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Concrete In Australia : June 2009
Concrete in Australia Vol 35 No 2 17 Sustainability in construction materials by Rick Kreeck e heavy building materials industry is under pressure. e global financial crisis, coupled with declines in residential, commercial and civil construction, has reduced market volumes and led to increased competition for the work that is available. Given that market conditions are tough, many companies are looking to batten down the hatches and cut costs wherever possible. is means that product development and service innovation can come to a standstill. However, despite the economic gloom, the market is not standing still. Further challenges are looming to test the construction industry. Long term prosperity will come to those who address those challenges in a way that meets sustainability and performance criteria and works to get all stakeholders on side. Cement production contributes around 2.4% of global greenhouse gas emissions and a price on carbon will inevitably lead to further cost pressures, irrespective of the level of assistance given by the federal government to emissions intensive trade exposed (EITE) activities. Emissions trading will also increase fuel prices over time, which is a significant contributor to the delivered cost of concrete and aggregates. In addition, environmental controls and conditions on developments will continue to become more onerous, and will require clever solutions to ensure that projects can be delivered within time and budget constraints. An increasing number of developments are seeking to achieve four, five or six star ratings under the Green Building Council of Australia rating system, or achieve local sustainability targets, such as those under BASIX. Added to this, the availability of materials is becoming a major concern to many suppliers. Quarries in some major markets are nearing the end of their useful life, and alternative sources can be limited or prohibitively expensive to develop. Many concrete or quarry operations are under pressure from encroaching residential or commercial development, which represent a short-term boon from a sales perspective, but represent longer-term challenges to meet operating conditions and deal with the complaints of community groups. All industry members understand that community support is essential for long term operation in that market. e companies that will prosper and grow in this market are those that will identify these challenges and will work with clients to develop solutions to issues which will meet sustainability targets, while also making business sense. ere has been a rapid proliferation of supplementary cementitious materials, such as milled slag. is development has been driven in large part by a desire to achieve environmental outcomes that both keep clients happy and improve durability performance, but don t impose prohibitively high costs on the supplier. Companies are now much more strategic in their use of these materials and consequently have been able to reduce their cement content per cubic metre while delivering increasingly sophisticated sustainability solutions to clients. e development of recycled alternatives, such as manufactured sand, can also lead to improved sustainability performance while maintaining business viability. However, as the use of manufactured sand can demonstrate, there are a number of technical challenges that must be overcome to determine how such a product can be best used and where its use may be unsuitable. Further, gaining market acceptance -- from sceptical engineers to pump operators and dealing with a natural resistance to change, is also a key element of development work. It is one thing to develop a conforming, environmentally sustainable product in a laboratory. It is another thing entirely to sell its virtues to those working with the product. Dealing with the market challenges to come will be a difficult challenge for those in the materials industry, as they are already doing it tough. However, long term prosperity will come to those who address those challenges in a way that meets sustainability and performance criteria and works to get all stakeholders -- including the engineers, the drivers, the pump operators and the concreters -- on side. e federal government wants the materials industry to meet these challenges and ensure that the construction industry remains viable in difficult economic times. Companies that are confronting these issues, through developing new products or using alternate materials, may be entitled to additional tax deductions based on the cost of undertaking this activity. For every $100 of eligible R&D expenses incurred by a company, the company may be entitled to claim an additional $25 tax deduction, which could save $7.50 in tax. Companies must move forward to survive -- those that don t will be overwhelmed by the challenges that confront them. Fortunately, the federal government provides assistance to firms willing to take risks in moving forward, which provides for more sustainable development, better solutions for clients and an opportunity for companies to obtain a significant financial benefit for the challenges they undertake. It is up to the industry to find the answers to the challenges it faces: the rewards will come to those that do. Rick Kreeck is a senior manager at accountant and business consultant Ernst & Young, Sydney.