President And CFO Interview: China Advanced Construction Materials Group, Inc. (CADC) - Jeremy Goodwin
October 25, 2010 - The Wall Street Transcript has just published Building Materials, Residential Construction and Housing Report offering a timely review of the Building Materials sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Jeremy Goodwin has been a member of China ACM's board of directors since October 2008, and he recently assumed the position of Acting President of the company on Jan. 25, 2010. As President and Chief Financial Officer, he now oversees the public company activities, financial reporting and internal controls, as well as assists the CEO in procuring and deploying domestic contracts, expanding the company's involvement in international projects, and in the strategic and financial partnerships going forward. Mr. Goodwin has extensive experience in advising multinational and Asian companies on key corporate initiatives, such as business expansion, project management, strategic partnership, mergers and acquisitions, and financial management and reporting. Mr. Goodwin has experience working with Chinese building material companies, Chinese government agencies and various financial institutions. He received his Bachelor of Science from Cornell University and completed advanced-degree studies in international finance at the Graduate Institute of International Studies in Geneva Switzerland, as well as in Chinese affairs from Princeton University and the Johns Hopkins School of Advanced International Studies in Nanjing, China. He is fluent in Mandarin Chinese and French.
TWST: Please give us a history of China ACM and an overview of operation.
Mr. Goodwin: China ACM (CADC) was founded as a private company in 2002 by two veteran industry operators, our CEO and COO, with over 25 years' experience. Previously, the CEO served as plant manager of Beijing's municipal construction company in the 1980s and 1990s, doing prefabricated concrete blocks for landmark government compound buildings in Beijing. Working together, they were involved in using the first wave of premium concrete manufacturing production equipment in China, and they developed a thorough understanding of the industry. As a result, they also developed a passion and a vision for the accelerating development of the industry and wisely anticipated its trends. They left their state-owned employer in 2002 to start up China ACM with their own capital and have grown it from one concrete batching plant to what is now, eight years later, five fixed plants in Beijing, 16 portable plants across 10 provinces and five technically serviced plants across three provinces.
TWST: What are your primary products?
Mr. Goodwin: Our primary products are fresh, ready-mixed, eco-friendly concrete and related technical services. We provide concrete, ready-mix concrete mixing and engineering services and technical services.
TWST: You use a large amount of recycled waste material in your product. Why is that important?
Mr. Goodwin: When we say "recycled waste material," we mean the industrial byproducts from iron production, the ash thrown off from coal-fired power plants, wastewater, and we're also making a big R And D push to expand our universe of recyclable materials. It is important because we distinguish ourself as a certified eco-friendly green provider, and it actually lowers our cost of goods. A quick "Concrete 101" will help your readers understand what eco-friendly encompasses. Let's start with the difference between concrete and cement. Cement is a commodity; you can produce as much as you want and sell as much as the market will take. It doesn't require any special relationships with contractors or developers. It's pretty much a uniform product. It is also one of the primary component materials of concrete. Concrete is a value-added product and, in our case, a service as well because we provide custom mixing services and related technical services for concrete production. Cement does not go into the final structure of the building, concrete does.
Cement is not regulated on the front end; it is regulated on the back end in terms of requiring mining permits to mine the necessary resources to melt them down and make cement. And then cement is added to the concrete, which is mixed according to various formulas, and the concrete itself goes into the ultimate structures, and the structures are regulated by the government more and more in terms of quality standards, building codes and increasingly energy efficiency codes and eco-friendly codes. So concrete is regulated on the front end. Think of China ACM more as a specialty chemical engineering and production company. Only those who have sophisticated chemical admixtures, and very deep and broad knowledge on the ground of local regulation, and relationships with those building contractors can compete effectively in the concrete market versus those who make cement. Cement companies can sell to anybody who'll buy.
That is why cement is a commodity and concrete is a value-added product and, in our case, a value-added service product. The production of cement is very environmentally unfriendly because you are burning copious amounts of coal at temperatures in excess of 1,000 degrees Fahrenheit to melt down heavily mined limestone. So you are stripping the earth of limestone and you are throwing off excessive amounts of carbon emissions. To the extent that you reduce cement input into concrete, you are alleviating that environmental burden in the production of cement. But cement is a primary hardening and strengthening component of concrete. So the more you dilute the cement, the more you lessen the survivability and the durability of your concrete.
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