There's clearly one good thing the construction market and concrete producers can say about 2008: It's almost over.
Improvement was nowhere to be found as summer turned to fall. Construction activity totaled $387 billion the first eight months of the year, 15% lower than the $455 billion a year earlier. Residential construction remained in dire straights, down 38%. Nonresidential building improved by 5%, while non-building, or public works construction, was flat.
Producers' results depict how difficult business has become:
Cemex expects its U.S. ready-mix business to drop by 28% in 2008, the Monterrey, Mexico-based construction materials supplier said in its quarterly results released in September. Cement volume in the U.S. will decrease 18%, and aggregate volumes also will decrease by 28%. “We continued to face a challenging economic environment in most of our markets,” said Rodrigo Trevino, Cemex's CFO. As a result of a poor housing market, Cemex said in late summer that it was shuttering its cement production plant in Brooksville, Fla., north of Tampa. It will reopen when conditions improve. For more, visit www.cemex.com.
U.S. Concrete reported it sold 1.79 million yards of ready-mix in the second quarter, a 4.4% drop from a year ago. Ready-mix sales are down 3.2% for the first half of the year. “While the decline in same-store-sales volume in the quarter was not totally unexpected, the pricing pressure for our products in most of our markets was greater than anticipated,” said Michael Harlan, president and CEO of the Houston-based producer. Visit www.us-concrete.com.
Operating income for Lafarge was down 7% the first half of 2008 and down 3% for the second quarter. “Solid pricing and cost reductions offset most of the decline in volumes due to the slowdown in the U.S., Spain, and the United Kingdom,” said the company, whose U.S. headquarters is in Herndon, Va. Visit www.lafarge-na.com.