It's no secret that from 2008 to 2010, North America's concrete production industry, like much of the economy, has been stagnant and unable to gain momentum. A cavalcade of forces has conspired and schemed to reduce concrete demand.
These factors include, but are not limited to, a plunge in the housing market, the recession that began in 2007, the economic crisis of 2008, the drop-off in commercial real estate, and frozen credit markets.
Yet, despite this challenging economic environment, concrete producers have taken a collective deep breath and are ready for a clean slate. Only 15% anticipate lower sales this year compared to 2010, while 64% expect to hire new employees. These include drivers, office personnel, sales people, mechanics, and more.
Of course, producers gave us these answers after already experiencing several years of lower revenues and after painfully laying off many employees. Still, this year's TCP100, the concrete industry's most complete annual listing of the largest North American producers (page 22), shows the worst is over. The heady days of the last decade are still a memory, but producers are ready to do what they do best: manufacture more of the world's most important building material for the masses.
Waiting for a recovery
Depending on which day's headline you read, the economy and construction industry are recovering or facing yet another decline.
Following the $787 billion American Recovery and Reinvestment Act, popularly known as the Stimulus Bill, signed by President Barack Obama in February 2009, there was much hope for an industrywide recovery. Our nation would turn to concrete to rebuild its roads and infrastructure. There were plenty of “shovel-ready” projects in all 50 states, we were told.
But by 2010, that hope began to fade. Although the economy finally began to expand in June 2009 (the 18-month-long recession's official end), the snap back to prosperity has been fleeting. This year is turning into a disapointment. Worldwide and U.S. debt issues and a debt downgrade sank the stock market this summer.
Concrete producers want better growth than the anemic 0.8% gross domestic product we saw the first half of this year. “From a pure volume perspective, 2010 was one of the most difficult years the industry has ever experienced,” says Nathan McKean, CEO of BMC Enterprises and owner of Breckenridge Material Co. of St. Louis. The giant spending plan's results did not meet McKean's expectations.
Despite such disappointment, some believe that without the $787 billion in lifeblood pumping though the economy's veins, the serious recession could have been a depression. “I would hate to see what the last two years would have looked like without the stimulus,” says Wally Johnson, vice president of marketing and sales at U.S. Concrete in Houston. “It softened some of the blow that we took, but we still took a blow.”
Much like the conflicting headlines, opinions among producers differ regarding the state of the industry. Some remain optimistic, while others are downbeat. “We're marking time and waiting for demand to return,” according to F&F Concrete Corp., a ready-mix producer in Plantsville, Conn. “We see two more years of drought.”
Though there isn't a clear answer of when the industry will regain strong momentum, one thing is clear: The overall feeling among producers and industry analysts suggests the worst is over.