Industry Outlook

Industry Outlook

Dear Valued Distributor, Typically, we wait until the end of the year for our update letter but SpecChem has been very busy, thus we wanted to stop just past the half way mark to share what we are doing to improve our value proposition to you, our partner, and to share some market comments. Below are a few of our 2012 highlights: Our new Las Vegas Manufacturing facility (Project Sinatra) is in full production. This state of the art liquid and powder facility is strategically located in the southwest region of the United States to improve lead times, competitive position and our overall customer service.

We added to our professional sales staff by hiring a new Regional Salesman with another on the way in the very near future. Please join us in welcoming Chad Maple to the SpecChem team. Chad is a recent graduate from the University of Missouri with a degree in Finance.

We have added a new support specialist to our operations department. Tim Hutchens, who has interned with SpecChem the last two summers, will join the team full time upon completing his M.B.A. from the University of Missouri in December.

Expanding our Kansas City manufacturing footprint. We are currently working on a project that will increase manufacturing capacity as well as expanding our state of the art concrete chemical laboratory in Kansas City.

Commitment to Specifications. We are half way through the year with SpecLink-E and the SpecChem specification groundswell is creating more momentum across the United States. Additionally, we are now listed in Target’s concrete specifications across the United States.

Distributor Sales Training – We will again offer our SpecMasters Training program early next year, simply the best distributor sales person training school in the industry.

As part of our continued effort to promote SpecChem throughout the industry, we have proudly attended and/or displayed at the following 2012 trade shows: World of Concrete, IGGA, CFA, ICRI, TCA and ASCC.

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1619 Walnut Street | Kansas City, MO 64108 | 866.791.8700 f. 816.561.4029 | www.specchemllc.com

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Industry Outlook

Although our primary focus has been to increase market share in the United States, our China office continues to build upon its 2011 market success. Check out our China operation at www.specchemllc.com.cn Our distribution channel in Central America, specifically Panama, has made great strides and has securely positioned SpecChem as a major player in the Panama and Central America markets.

SpecChem will be well represented at the ACI (American Concrete Institute) National Convention in October which is held in Toronto.

SpecChem continues to grow thanks to the efforts of you, our distributor partners, and we have a very optimistic view of the market. Having said that, though, we understand that there continues to be some uncertainty in the market and economy as we head towards the November Presidential election. To that, please see the attached statistics that we believe are relevant to our current economic trends.

As always, we appreciate your continued support. SpecChem has not waivered from our Vision and Mission Statements: Vision Statement – To be recognized and respected as the premier concrete construction chemical company.

Mission Statement – “Best in Product, Service and Dependability” Sincerely,

Greg S. Maday Chairman & CEO

Mike Shull President

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1619 Walnut Street | Kansas City, MO 64108 | 866.791.8700 f. 816.561.4029 | www.specchemllc.com

Made in America

Industry Outlook Market Update As the economic recovery progresses, Portland cement consumption volumes are expected to reach 111 MMT (million metric tons) in 2016 up from 70 MMT in 2010.

Population growth is a critical long-term driver of cement consumption. Population is expected to grow by 78 million persons by 2035 (20+%).

Population increases will result in new requirements to expand highways, build schools, hospitals and other public buildings, construct new homes and add to existing commercial buildings.

The emergence of shale production is accompanied by increased cement demand and will account for 24% of U.S. natural gas consumption in 2035 compared to 6% as of 2008.

PCA estimates by 2015 concrete paved roads will enjoy a $266,185 initial bid cost advantage over asphalt for a one mile “standard” two lane roadway (30% savings).

Emerging competitive cost advantages over asphalt may improve concrete’s share of highway paving activity, resulting in huge potential volume gains.

Though new home construction represents just 20% of the overall housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to data from the Home Builders Association.

In 2006, residential construction accounted for an average of 10% of every state’s jobs, it is now 6%.

The Commerce Department said that housing starts rose 6.9% in June from May to a seasonally adjusted annual rate of 760,000. That’s the highest since October 2008. Single-family housing starts rose for the fourth straight month to a two-year high. Apartment starts, which can be volatile, increased after falling in May. The number of permits to build homes, a sign of future construction, fell 3.7% to 755,000. But that’s down from a three-and-a-half-year high in May. Permits for single-family homes edged up to the highest level since March 2010. Permits to build apartments declined.

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1619 Walnut Street | Kansas City, MO 64108 | 866.791.8700 f. 816.561.4029 | www.specchemllc.com

Made in America