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    Credit: Allen Villere Partners

    Producers are thankful that while pretax profit per yard has plunged during the recession, average sales price has continued to climb.

The National Ready Mixed Concrete Association's Industry Data Survey is the most important tool any concrete producer can utilize to benchmark performance against industry peers.

In prior years, we have described the value of the survey, discussed the distinctions between the top and bottom performers across the industry, and reported specific gains and losses in various areas of operations to help point producers to the parts of their business they need to examine carefully.

As the industry struggles in the worst downturn in memory, measuring performance is more important than ever. The results presented by NRMCA each fall are for the prior calendar year. So in this instance, the 2009 survey is reporting financial results for calendar 2008.

So how did the industry fare in 2008? When we presented the 2007 results in the fall of 2008, we opined on how the industry would perform in the coming year, given the darkening economic clouds forming over the industry. Interestingly, we were right on almost every measure we predicted. Fortunately, we were wrong on the selling price projection, as that was actually up again in 2008. This surprised us-and saved the industry from falling into red ink. Here are some of the key data:

  • The increase in selling price saved the industry in 2008, allowing it to essentially break even at a 20 cent per yard profit margin, down from a profit of $6.06 in 2007. The industry hasn't experienced this level of unprofitability since the 1991-92 recession.
  • The selling price averaged $94.15 per yard, compared to $91.88 in 2007, an increase we never would have guessed. We had predicted a drop in selling price to $85.45. In the absence of this top-line increase, the industry would have fallen deeply into the red. Specifically, profitability shrunk by $5.86 per-cubic-yard last year from 2007, so the importance of the $2.27 selling price increase was critical.
  • Other key indicators including the Typical Producer's annual cubic yards, cubic yards per plant, and cubic yards per mixer truck were all impacted on a peak-to-trough basis. (Typical Producer is defined as the 50th percentile, and does not take into account size or geography).

Specifically, annual yards have fallen from 981,828 in 2005 to 657,035 in 2008 for the Typical Producer, a 33% drop over the period. Yards per plant have fallen from 66,391 in 2005 to 49,796 in 2008, a drop of 25%. Yards per mixer truck dropped from 5846 in 2005 to 5158 in 2008, reflecting the number of parked mixers in the national fleet, thus impacting fleet efficiency.

Production plunge

Like last year, the biggest news is the continuing drop in volume. In last year's report, we estimated volume would be down to 364 million cubic yards from 414 million the year before. We ended at 351 million yards, lower than we had expected.

And as we start to predict the outcome for 2009, the precipitous free-fall continues. The industry looks like it is headed to 265 million yards, the smallest since 1995, and a drop in volume of more than 42% from the 458 million yards in 2005.

As we begin 2010, we think the industry has stabilized, and the trend line points upward to a recovery year. As I have said in the past, it is in these times that the Industry Data Survey can be the most valuable tool in a producer's arsenal, pinpointing the areas of performance that can be improved upon as the industry digs out from the worst slump in its history.

Pierre Villere is president and managing partner of Allen-Villere Partners. Contact him at pvillere@allenvillere.com or telephone 985-727-4310. Visit www.allenvillere.com.


All participants receive a detailed questionnaire each spring, and financial personnel within the participating companies complete the form with the results of their prior year's financial performance, which is then submitted to a third-party accounting firm to assure confidentiality.

The data from these questionnaires are compiled and circulated to the participants, all of whom receive a customized report that measures the performance of their companies against their peers throughout the industry. The results are tabulated by region, size of the 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 Indianapolis in October. The results presented by NRMCA each fall is for the prior calendar year. So in this instance, the 2009 survey is reporting financial results for calendar 2008.