TCP interviewed Scott Szwejbka, senior vice president of Hanson Pipe & Precast, on the unique aspects of precast products in the current economy. The Irving, Texas-based producer supplies precast and pipe (30% and 70% of its products, respectively) to the southeastern and western states in the U.S. and eastern Canada.
Q: NPCA’s latest Benchmarking Report says precast sales increased 2% in 2012. Do you agree with their forecast for more of the same by the end of 2013? What has Hanson’s experience been in 2013 versus 2012?
A: Yes, in general I agree with the forecast that more of the same should be expected for the remainder of 2013. I think that the growth of 2% can be a bit misleading as it is very market dependent. Texas is seeing a larger increase due to large PPP projects that are primarily accomplished through private funding. California is also showing some increases as for the first time in many years there is a budget surplus and some of the pent-up demand for infrastructure projects is being realized. The increases in Texas and California are hiding markets like the Midwest, Northeast, and Southeast, which are flat or still shrinking.
Q: What do you consider the most important factors that will determine the future growth or decline of precast product sales?
A: The residential market is the key driver, which is heavily influenced by the overall economy and employment levels. Much of the demand for precast drainage products involves subdivisions and the associated commercial growth surrounding those developments. Currently, there are signs of life across the US in residential growth, but whether or not this is a short uptick or a move to steady improvement is still unclear.
Q: What markets (infrastructure, commercial, etc.) have been best/worst for you over the past 18 months? Feel free to give examples.
A: Infrastructure projects have been key over the last 3 years but as mentioned earlier, some of the largest projects have been Public Private Partnerships (PPP). In north Texas alone, there are currently 2 large examples in the North Tarrant Expressway project (SH 183-121) and the LBJ Freeway expansion (I 635). These two projects have a total cost of $5.2 billion, but approximately 80% of the funding comes from private sources. These projects result in significant improvement in road capacity without an immediate burden on taxpayers with the offset being the implementation of new toll roads.
The worst markets have been in the residential arena. With the collapse of the residential market, most new development stopped. Additionally, when the developments started, there was a very high backlog of completed lots yet to be built upon. As precast drainage products are installed very early in the development process, the recovery for our industry in residential was and still is delayed as the inventory of existing lots is depleted.
Q: Is Hanson Building Products changing the way it does business to ensure success in the (projected) economic recovery? (Ex: targeting a specific business segment, implementing new products or technologies, entering new partnerships).
A: Very little is the same coming out of this downturn versus how we went into it. Many contractors have gone out of business or combined with other organizations, so the customer list is smaller and thus each customer is more important. The downturn taught the industry that too much reliance on any one sector can cause difficulties, so we look to have a significant presence in infrastructure, residential and commercial segments in all of the markets that we serve. Our organization, like most, is much leaner than it was but the expectations of the customer base have only gotten higher. This requires a much more efficient approach to all aspects of the business.
Hanson Building Products is an international building products company and the largest manufacturer of concrete products in North America. With more than 80 facilities throughout the United States and Canada, Hanson Pipe & Precast is your single source for everything from precast bridges and gravity pipe to cellular concrete building panels and Premier® Railroad Crossings. Hanson is part of the German-owned HeidelbergCement Group.