I have written about the results of the NRMCA's Industry Data Survey each year since 2005. This year, against the cruel reality of a market in contraction and an industry witnessing a transformation that represents the “new normal,” it may be the most compelling time to review the latest results. The stark reality is the industry's financial performance hasn't been this challenging in decades.
So there is no confusion, the results presented here are for the prior calendar year. In this instance, the 2010 survey is reporting financial results for calendar 2009.
Unfortunately, many of the predictions we made last year about 2009's results were correct, except one: Somehow, as puzzling as it may seem, the industry succeeded in effecting an increase in the top-line selling price, which was something we did not predict. This made the results less painful than they could have been.
Otherwise, we were right in many areas: We predicted a 265-million-yard market in 2009, and the actual number fell below that, finishing closer to 258 million yards. We also predicted contractions in volume and the attendant impacts on plant and fleet efficiency.
So how did the industry fare in 2009? While this may come as no surprise, we predicted falling volumes would tip the industry into the red. And despite the gains in top-line selling price, the industry lost the most amount of money per cubic yard produced since the recession of the early 1990s. Here are some of the key data:
But the bottom line was painful in 2009, as the industry lost $3.07 per yard produced despite an increase in the selling price of $1.90 per yard for the Typical Producer, which is the average of all producer respondents and does not take into account size or geography. This is a financial drubbing we haven't witnessed in almost two decades. It is driven exclusively by lower volumes over which to spread fixed costs.
Selling price averaged $96.05 per yard compared with $94.15 per cubic yard in 2008. This increase was critical in staunching further red ink. Losses could have reached more than $5 per yard without this increase.
All of the rest of the key data reflect the impact that lower volumes have on profitability, despite efforts by producers to cut costs. One producer-friend told me “I have cut all the fat, then all the muscle, and now I am trying to cut bone…”
This is why I preach the Industry Data Survey is the single most important tool any concrete producer can utilize to benchmark the performance of his company against industry peers, particularly against the backdrop of the worst financial performance this industry has endured in many years. We hope you will participate this year.
Pierre Villere writes the Concrete Returns column each month in The Concrete Producer and is president and managing partner of Allen-Villere Partners. Efirstname.lastname@example.org telephone 985-727-4310. Visitwww.allenvillere.com.
While I have described the mechanics of participating in the survey many times in the past, this year I'm betting there are readers interested in the survey who are examining the results for the first time. So let me briefly describe the report and the participation process.
Historically, participants are solicited each spring, and financial personnel within the participating companies complete detailed questionnaires with the results of their prior year's financial performance. This is then submitted to a third-party accounting firm to assure confidentiality.
The data from these questionnaires are compiled and circulated to the participants, each of whom receives a customized report that measures the performance of their individual business against their peers throughout the industry. The results are tabulated by region, size of business, and by the top and bottom quartiles in terms of profitability.
In addition, for those individual states where five or more respondents participate, regional results are reported by state, which is even more meaningful for individual participants. The Business Administration Committee then presents the results at the NRMCA's ConcreteWorks Conference & Expo, which was held in Charlotte, N.C., this past October. The results presented by NRMCA each fall are for the prior calendar year. So in this instance, the 2010 survey is reporting financial results for calendar 2009.