This past fall, the concrete industry received a message of hope from economists. The general outlook: While no spectacular changes were expected for the fourth quarter of 2006, the forecast for 2007 and 2008 is brighter.
The growth rate for cement consumption in 2007 is projected to be a modest 0.3%, and this should increase by another 2.7% in 2007, says Ed Sullivan, chief economist at the Portland Cement Association (PCA).
However, Sullivan predicts this modest rise in consumption will get a boost from a 2% increase in cement intensity growth (tons of cement per dollar of construction activity). So, there will be more cement used in construction projects, particularly in “green” building and hurricane-prone areas.
Through November, there had been 15 consecutive monthly increases in nonresidential construction spending, says Ken Simonson, chief economist for the Associated General Contractors of America (AGC).
The most significant growth was in lodging, multi-retail units, hospitals, and manufacturing. Paving and educational construction also increased in 2006. Although this was not quite enough to offset a continuing drop in residential construction, Simonson projects continued growth in many nonresidential sectors.
Such insights can mean the difference between informed business planning and guesswork. We have created the “Material Issues” department to provide this competitive edge: accurate, top-notch information about the availability and cost of materials and products that affect our readers.
Taking this idea a step further, THE CONCRETE PRODUCER's first Economic Summit takes place Jan. 23 during World of Concrete in Las Vegas. Allen-Villere Partners, a private investment banking and consulting firm specializing in the ready-mixed concrete, aggregate, and construction materials industries, will sponsor the luncheon event.
The industry's drivers
“We're inviting people to take a step back from their day-to-day work, to get a significant macro view of the current and future health of the concrete industry,” says Pierre Villere, managing partner of Allen-Villere Partners. “They will leave with important information about key economic drivers of the industry that they can apply to decisions in their own businesses.”
PCA's Sullivan will present an update on the U.S. economy, and provide an outlook for commercial, residential, and public works construction for 2007 and beyond.
Villere will discuss what makes a producer profitable, while also concentrating on concrete industry consolidation and strategies for buying and selling companies.