In this issue, we’ve highlighted people who have been working on the concrete industry’s behalf. The foundation for much of their work has been laid in the past. We thank and congratulate them. Now, looking forward to 2015, there are important industry trends that might influence your business operations.
- Supply pressures on ingredients. Our industry is facing a series of new constraints on the ingredients we use to make concrete. From water shortages on the West Coast to dwindling fly ash production on the East Coast, producers must pay more attention to their supply channels. As rebuilding projects come on line, from Hurricane Sandy combined with a stronger commercial market with increased cement intensity, material supplies could become more constrained. Producers will be more even more interested in economical mix designs and long-term supply contracts. There could even be a renewed interest in material price escalators in project contracts.
- Trucks. In early November, FTR, a freight transportation forecaster, released preliminary data showing October 2014 North American Class 8 truck net orders at 45,795 units, a near record number. October was the second highest order month ever, resulting in increases of 87% month-over-month and 76% year-over-year. Class 8 orders for the latest six-month period through October annualize to 354,000 units, a major increase from the previous six-month period ending in September. Producers planning to increase their volumes or market area must plan now to increase their fleet sizes.
- Mid-level Management. With the economy relatively back on track, our industry is experiencing a loss of historical perspective as key executives retire. Many corporate leaders were forced to stay on past their personal exit dates. But our industry’s greatest current constraint to business expansion is at mid-level management. Managerial span of control, or the number of employees who report to a manager, has been stretched thin. Executive development programs and industry-focused, job-specific training will see a dramatic increase in 2015. For the past few years, producers couldn’t afford this educational investment, but they can’t grow without a definite managerial development plan. I predict strong interest in the Master of Business Administration (MBA) degree in Concrete Industry Management offered at Middle Tennessee State University.
- Back-office technology. Our industry’s procrastination in adopting new technology may have actually been a good thing. The concrete industry as a whole is behind in incorporating back-office technology that managers can use to manage their business activities. But with cost-of-technology reduced, producers will leapfrog into the new high-tech world. Investment in truck-tracking, mobile slump control, and customer service technology will reach an all-time high in 2015. More than ever, operational margins are a function of IT investment.
2015 will be a better year for concrete production. How your operations benefit in the near-term future is in your hands. Are my predictions close to the discussions you’ve been holding in your 2015 capital and operational planning sessions? Did I miss something?
If you think my predictions are correct, drop me a note advising me how some of the folks on your staff are influencing these trends in your region.