wiss building materials conglomerate Holcim is one of the world's leading manufacturers of cement, aggregates and other supplies. The company employs more than 90,000 with operations in about 70 countries. Holcim CEO Markus Akermann recently offered Site Selection a look into his company's global strategy.

   Site Selection: Where is Holcim currently expanding operations around the world?
   Akermann: Holcim has expansion projects in cement primarily in the fast-growing emerging markets of Asia Pacific – to a large extent in India – Eastern Europe and Latin America. In developed countries, cement capacity is added selectively. In the U.S., for example, we are currently constructing the country's biggest cement plant, which is scheduled to go on stream in 2009. However, the focus in developed countries is more on other activities such as aggregates and ready-mix concrete. In 2007, Holcim invested substantially in this field in Europe, the U.S. and Singapore.

   SS: Where is the current hot location for building materials companies?
   Akermann: Certainly, India is one of these locations as demand is growing by eight to 10 percent annually. The economy is booming and the country has a huge need for infrastructure and housing. However, other emerging markets in Asia – especially China – Eastern Europe and Latin America show strong growth and respective opportunities.
   SS: What are the major factors driving the building materials sector today?
   Akermann: It is the drive for economic growth and urbanization, especially in emerging markets. Growth is the only way that the two billion people who still live at subsistence level – or below it – will gain a perspective to escape from poverty. Another factor is the ever-rising number of young people joining the labor market. Without growth this will lead to a social and economic collapse. The rapid pace of development goes hand in hand with a massive wave of urbanization. More and more people are thronging to megacities which are already bursting at the seams. By 2030, some seventy percent of the global population – five billion people – will be living in cities. Just think how much infrastructure urgently needs to be built for water and sewerage, road and rail transport, and the energy and telecommunications sectors. At the same time there is growing demand for public transport and a conspicuous lack of housing space. In the foreseeable future, rising incomes will induce a large proportion of the population of the emerging markets – according to The Economist, about one billion people – to demand goods that go well beyond simply meeting their everyday needs. In short, all this opens up promising prospects and new growth potential.

   SS: What are the major challenges in the sector?
   Akermann: How to reconcile growth with sustainability is increasingly coming to be seen as a central problem for the emerging markets in particular. We must all take our corporate responsibilities seriously and recognize the significance of the "triple bottom line," which covers economic, social and ecological factors. Some years ago we at Holcim incorporated these three core elements of sustainable development into our corporate strategy, giving them equal weight, and committed ourselves to thinking and acting accordingly.
   At the same time, this is also a huge opportunity. It is known that the built environment – i.e. the buildings on our planet – is responsible for about 40 percent of global energy consumption. Adopting a more sustainable approach to property construction would in my view make it possible to reduce energy consumption and thus CO2 emissions on a large scale, now and for future generations.

   SS: What is Holcim's investment strategy?
   Akermann: Our investment policies and product ranges are geared to the maturity of the market and resulting local customer needs. In the emerging markets, for example, the main emphasis is on building up and expanding cement production. As an economy becomes increasingly mature, there is greater vertical integration, and Holcim's product range becomes broader. The ready-mix concrete business is established first in the major urban centers. In the industrialized countries in particular, this is followed by a more sharply differentiated product range that may encompass the full spectrum, including other activities such as asphalt. The importance of the aggregates business in mature markets is accentuated by the degree of government regulation and shortages of high-grade raw material reserves.
   Holcim's growth strategy mainly concentrates on growth markets, particularly in Latin America, Asia, Africa and the Middle East. In these groups of countries, the focus is usually on the cement business. The importance of these markets has been given a huge boost by our market entry in India. The cement industry in these countries is experiencing a strong expansion phase as the markets require significantly larger quantities of cement each year. Holcim's logical response is to focus on substantial capacity expansion. However, mature markets also offer growth opportunities. By broadening its product range, expanding the aggregates business and offering supplementary services, Holcim is able to put together packages specifically tailored to the customer.