Will TXI Be Sold and What Does That Mean to Your Air Quality?

As a living, breathing organism, you are no doubt closely following recent developments at cement maker TXI. Having read our story from 2005 about how the company fouls our air in North Texas by belching forth pollutants in Midlothian, you are wondering what it means to our air quality now that a rogue group that controls 10 percent of TXI has gotten elected three of its people to TXI’s board in what is being described as an idictment of current management by the shareholders. Right?

Well, I asked Jim Schermbeck of Downwinders at Risk about all this. Schermbeck is a watchdog who has been hounding these cement makers in Midlothian to clean up their act for years. I found his take on the situation instructive. In short, he thinks the new guys on the board might be getting ready to try to sell the company. Read on only if you have lungs:

[What these three new board members means to our air quality] is a good question and no one knows the answer yet. Although Shamrock keeps stating that TXI has not produced the kind of “value” for shareholders its peers have, I’ve not heard or seen one specific example of that in terms of policy or decision-making they’ve cited. Right now, it seems like its coded language for hanging out a “for sale” sign.

The “cement guy” the Shamrock folks brought in as one of the three directors elected yesterday is a former head of Giant Cement which operates notorious haz-waste burning kilns in S. Carolina and Penn. So it could be they would want to turn back on the four ancient haz-waste wet kilns TXI turned off last year in Midlothian and just keep running them into the ground for the extra bit of profit they provide as waste incinerators.

The same guy — Gary Pechota — also stuck around to supervise the sale of Giant to a huge Spanish cement company for a cool $350 million. I can’t help but think that this is the direction all of this is going for TXI. It’s one of only a couple of American-owned cement companies left, and has been a ripe takeover target for some time because of its Texas and California market shares. I think the recession has put a damper on that kind of sale talk for now, but in a year or two — and when Shamrock has elected even more board members — I think you might see some suitors stepping up. First on my list is the Egyptian billionaire Nassef Sawiris, who’s already the largest shareholder with 15% and joined with Shamrock yesterday in voting against management.

On the other hand, TXI has always been the project of the Rogers family. It’s been their corporate fiefdom. And the 20-year fight with us has gotten very personal. Ralph was a kindly old guy who gave a lot of money to PBS for early childhood education but could never reconcile that concern with the fact that his company was responsible for raining down lead on Midlothian kids. His son, Robert, is a lot more premeditated and calculating, and doesn’t have the company loyalty, or the economic conditions, his father enjoyed.

What’s been kind of funny to watch in this case is that the same tactics they tried using against Shamrock were the ones they’ve always used against Downwinders — ignore them, and then when you can’t ignore them, condescend to them. Only they don’t work as well when the other side has an army of millionaires and billionaires.

Last year, when TXI announced they were “temporarily idling” those four haz-waste burning wet kilns, the board of Downwinders sent the company a very sincere, non-gloating letter saying that we wanted to take this opportunity to explore ways the company could move forward without those wet kilns ever coming back on line. We offered to work with TXI to get financial incentives for them to keep those kilns off line and make the dry kiln they have in Midlothian more environmentally friendly. We never got a response — not even acknowledgment that TXI got the letter.

So it might be a breath of fresh air to dialogue with the new directors about areas of agreement and possible cooperation. It’s not so personal with them — it’s business. I think we can make a pretty good case that good business means talking to the folks that can either step out of your way, or be an expensive obstacle. We’ll certainly be trying to establish a line of communication with the new directors in hopes that such a dialogue and cooperation is possible.


  • Doug

    As a large consumer of TXI products, the downwinders have it all wrong. Shamrock is in it for the money, period. They don’t give a rats ass about the downwinders or the contractors.

    TXI tried to raise cement prices at the beginning of 2009, during the biggest downturn since the late eighties. Their customers laughed in their faces…in fact, I threw my TXI salesman out of my office. Told him to try to raise prices and see where that gets them.

    CEMEX has bought out every profitable manufactuer of cement around the southern half of the US, and they don’t need to buy TXI, they will just continue to lower the prices to the point they will force them out of business. TXI at one time was a big player, not anymore that the Mexicans (CEMEX) have come to play

  • Bob

    It is interesting that nobody every talks about the TXI plant in a positive manner or that it makes some of the greenest cement around. When you look at facts, it has more environmental equipment than any other plant in the U.S. It has invested more environmental control equipment than any other plant in the U.S. Those are facts and not just my opinion that are always neglected to be mentioned.