Ash Grove's ownership is interested in remaining independent. We think we have sufficient mass to continue business as usual.

Ash Grove doesn't consider itself limited to any degree by the fact that we're not owned by a foreign company. We are able to expand where we have opportunities.

Cement Americas: What's it like to be the president of the largest U.S.-owned cement company?

George Wells: It's not unexpected if you've been observing what's been going on with recent mergers and acquisitions. It's funny, we like to compare our performance with other similar companies for benchmarking purposes, and there are very few of us left now that we can compare with. Really there's just companies like TXI Industries and ourselves that are American owned that own multiple production facilities. And we're proud of that. We use it as a sales tool.

Even though we find that a lot of our ready-mix customers are owned by foreign companies, we still fly the American flag.

CA: So there's no immediate danger of Ash Grove becoming a foreign-owned entity?

GW: None at all.

CA: Let's go through some of the individual plants: eight cement plants, with half of those still being wet process operations.

GW: Right. Seattle; Lemington, Utah; Durkee, Ore.; and Louisville, Neb. are all dry process plants. Foreman, Ark.; Inkom, Idaho; Clancy, Mont.; and Chanute, Kan. are the wet plants. But our Chanute plant, as you know, is being modernized and being converted from a wet to a dry plant. We hope to be shutting the plant down for the conversion during the first part of April; it should be down for about eight weeks before start up in early June. Our contractor has 500 people working on that project.

At Chanute, we'll be increasing the capacity from about 500,000-tpy capacity to 1.5 million tpy. We just completed an upgrade at the Durkee plant, and we've been fine-tuning our Lemington operation. At Durkee, we added another line and increased capacity 400,000 tpy.

We're also 50% partners with Hanson in a company called North Texas Cement Co. [which includes a 900,000-tpy wet-process plant in Midlothian, Texas]. Hanson is a good partner, but what their long-range plans in the cement business are, we don't know. Their only other U.S. cement operation, as you know, is the Permanente plant in California.

CA: How involved is Ash Grove in importing?

GW: Well, the North Texas Cement Co. has an import terminal in Houston, which the venture built several years ago, and we are importing material into that area. We aren't looking at any other import facilities of that size.

CA: What is the balance in the areas Ash Grove operates between supply and demand? Is importing even an issue to the company?

GW: Between the market and capacity, it's pretty well balanced in all of our markets. In the Northwest, there is a major importer with Glacier Northwest, which imports into both Seattle and Portland, Ore. And there are plentiful imports that come in from Canada from the Lafarge and Tilbury plants in British Columbia.

In the Midwest, we have additional capacity coming on at our Chanute plant; Lafarge is adding capacity at its Sugar Creek, Mo. plant; Monarch is adding capacity at its Humboldt, Kan. plant. We think that there will be plenty of capacity to meet the anticipated increase in demand for that area.

If anything there's more capacity than the present market requires, so everyone is anticipating that they will be able to take care of the growth that's expected over the next four or five years.

CA: I assume all of your facilities are operating at capacity presently.

GW: Yes, we've been operating at full capacity for the last several years.

CA: Considering that in North America, something like 80% of all cement plants are under some form of foreign ownership, what are the advantages of keeping Ash Grove independent?

GW: Ash Grove's ownership is interested in remaining independent. We think that we have sufficient mass to continue business as usual. We don't have any problem with foreign ownership per se. Cemex saw an opportunity to get involved in the U.S. market with their Southdown acquisition. That's their decision; I think it's a good one; and it's fine with us. The same can be said with recent moves by Dyckerhoff, Heidelberger, Holderbank, or Lafarge.

I think our employees are very comfortable with the present ownership. They like the style and culture of the company, and it would be difficult to maintain that culture with a change in ownership.

CA: How would you describe the Ash Grove culture?

GW: Our employees are expected to perform at high levels. At the same time, they're used to having decisions made quickly without any financial constraints, because we're well financed and able to what we want to do in the market in terms of expanding our production facilities.

They like the fact that the ownership is very accessible and available and stable. The company has been in the business since 1882.

CA: Do you see advantages to foreign ownership that Ash Grove might not benefit from in its current state?

GW: I assume that the recent sales were done in the best interest of the shareholders. I know in Lone Star's case, the shareholders came out very well. The sales have been at very rich multiples. But I also think that the new owners intend to make a return on that investment.

We also put a bid in for the Dakota Cement plant but were unsuccessful. It will be interesting to see how Chihuahua maximizes return on that significant investment.

CA: Will the added international resources that these recently purchased companies now have hurt you competitively?

GW: Our equipment vendors to help us maintain our plants and keep them competitive. We operate one of the most sophisticated cement and concrete laboratories in the United States, and it furnishes us with the information we need to maintain the quality of our cement to compete in our market.

CA: Is Ash Grove considering anything in terms of expansion in terms of acquisitions or new construction?

GW: We will have a terminal supplying the Denver market, we've signed the agreement. It's a facility that was distributing cement, but the owner is adding additional storage capacity for us.

We have master plans for expanding all of our plants, and we'll move forward with those as we see markets develop. We also will continue to explore acquisition opportunities as they arise. Our focus now will be on what we can do at our plants to take advantage of the market.

CA: Are you concerned with the minimal increase in North American cement consumption in 2000?

GW: We're at historically high levels, and we just heard the Portland Cement Association's chief economist [Bill Toal] last week, and he's forecasting that, in 2001, more cement will be consumed than it was last year. But frankly we're concerned with some general weakness in the economy, in housing and commercial construction. And unless public works picks up the slack, we could see that it might be difficult to improve on 2000 numbers.

CA: I recall a few downward adjustments in the PCA's 2000 forecast as the year progressed.

GW: Toal is pretty good at adjusting, and his final forecast is usually right on. But at last week's PCA meeting, he projected a slight increase in 2001 based on increase in public works, specifically highway work, which we have not seen to date in most of our markets. So we are concerned about that.

If the general economy contracts, our business will contract. That's just the nature of the industry. I think in the markets where we are, we're seeing good population growth. People coming in creates jobs. The outlook is good for us but it's not guaranteed.

CA: So Ash Grove isn't considering getting into the importing business to hit markets that you don't right now?

GW: No, we have no plans to add to our import capacity.

CA: One problem that many companies — not just cement companies — are facing today is getting new blood into the industry. Does Ash Grove have any plan in place to bring people into the industry from the college level or from other industries?

GW: We're not only concerned about getting new people into the company, we're also worried about keeping the good people we have. The nature of the problem is that there's a lot of movement between companies. This is happening because many companies, including ourselves, have not developed internally the kind of people we want running our plants and marketing our products. We're working on that problem.

We do have a summer intern program, where we hire interns at the plant level. And we've been fairly successful at getting productive work from the interns, with some of them actually being hired by us at the completion of their internship. Every summer, we usually have two or three interns company-wide.

CA: For many years, Ash Grove has been at the forefront of waste fuel usage and tire burning. Is that still a part of the equation or has interference from environmentalists taken the steam out of those programs?

GW: We're still very involved with waste fuels at our Chanute and Foreman plants. And the North Texas venture consumes just under 4 million tires per year. The burning of wastes has been very important to the success of those plants.

We're also burning tires at our Seattle, Oregon, and Idaho plants. We're taking advantage of technology that was developed in some part with our own people. We're very proud of our environmental efforts. Some people may not see it as helping the environment, but we're taking waste that would otherwise be land-filled. But it helps us too because we use the material as a primary fuel source.

CA: How has the subject of waste fuel burning impacted Ash Grove's community relations efforts in your markets?

GW: Community relations are important at all of our plants. Our employees serve on school boards, volunteer fire departments, and in elected positions. We have an Ash Grove foundation through which we contribute financially to local sports programs; we've purchased fire trucks for local programs. We just try to be as active as possible in the community.

Each of our plants produce a company newsletter, which is also available to community leaders. The newsletters are primarily designed for our employees because we think communication is important.

CA: With the way things have changed in the North American cement industry lately, where do you see Ash Grove's place in the grand scheme of things?

GW: Our business is still a local business. We're fortunate to have plants that are in locations that are strategically placed in their markets. We strive to take care of our customers' needs by providing quality products.

With the size of Ash Grove, we are able to expand and grow where we have opportunities. We don't consider ourselves limited to any degree by the fact that we're not owned by a foreign company.

Ash Grove is a family-owned company. The great-grandsons of the founder are involved with the company, and they are very interested in the business and the success of the company. And they are committed to keeping Ash Grove a private company.

George M. Wells graduated from Carleton College, Northfield, Minn., in 1958. He received a law degree from the University of Michigan in 1961. He practiced law in the Kansas City area for about four years, and started working for Ash Grove Cement Co. in 1965 as assistant vice president and secretary. Wells left Ash Grove in 1975 to work for Oregon Portland Cement Co., a publicly held company in Portland, Ore.

In 1983, Ash Grove purchased Oregon Portland; and in 1991, Wells was brought back to Ash Grove's headquarters in Overland Park, Kan., as president of the company, a position he has held ever since.