2008 TCP 100 List
A painter can portray whatever he likes on a blank canvas. But businesses or whole industries do not have the luxury of starting from a clean slate. They must take what is given and make the best of it.
That's what producers did in 2007. They contended with a plunge in housing starts and rising raw material and fuel costs. And still, the industry persevered. Here, we present producers' strategies.
You will find this year's TCP100 listing of North America's largest concrete producing companies, presented by Allen-Villere Partners, in the double-gatefold next to page 46.
There's a rumor that many of the chairs in the offices of the leading concrete producer have been modified recently. Many of the smart concrete producers in 2007 (and so far this year) have been reported to be wearing their new seatbelts. Those who haven't been suitably equipped might have received a serious case of whiplash as they've tried to direct their companies in these topsy-turvy times.
Rarely has a year been filled with more important events. For every piece of good news that seems to indicate things are going forward smoothly, a manager would get jarred with another bit of bad news.
For instance, commercial and public works construction eked out gains of 3% and 2%, respectively, in the U.S. last year. Producers were pouring or getting ready to pour concrete for high-profile projects such as the 92-story Trump International Hotel and Tower in Chicago and the 1776-foot-tall Freedom Tower on the former World Trade Center site in New York City.
But a staggering 24% drop in total residential construction, triggered by the subprime lending debacle, wiped out these commercial gains. “The continued strength of the non-residential construction sector during the year was offset by a very weak residential sector,” reported CRH Plc, the Ireland-based owner of Oldcastle Materials, to its stockholders.
Home builders' losses
The drop has had a dramatic effect on our customers. Eighty-nine of the 100 biggest home builders in the U.S. posted sales losses in 2007.
What's more revealing is that the vast majority posted double-digit, year-over-year losses, according to BUILDER magazine, TCP's sister publication.
This year has brought no relief, as new residential construction was down 39% during the first four months. This is on par with what one Southern producer told TCP: “Residential housing is down 44%, while the commercial market is flat.”
Still, residential accounts for only one-third of the concrete produced in the U.S. So producers' batch plants, while impacted by the depressed housing market, have still been humming along with other orders.
Against this backdrop, we again present the TCP100, the concrete production industry's exclusive listing of North America's largest producers by revenue.
Start at the top few positions and you will notice many changes from last year. Industry consolidation in 2007 resulted in many large players being gobbled up by multinationals: Rinker (no. 5 last year) was purchased by Cemex; Hanson (no. 6) was bought by Heidelberg Cement; and Florida Rock (no. 11) was acquired by Vulcan Materials. You can find such changes up and down the list.