Cement Americas: Let's start with a broad overview of Titan America. How would you describe the state of the company right now? Is it where you would like it to be?

Aris Papadopoulos: These are good days for the industry as a whole, so we're fortunate to be where we are in the U.S. at this point. Obviously, we've been working at it for the last 13 years. Following the Essex cement terminal in New Jersey in the late 1980s, our first cement project in the U.S. was in 1992 when we did the joint venture with Tarmac and became the managing partner of the Roanoke Cement plant.

Until then, we were pursuing a project in Castle Hayne [Wilmington, N.C.], which we still have a possibility of doing and are re-examining. That was something we had started, but Tarmac proposed doing the Roanoke project, which at that time needed to be modernized. So, we put together that joint venture to modernize the plant in 1995 and 1996. We enjoyed then the improvement of the market during the 1990s.

In 2000, Tarmac America was sold by Anglo-American, which had acquired U.K.-based Tarmac PLC. So, we were successful in 2000 in buying Tarmac America, spinning off the non-Florida aggregates businesses to Vulcan, and spinning off the pavers and the non-Florida concrete products businesses to Eagle Materials in late 2000, early 2001.

CA: You still have ready mix operations, right?

AP: We kept all the ready mix operations that Tarmac had, both in Florida and in the eastern part of Virginia. And, we modernized the Pennsuco plant in Florida, which Tarmac had talked about doing for many years. That started last June, and next week [week of May 15] we're holding our grand opening of the new Pennsuco kiln line.

CA: Would you elaborate on the Pennsuco plant upgrade?

AP: The plant had two wet kilns, and we've shut those down and replaced them with a single-line precalciner of 5,000 tpd. We've kept the finish mills, and we're supplementing those with additional finish grinding. And, we're building a new packhouse for bagged products. Essentially, we doubled the capacity of the plant from 900,000 to 1.8 million tpy. With that design, I think the plant could probably do another 500,000 tpy.

Obviously, when we started this in 2001, we didn't expect that the market would surge so quickly. Our business strategy was [based on the fact] that 40% of the cement consumed in Florida was being imported, and that was a very high percentage for long-term sustainability for a product so essential to Florida's economy. So, we expected that the additional capacity would be absorbed over a longer period of time. But, then, luck struck, and we were in the right place at the right time. In fact, people were calling up in the months before the startup and asking, “When is this product going to be available?”

CA: You also opened a new terminal earlier this year at the Port of Tampa.

AP: Yes, we did. In December, we opened a terminal for cement in Tampa. There, our philosophy is that we like to pair plants with terminals, as we did in Roanoke, which was paired with Norfolk. Today, when you're depending on one line and one piece of equipment for everything, it's good to have an import backup. Our use of imports is essentially to supplement demand. For example, in Norfolk, we imported when necessary; and then, during the 1990s when there was enough domestic capacity, we were the first to cut back and even stop importing through Norfolk. But, we may have to begin imports again with market conditions as they are developing.

CA: Let's talk about demand issues. You were fortunate to have the ball rolling on the Pennsuco plant before what could be deemed a demand crisis arose, especially in Florida, with respect to cement demand. I assume you're running and shipping at full capacity now.

AP: Yes, we are.

CA: Are you contemplating any additional efforts to bring in more product, either through your own plants or importing?

AP: Pennsuco is looking at further debottlenecking and adding possibly as much as 500,000 million tpy of production with the existing line. And, obviously, Tampa has started stronger than we had originally planned, and that terminal is capable of going up to 1 million tons, as the market demands. In Virginia, we have more limited ability to debottleneck that plant — we've done that already — but we're looking at restoring some import activity at Norfolk.

CA: Is that area experiencing an increase in demand as well?

AP: I'd say it's throughout the East coast. I'm not that familiar with what happens on the West coast, but I'd say, definitely the East coast over the last couple of years has surprised us and many other people.

CA: With respect to importing, I think I saw in an earlier annual report that you were importing over 1 million tons into the U.S. at that time. Is it significantly more than that now?

AP: No, it has stayed at about that level. Our plants in Greece export to several locations in Europe and the U.S. We supply both our own terminals and other companies, too, that are purchasing cement. Sometimes, we buy cement from others.

CA: Then all the cement you're importing isn't coming from Greece, though I assume a sizeable amount is. Where else are you importing from?

AP: I'd say Greece is exporting 1 million tons to the U.S., but we're also trading with other companies to supplement that. We're buying product from our competitor in Greece, Heracles, for our needs up in New Jersey. We're looking elsewhere, too. In fact, we're bringing product in from the Far East to help the situation in Virginia right now.

CA: Do you anticipate demand this year or next to drop off?

AP: It's hard to predict. The Portland Cement Association and everyone else underestimated last year's surge in demand. We thought that this year everybody may overcompensate and overdo it. But, it seems again the market is proving to be stronger. I think one component there is that a lot of companies ran their plants flat out last year and deferred maintenance, which caught up with everybody this year. That affected some of the domestic production.

Everybody's optimistic about this year, and PCA is predicting steady growth for the coming years. But, based on our combined history of predicting, we should always exercise some caution in our thinking. We should be prepared for both events: improvement and deterioration, if that happens. PCA's message was that the economy, unless there's some abrupt movement in interest rates, should be able to adjust to what appears to be speculative activity in the housing markets.

CA: In Florida, what types of projects are driving demand — highway, residential, commercial?

AP: It cuts across everything. We've got a pretty representative cross section of everything that goes on in Florida. Obviously, Florida is a very concrete-intensive market. It will probably become even more so as a lot of these building codes become stricter further north after the severe hurricane season. I think, as a general trend in the U.S., concrete use will probably intensify.

The increase in steel and lumber prices has made concrete more competitive, so I'd say the overall demand picture combined with demographics is favorable. But, then, you can't predict some of these events that turn the world upside down all of a sudden.

CA: It looks like the highway bill will be moving forward sooner rather than later. Will that create a demand difficult to meet?

AP: I don't expect a surge. There's so much inertia in highway projects, both for those underway and future ones that have to go through a lot of planning, permitting, and local issues. We get a representative portion of the work, and I don't expect a sudden spike or a big decline there.

CA: In such hot markets where you operate, especially Florida, how do you remain competitive against, perhaps, some of the larger companies? Is distribution an issue?

AP: I think logistics is one of the key dimensions of this business — getting product to people at the right time and the right place, in the right quantities, with the right quality. We're a lot more focused in fewer regions, and we try to apply a lot more care and service for customers in those areas. We underestimate the costs that people incur when they don't have that, in terms of lost labor efficiency, lost time, etc. If you can do that and do it well, I think people see the value.

I look at our ready mix business, for example, where in the last two or three years we have added Systech GPS to all of our mixer trucks in order to be able to better manage the mobile fleet. Until now, you knew the truck was somewhere, but you didn't know exactly where it was, and you couldn't really communicate that to the customer. Now, we know exactly where the driver is, and we can tell the customer, He's about to turn into your front gate; and, he can look out his window and see the truck. That makes life easier for them and for us, and makes everybody more efficient in the process. We're probably the first company, I think, that really integrated GPS into the dispatching system.

CA: You mentioned North Carolina earlier. Are there any other areas along the East coast that you're looking at in terms of growth? Or, will you stay with developing what you have now?

AP: Ours is an Eastern U.S. strategy. We'd like to grow that presence with time. But, we're not rushed; we're not going to do something that doesn't make sense from a value perspective, where we can't improve and increase the value. Right now, a lot of assets have sort of surged in value, and it's very tricky buying things. I'd say organic growth is probably a higher priority for us right now, but we will look at opportunities as they come up.

CA: I noticed a company called Separation Technologies listed on your web site. Is that a relatively new business you've entered into?

AP: That's a very interesting business. We really identified that as a need back in 1995-1996 in Virginia as we saw the state DOTs wanting to specify pozzolans for long-term durability projects. Our customers were telling us that they could not find reliable quality sources of fly ash. We have a medium-alkali product there, and the aggregates were reactive, so it was important that they use slag or ash. At that time, we were investing millions of dollars in the cement plant and in quality control. We said, This doesn't make sense: We produce a quality-controlled product, and then somebody takes an uncontrolled ash, throws it in, has problems, and comes to us for help. This model is not going to work.

So, we looked around, and we ran across a company that had just come out with a technology to refine ash, essentially to take the carbon out of it. We did a small project with them in North Carolina, a joint venture. That succeeded, we expanded it. Then, we took a minority stake in that company, and 2½ years ago we bought out the remaining investors.

It's sort of a unique position, because in our industry you typically don't have proprietary technology. You can buy most technology from suppliers, but we have a patented proprietary technology for beneficiating the ash. It's an electrostatic process, and I think few people realize that today we're the world's largest processor of ash for use in concrete. This year, we'll have about 1 million tons of processing capability.

Our strategy is two-fold: In the Eastern U.S., we own and operate these processing facilities at power plants and market the product. Outside that area, and internationally, we're looking to sell market licenses to other building materials companies that want to do the same thing. In fact, we signed our first market license with Lafarge for the U.K. and Ireland last fall. So, they're in the process of developing that market, buying the equipment from us and so forth, and we're looking to expand that model into continental Europe and other parts of North America before we look further to Asia and more distant places. It's a promising little niche.

CA: Where are the facilities that are processing ash in North America?

AP: Right now, they stretch from eastern Canada all the way down to Jacksonville, Fla. In North America, we're talking about six facilities. The brand name for the final product is ProAsh, which is a consistently low-carbon product that can be used in concrete.

CA: And that is the ash product, not the combined ash/cement mix?

AP: Yes, that's the product that is sold to the ready mix companies, and we use it ourselves, obviously, in our own ready mix. The other benefit of this is that you do have a side product that is very rich in carbon. That can be — and is being reused today — at power plants as supplemental fuel. We're also trying it out as a supplemental kiln fuel. Where coal prices have gone today, it's a lot more valuable than it was years ago. This is a great win-win story for the power industry that obviously doesn't want to landfill this, the environment, the concrete manufacturers that have a stable product they can rely on, and the cement industry that can use it as a supplemental fuel, which we are actually using at our Pennsuco plant.

CA: Can you walk us through Titan America's environmental efforts. And, where does the company stand in terms of sustainability?

AP: Titan Cement is part of the World Sustainability Council and the cement subsector of that. We are very keen — not just in the U.S., but in Europe also — on the whole range of sustainability issues from environment to efficiency to the community dimensions of sustainability, that is, how you can improve the way plants look and how people perceive you, which may be not just your NOx number and so forth. Your appearance, how you interact with the community trafficwise, and all these other dimensions are significant.

On the environmental front, everything we've done projectwise in the U.S. has had an environmental objective to it. Pennsuco's was multifold, including air emissions improvements and also recycling of some of the materials produced in the quarry, which otherwise would be wasted, such as fines. Plus, the elimination of the production of kiln dust. So, all these were dimensions of this improvement project.

Similarly, Roanoke over the years, both in its modernization and many other projects, directed its efforts toward improvements in air quality, managing effluents by reusing stormwater and other plant water that has hounded the plant, and also better containment of kiln dust. In fact, three or four years ago, Roanoke received the governor's environmental award for the state of Virginia.

CA: Has the company set any future long-term goals in terms of sustainability?

AP: We're constantly focused on the issue of efficiency, which obviously has an improvement dimension for the environment — the more energy-efficient and resource-efficient we can be, the better it is from a consumption and emissions perspective. Pozzolans themselves, I think, are important in this regard; our fly ash involvement has a very strong environmental dimension. By using more pozzolans, we do substitute some of our own cement and clinker consumption. We are examining even the potential benefits of building up CO₂ credits here and in Europe. I think that's one of the attractive features for our potential licensees elsewhere, that there is a possible CO₂ credit benefit from this.

CA: Recruiting and retaining employees is another vital issue to the industry. Is Titan doing anything unique with respect to recruiting from the university level or within the industry? As for retention, do you have a strategy to keep employees on board a long time?

AP: A lot of this originates with the nature of the company itself. The Titan group is somewhat unique in the industry, as it is still a family-led company. Although 103 years old, we feel very young because we have a new generation — the fourth generation — that has taken a leadership role. At the same time, combined with our core shareholder base, we do have a very strong professional culture. So, I think the balance of the two gives us the best of both worlds: stability of shareholders and being able to plan things that have long-term benefits and implications without chasing the quarterly and annual objectives that too many companies today spend a lot of and effort trying to manage. That gives us a unique environment to work in as professionals.

We are multiregional, we're not global; we are a lot more focused in the areas where we do operate. We are hands on operators of our assets. We're not the sort of company that looks at businesses as portfolios. We spend a lot of time with our assets. I'm probably out in the field 80% of the time — at our plants, at our customer locations, at our terminals, because honestly, that's where I get my best ideas and my best information.

We tend to be very lean in terms of staff. I personally believe that the line people have to engage in thinking about strategy and other staff functions. So, we tend to be a lot more empowering of people. I'd call it almost entrepreneurial in nature. That appeals to certain people who are attracted to us and enjoy working in that kind of environment and stay with us — including myself! So, that's a big component in retention: who you are and how you go about doing your business.

We are values-centered, that is, we have a core set of values built over the century of company life that basically makes decision-making easy, because if you have a dilemma or decision, you typically turn toward your values and probably see the answer right there. And, we tend to communicate a lot, not through bureaucracies, but by people talking to other people throughout the company. That helps us make decisions faster and move quicker and take advantage of opportunities when we see them or address issues faster than most others.

CA: In one of Titan Cement's annual reports, there was a quote in which you said, “The goal of the company is to be a powerful regional cement producer, vertically integrated and independent.” It seems that independence is key to the company identity.

AP: We are publicly traded. We do have respect for the shareholder, but we recognize in our business that the decisions and investments we make are not events that happen in just one quarter or one or two years. When you undertake big projects like we did at Pennsuco, that's a 50-year commitment at least. If it's the right thing to do, you might get lucky as we were, and things happen faster, or you may have to wait a little longer. We're not pressed for time.

I think we're very fortunate in our industry that we have a product that is probably not going to get obsolete for many generations. I think we can benefit from that and use the technology. I often tell our young employees, You have the best of both worlds here. You don't have to wake up every day worrying that someone has made your product obsolete. But, you can take advantage of all the technology that's being created. We use the latest in systems at our cement plants to control production. We use the GPS and myriad other technologies to improve the way we do business. I think that's the best of both worlds.

Because of our hands-on focus, we have been able to execute big projects very successfully, both at Roanoke and especially at Pennsuco. We did study a lot of the projects that had happened in the U.S. over the past seven or eight years, and there have been a lot of problems. By contrast, Pennsuco was completed ahead of schedule by two months and without a lost-time accident over the complete project. All the parties left on very happy terms. To do a big project like that is a great accomplishment, but it takes a lot of involvement through a cross section of management. We don't feel it's something you can turn over to somebody as a turnkey project and expect the best results. If you're not directly involved in these projects, you're not going to get what you want, and it's not going to happen by itself.

Aris Papadopoulos began his career with Athens, Greece-based Titan Cement Co. (Titan America's parent company) in 1992. He became managing director of Titan Atlantic and CEO of Roanoke Cement Co. in 1994. Following the successful acquisition of Tarmac America, Inc., in October 2000, the Titan Atlantic named changed to Titan America, and Aris became its CEO.

He has more than 20 years of experience in heavy industry. Prior to joining Titan Cement, he held several management and technical positions in the power generation and petroleum industries at Thermo Electron and Aramco. He earned a degree in Chemical Engineering from MIT and his MBA from Harvard University