president of government affairs and was announced as its new president in September 2012. He brings a strong record of accomplishments to PCA with a wealth of experience in trade association leadership and legislative campaigns on federal transportation, environmental and energy issues. Most recently, he served as executive vice president and general counsel for the National Petrochemical and Refiners Association in Washington, D.C.
While executive vice president, Scott initiated a significant expansion of the association’s public policy advocacy efforts. His work helped to position the group as a leading advocate for American manufacturing and a balanced, long-term national energy policy. Prior to joining NPRA, Scott served as vice president of National Strategies, Inc., a trade association representing CEOs of Fortune 100 firms on corporate finance and tax issues.
Scott has extensive legal, management and political experience in the public and private sectors. He began his career serving on the staff of Sen. Timothy E. Wirth (D-Colo.), first as a legislative assistant for then-Rep. Wirth and later as assistant financial director for his campaign for the U.S. Senate. From 1991-2008, Scott was a partner/member of Kelley Drye Collier Shannon, where he gained extensive expertise in petroleum refining and motor fuel marketing, legislative and regulatory issues.
Scott received his Bachelor of Arts degree from Colorado College in Colorado Springs and his J.D. from The American University’s Washington College of Law in Washington, D.C.
He recently sat down with Cement Americas to outline his thoughts and strategies for the cement industry to move onward and upward.
CA: In the press release that came out in September 2012, PCA made it clear the shifting of its headquarters to Washington, D.C. Can you talk about some of the factors that went into making that decision and how the association will be different in its focus?
Greg Scott: Sure. The first thing I’ll tell you is that I’ve only been with PCA for about a year now, but it is my understanding that the executive committee and the board of PCA had been thinking about such a shift from the Chicagoland area to D.C. for a number of years. So this wasn’t a new idea or one that came up out of the blue. Federal government relations and the impact of the federal government, both positively and potentially negatively, on the cement industry has grown. PCA decided it was time to make the shift and to put the focal point – the president and CEO position – in Washington, D.C., to send a message of the importance of federal advocacy to the industry.
I think it’s also very important to note what it doesn’t mean. I hear rumors about this occasionally, but we are not shutting down the Skokie campus. There are still vital, PCA activities in the technical, marketing, and communications areas. Our subsidiary, CTLGroup, is also in Skokie. I certainly don’t see in the near, medium or long term any move to completely relocate PCA to D.C. It simply doesn’t make economic or operations sense. We can work well with two primary offices, and I see that as how things will remain over the next few years.
CA: The press release made it seem like this decision was being mulled over even before the economy turned several years ago.
GS: I think that’s right. PCA has adopted a long-term strategic plan on which we’re focusing on two different things. One is federal and local advocacy, and second is market development. Those themes have been in place for at least the last 10 years, and it really does extend prior to the economic downturn that has hit the industry so hard. I would not tie the economy to this decision.
CA: As a result of this shift, do you expect any staff to be added?
GS: We’ve added three people in the last couple of months, so yes. Each of them was hired off of Capitol Hill, each a former Congressional staffer. We’re sending a signal that PCA wants to become more active on the Hill, and we’re working toward having a bigger footprint there and a larger set of interactions both with federal legislators and regulators. I see that as both offensive and defensive. There are opportunities for the cement industry and PCA members in the regulatory and legislative camps, and there are threats.
One of the things we all need to recognize is that it’s not all bad; the federal government is not all a problem for the cement industry. The opportunity we see right now is the post-Hurricane Sandy Disaster Relief [Act, the first dollars from which went out in March]. If folks continue talking about resiliency and investing now so you don’t have to rebuild later, that’s certainly an opportunity for cement and concrete to gain a larger market share. In that case, we can speak positively about something as opposed to speaking about certain EPA or MSHA programs.
We’ve already expanded our D.C. office with boots-on-the-ground lobbyists on Capitol Hill and at the agencies, and we’ll keep the size of the Skokie staff the same moving into the future. We’ve had some staff reductions in previous years, but my impression is that is over for the time being. We’ve got the staff we think we need to grow the organization and service our members well.
CA: Speaking of regulatory issues facing the cement industry, what is your reaction to the EPA’s final NESHAP [National Emission Standards for Hazardous Air Pollutants] ruling, in terms of cooperation between the agency and the cement industry during the process of creating the new rules?
GS: PCA is very pleased with many portions of EPA’s final cement NESHAP regulations, which were finalized in December 2012. The final NESHAP rules reflect, in my opinion, the positive outcomes that can be achieved when regulators and the regulated community talk with each other rather than past each other. While the final NESHAP rules continue to contain strict emissions standards that will be difficult and expensive for domestic cement manufacturers to achieve, the reset compliance timetable and appropriately revised emissions standards are achievable by PCA members and will protect American jobs and manufacturing while reducing emissions from the cement production sector of the economy.
CA: It seems like the D.C. office's primary function in the last few years has been educating and negotiating the regulatory agencies on how the cement industry does and doesn’t function or contribute to the emissions problem. But it seems like most of those meetings were met positively and were a part of the final NESHAP rules.
GS: You’re absolutely right, there have been one after the other. Let’s go back three or four years when we talked about climate change legislation, the cap-and-trade bill, or CO2 regulations. I personally think that for the time being, we’re not going to see federal legislation on CO2 controls. Clearly, being an energy-intensive industry, PCA and our members will want to track that carefully. There’s probably not the political will to tackle a new cap-and-trade program or even a carbon tax in the near future. I think what we’re going to be left with is really EPA regulation of CO2 through the Clean Air Act. I’m not saying that’s the ideal approach that PCA would want, nor is that the easiest way to do it, but that’s probably what we’re going to see for the next few years.
It’s interesting that while we’ve been battling with EPA over the NESHAP standard for several years, I also believe we have developed a better relationship with EPA as we’ve gone through the process. They understand the cement industry and what is doable and not doable on some of the criteria pollutants and emissions that come out of our plants. Yes, we’ve been involved in litigation with them, but we've settled that and are now moving forward with what we hope will be a NESHAP rule that the industry can live with and meets everyone’s goals. And if we’ve done that, I think we’ve achieved something very positive and not simply a battle with EPA; it’s a discussion and accommodation and acknowledgment of both sides’ interests.
EPA and our members want to use alternative fuels to reduce our emissions. We agree with that, and many of our members are aggressively pursuing alternative fuels instead of coal. There needs to be rational regulations governing the use of alternative fuels in order for our members to continue to use those options. We think that our conversations with EPA over the last couple of years has led to a better understanding by EPA on what each side is looking for and what the challenges are.
I don’t think we’re going to see an end to the pattern of one rule after another. There’s a PM [Particulate Matter] standard that EPA put out in December that impacts the cement industry; there’s a new ozone standard coming out; and probably a new sulfur dioxide standard as well. What I do hope we have seen is perhaps a shift in the relationship and the dialogue between the cement industry as a regulated party and EPA as the regulator, and more of an understanding of the core issues each side is pursuing and how both sides might be able to achieve their goals in way that isn’t a we-win/you-lose proposition.
CA: As a result of President Obama winning his bid for re-election, are you expecting his second term to be more or less tough on the cement industry?
GS: My viewpoint is that neither President Obama nor the Republican Party achieved much of a mandate out of this election. Quite frankly, I think even if Mr. Romney had won the White House, I’m not sure that you could realistically say that there was a mandate from the American people. Mr. Obama is trying to claim a mandate regarding taxes and that sort of thing, and I won’t dispute him on that. But there is still a relatively even divide in the U.S. Senate and the Republicans still control the House.
Because there wasn’t a tremendous shift in power in Washington, you have to start wondering what Mr. Obama’s agenda is for his last four years in office. I think he will pursue a fairly aggressive agenda of environmental protection, but he is also now saddled with the economy. He can no longer look back at President Bush and say, “You handed me this economy.” Now, it’s his economy, and he’s going to need to develop jobs and get the economy moving again or he – and ultimately the Democratic Party – will be blamed in four years at the polls, or maybe even in two years at the mid-term election.
CA: Wasn’t it shortly after the election that the President said that until the economy was thriving again, he wasn’t going to put as much emphasis on regulating industry?
GS: I think I heard the same thing. He is correctly saying that the biggest thing on the average American’s mind is jobs and the economy. We’ve seen a lot of rules hung up over at EPA during the election year, and I think we’ll now see several of those rules start to make their way to actually being published. We’ll see more regulatory activity on the environmental front in the next few months than we saw in the six months leading up to the election. But I don’t see a strong charge toward environmental protection by the Obama Administration in the coming couple of years.
While we’re on the subject of government and policy, can you talk about the potential impact on or importance to the industry of EPA Administrator Lisa Jackson’s and Secretary of Transportation Ray LaHood’s respective retirement announcements.
I don’t believe that the retirements of Administrator Jackson or Secretary LaHood will have a significant impact on the domestic cement manufacturing industry over the next four years. What will be important for PCA members will be to build on the cooperative, as opposed to confrontational, dialogue established with EPA during Administrator Jackson’s tenure during the term of the individual nominated to be her successor, Gina McCarthy.
With respect to DOT, we look forward to working with the next Transportation Secretary and leaders in Congress to devise and enact a long-term financing mechanism to fund national transportation infrastructure improvements over the coming decade. The next four years will be challenging ones for PCA and its members, but there also will be opportunities embedded in those challenges if we can take advantage of them.
CA: In the entire time I’ve known [PCA Chief Economist] Ed Sullivan and seen him speak, I don’t think I’ve seen him as optimistic as he was at World of Concrete this year. You were in the room as well. What was your reaction to his new and improved forecast for 2013 and beyond? Do you agree with his assessment, and is the industry ready for the type of growth he is talking about?
GS: Ed’s revised forecast for 2013 reflects the fact that President Obama and federal legislators proved that there was room for compromise and a common commitment to avoid driving over the “fiscal cliff” at the end of 2012. That year-end compromise avoided the significant harm that would have been visited on the U.S. economy should the Bush-era tax cuts have been allowed to expire. It’s also important to remember that Ed’s most recent forecast is for modest growth from historically low levels of cement demand; it’s an improvement, but we still have a long way to go. PCA members are fully prepared to meet increased cement demand in the coming years as the housing market recovers and investment in infrastructure expands.
CA: Compared to his year-end forecast, which was done in face of the fiscal cliff crisis, it was quite different.
GS: What PCA did late last year is activate our grassroots teams and lobbyists on Capitol Hill, having them talk to legislators and their staff, and saying, “We need to solve fiscal cliff.” We didn’t say, “Raise taxes,” or “Cut entitlements.” We simply reflected Ed Sullivan’s forecast at the time – if we go off this cliff, there’s going to be an impact on the economy generally and the cement industry more specifically that is going to be very bad for employment and the recovery economy. We could have seen the economic activity retract, a return into a recession, and a reduction in cement demand. That wouldn’t have been in our interests or the country’s interests.
Ed is still very bullish on the medium- and long-term prospects for the cement industry, to the point where he believes we will be short on capacity by the end of this decade or the beginning of the next decade.
CA: Is there an emphasis on the benefits of cement and concrete – in particular life-cycle and sustainability issues – when PCA is in Washington having discussions with regulators or legislators?
GS: Absolutely. That is working its way into a spinoff of the work we’ve been doing at MIT with the Concrete Sustainability Hub. The focus on life-cycle, cost analyses, carbon footprint of the industry is something we are pushing very hard in a variety of areas. For example, California has adopted its climate change legislation, and the highway department is looking at ways of reducing the carbon footprint of paving. MIT and PCA have been talking to Caltrans [California Department of Transportation] about how the carbon footprint of concrete pavement is lower than asphalt when you look at it in a life-cycle fashion, based on MIT research.
When you look at it in a cost fashion, it is also less expensive both with the initial installation and over time. Those types of positive messages are the sort we’re taking from the MIT research both to the states and the federal government. Our advocacy is focused on carbon intensity as well as life-cycle costs, showing that whether it’s resiliency or cost or carbon footprint, there are significant advantages to the use of cement and concrete over other products.
CA: After every major weather event, such as Hurricane Sandy, or a particularly aggressive tornado season, talk turns to the idea of building with concrete, particularly when it comes to residential building.
GS: Resiliency means different things to a lot of different people, and we’re making the argument that for every dollar you invest in resiliency, you save about $4 in not having to rebuild. That type of long-term thinking and investment is sometimes difficult to get policy makers, legislators or regulators to grasp. Whether you’re talking about buildings or infrastructure such as flood walls or berms or pavements, there are significant advantages to using cement or concrete over other materials in terms of resiliency. That message is being embraced by many policy makers in the wake of Sandy and other storms.
We had a resiliency day out in Joplin, Mo., [site of a devastating May 2011 tornado that killed nearly 160 reisidents], in the fall, in which we said, “As you rebuild post-tornado, if you invest in resiliency in your rebuilding, it will pay long-term dividends and it will be inexpensive in the long term.” That’s the message we took to Capitol Hill post-Sandy as well.
CA: While you’re leading PCA, will there be certain areas of interest you will emphasize?
GS: Clearly, the shift from Skokie to Washington emphasizes the importance of the federal government to the future of the cement industry. I have a mandate from our board to increase and deepen PCA’s profile in Washington, as well as at the state level. One of the things that I'm a firm believer in is the coordination of our technical people in Skokie, our lobbyists in the D.C. area, and our regional representatives we have in the promotion groups. We have to all work together and sing off the same songbook in order for us to be successful.
I’m not a particularly helpful guy down in Augusta, Ga., for example. There’s got to be a local representative down there to talk to the state legislature, but we can help our Georgia lobbyist or Colorado lobbyist develop the messages that are similar to what we’re doing at the federal level. That’s a very important goal that I have moving forward. I also think that we have a change in leadership, not just at the staff level, but also on the volunteer level. Cary Cohrs is our chairman now; he’s a third-generation cement industry executive. He has a lot of great ideas about energizing our meetings and message, and I’m looking forward to working with him.
Steven Prokopy is a Chicago-based freelancer, and the former editor of Cement Americas.