A fourth-generation, family-owned concrete company in Chicago wants to build its own cement plant so it can become more vertically integrated.
Ozinga Bros Inc., founded in 1928, has proposed building the 1-million-ton-per-year plant on a 50-acre parcel it owns on Chicago's South Side. A permit application was filed in 2008, but now Indiana politicians are encouraging Ozinga to site the plant there.
The project is an unusual move as ready-mix operators are being acquired by multinational cement producers. In 2008, Brazil-based Votorantim Cement purchased Prairie Material, a large Midwest concrete supplier and Ozinga's largest competitor.
“We feel like this will help secure our future as a family-owned company in the Chicago area,” says Marty Ozinga IV, executive vice president. “Vertical integration is key to our survival.”
Cement prices have stabilized since the downturn, but users fear an uptick. In June, the price of Type 1 cement was on par with prices a year ago and was 10% lower than June 2007, according to the Producer Price Index.
Cement manufacturers are trying to boost prices, having recently issued increase letters to clients to the tune of $4 per ton, or roughly 5%, Ozinga says, adding that, during the last economic boom, the company was importing cement from China due to tight supplies.
The new plant, budgeted at $250 million, would create about 90 full-time jobs and construction would last 30 months. Initial design work has been performed by FLSmidth, a German plant-equipment maker.
Besides permitting, other hurdles remain, such as financing and logistics. But the company is optimistic. “We are telling our story, and it is resonating with people,” Ozinga says.