The trends continued into 2008. Mitsubishi Materials of Japan said in January it was buying Robertson's Ready Mix of Corona, Calif. And the North American subsidiary of Votorantim Group of Brazil announced one month later that it was buying Bridgeview, Ill.-based Prairie Material Sales, a major producer in metropolitan Chicago.Biting into income
A large diverse Midwest producer credits its growth only to buying other companies. “Our revenue has only increased due to acquisitions. Revenue at most of our operations has declined, affecting margins,” the producer told TCP.
Unlike past years, there is little agreement among producers on how economics will affect their bottom lines in 2008. About one-third each forecast more, less, or the same profit as in 2007. A small ready-mixed producer expecting a drop in income put it succinctly, blaming the “housing slowdown and pricing pressure.”
Another small producer in Florida, a state which has been particularly hard-hit by housing troubles, believes it will not see improved income until the second or third quarter of 2009.
Others cited higher fuel prices for the difficult environment. Charging more in the form of fuel surcharges is not always an option. “It's difficult to pass the costs on to customers because of competition,” said a New England producer.
It's in times like these when producers must get creative and rely more on technology. A Southwest producer says profit will increase in 2008 because it has become more efficient.
But economics are forcing some producers to pull back here. While almost half plan to spend the same on capital investments this year compared to last, more said they were decreasing such spending than said they were increasing. Against this current, one producer in the Southeast credits such programs for an increase in income. “We're increasing productivity through modernizing equipment and production techniques,” this producer explained.GPS to the rescue
Others said they would buy fewer trucks this year than in the past. Also, producers are finding their trucks get caught in traffic more than ever and in every part of the country. Many have turned to GPS to cope. “Using GPS in the truck, as well as up-to-the-minute traffic alerts, we are able to direct trucks to the quickest route to the job,” a Florida producer explained.
“Larger jobs are scheduled very early in the morning, if possible, to minimize the effects of traffic,” said a Southern producer.
Also, a little divine intervention doesn't hurt in a traffic jam. One Midwest producer explained how it responds: “Pray.”