IBISWorld Industry Report 23811 Concrete Contractors in the US August 2013 Matthew MacFarland Cementing demand: Recovering construction markets will drive industry growth 2 About this Industry 2 Industry Definition 2 Main Activities 2 Similar Industries 3 Additional Resources 4 Industry at a Glance 5 Industry Performance 5 Executive Summary 5 Key External Drivers 7 Current Performance 9 Industry Outlook 11 Industry Life Cycle 13 Products & Markets 13 Supply Chain 13 Products & Services 15 Demand Determinants 16 Major Markets 17 International Trade 18 Business Locations 20 Competitive Landscape 20 Market Share Concentration 20 Key Success Factors 20 Cost Structure Benchmarks 22 Basis of Competition 22 Barriers to Entry 23 Industry Globalization 24 Major Companies 26 Operating Conditions 26 Capital Intensity 27 Technology & Systems 27 Revenue Volatility 28 Regulation & Policy 29 Industry Assistance 30 Key Statistics 30 Industry Data 30 Annual Change 30 Key Ratios 31 Jargon & Glossary www.ibisworld.com | 1-800-330-3772 | info @ ibisworld.com
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WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 1
IBISWorld Industry Report 23811Concrete Contractors in the USAugust 2013 Matthew MacFarland
Cementing demand: Recovering construction markets will drive industry growth
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 2
Establishments in this industry are primarily engaged in pouring, building and finishing concrete foundations and structural elements, like retaining walls and private driveways and walks.
Industry firms also perform grout and shotcrete work. The work performed may include new work, additions, alterations, maintenance and repairs.
The primary activities of this industry are
Concrete placement on construction projects
Finishing on concrete slabs and footings
Foundations construction
Concrete pumping
Sidewalks construction
Curb, culvert and guttering construction or repair
Concreting grout and shotcrete work
Concrete patio construction
Concrete parking lot construction
Installing and finishing precast concrete
23814 Masonry in the USCompanies in this industry are mainly engaged in concrete block laying.
23834 Tile Installers in the USContractors in this industry are mainly engaged in terrazzo laying.
23833 Flooring Installers in the USBusinesses in this industry lay floor coverings.
23593 Excavators in the USEstablishments in this industry are mainly engaged in excavation and site preparation.
32732 Ready-Mix Concrete Manufacturing in the USOperators in this industry produce and deliver ready-mixed concrete.
23411a Road & Highway Construction in the USCompanies in this industry are mainly engaged as prime contractors to lay road and footpath surfaces.
23411b Road & Highway Maintenance in the USIndustry operators are mainly engaged as prime contractors to lay road and footpath surfaces.
Industry Definition
Main Activities
Similar Industries
About this Industry
The major products and services in this industry are
Construction cast-in-place work and slabs
Highway and heavy industry applications
Other services
Repairs
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About this Industry
23411c Road & Highway Services in the USIndustry operators are mainly engaged as prime contractors to lay road and footpath surfaces.
Similar Industriescontinued
IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com
For additional information on this industry
www.concrete.org American Concrete Institute
www.ascconline.org American Society of Concrete Contractors
www.enr.construction.com Engineering News-Record
www.pavementpro.com National Pavement Contractors Association
Additional Resources
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Revenue vs. employment growth
Products and services segmentation (2013)
55%Construction cast-in-place
work and slabs
21%Other services
16%Highway and heavy
industry applications
8%Repairs
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Key Statistics Snapshot
Industry at a GlanceConcrete Contractors in 2013
Industry Structure Life Cycle Stage Mature
Revenue Volatility Medium
Capital Intensity Low
Industry Assistance None
Concentration Level Low
Regulation Level Light
Technology Change Low
Barriers to Entry Low
Industry Globalization Low
Competition Level High
Revenue
$37.1bnProfit
$2.6bnWages
$13.0bnBusinesses
68,403
Annual Growth 13-18
5.1%Annual Growth 08-13
-1.9%
Key External DriversHousing startsValue of private nonresidential constructionDemand from municipal building constructionDemand from bridge and tunnel constructionPrice of cement
Market ShareThere are no Major Players in this industry
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FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30
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Key External Drivers Housing startsThe number of annual housing starts reflects new construction of both single-family and multifamily housing units (i.e. homes and apartments). Single-family homes are typically built on concrete foundations, and concrete is an essential building material for apartment buildings. Additionally, most industry contractors that operate in a small, local area depend heavily
on the housing market for demand. As such, when this driver increases, industry revenue grows. IBISWorld expects housing starts to increase in 2013, presenting a potential opportunity for the industry.
Value of private nonresidential constructionThe largest contracts in the industry, such as those for sporting arenas and
Executive Summary
Concrete is one of the most ubiquitous construction materials in the United States. It is used in most structures as a foundation, in walls and floors or as external cladding. Therefore, the Concrete Contractors industry’s performance is closely tied to the construction sector, which caused the industry to contract sharply in response to the housing market’s collapse from 2007 to 2009 and the recession’s deep cuts to commercial construction. Industry revenue is expected to fall at an annualized rate of 1.9% to $37.1 billion over the five years to 2013, with
revenue growth returning in 2011 after years of significant declines.
Most industry operators are small-scale crews that serve local, single-family residential and small retail markets by laying foundations and raising walls for new construction. As such, the housing market’s collapse adversely affected most concrete contractors. The number of housing starts plunged 35.6% in 2009, cutting into the primary market of small firms. A year later, the recession caught up to nonresidential building construction, the value of which fell 23.5%, pushing industry revenue down
16.0% that year. Additionally, concrete prices edged up in 2008 and 2009, pressuring average margins down to 3.0% of revenue. While larger firms such as Gulf Shores Construction Services and Baker Concrete Construction were able to downsize in accordance with changing conditions, many small firms could not stay profitable and were forced to close. New entrants since the recession have only managed to rebuild enterprise numbers to their 2008 levels; as such, the number of industry enterprises has experienced flat annualized growth of 0.0% during the past five years.
Although construction markets stabilized and recorded minor growth in 2011, recovery did not begin in earnest until 2012, with a 29.1% jump in housing starts and strong growth in the value of nonresidential construction. In 2013, industry revenue is expected to grow 8.2%, reflecting downstream market recovery. As the rest of the economy recovers in the coming years, commercial construction will pick up further, benefiting large contractors with the resources to compete for lucrative projects. Additionally, a recovering single-family housing market will benefit local operators who rely on these smaller contracts. During the next five years, industry revenue is projected to grow at an annualized rate of 5.1% to $47.7 billion.
Industry PerformanceExecutive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage
The recent rapid surge in housing starts has been paving the way for strong demand
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Industry Performance
Key External Driverscontinued
commercial office buildings, are nonresidential projects pursued by the industry’s largest players. However, most operators in the industry are small scale local operators that rely on single-family home construction for the contracts their resources can accommodate. Therefore, the industry’s major companies are highly sensitive to fluctuations in business investment in retail, restaurant, manufacturing, warehouse and other commercial markets. The value of private nonresidential construction is expected to increase during 2013.
Demand from municipal building constructionThe municipal or institutional building market includes schools, hospitals, prisons and other public facilities. This market includes private and public construction projects, such as the expansion of a medical facility or the construction of a new public high school. These build-outs make heavy use of concrete and help drive demand for industry contractors. Demand from municipal building construction is expected to decrease in 2013, posing a potential threat to the industry.
Demand from bridge and tunnel constructionBridges, tunnels and similar infrastructure projects make use of large quantities of concrete and generate significant demand for concrete contractors. Investment in these projects is strongly tied to federal, state and local government infrastructure budgets. As bridge and tunnel construction rises, demand for the industry grows as well. Investment in bridges and tunnels is expected to increase in 2013.
Price of cementSpecialty contractors typically purchase the materials they need for a project (though these costs are included in their quotes for the job). Cement, a major component of concrete, accounts for a large part of concrete contractors’ purchase costs. During periods of strong demand, contractors can account for rising input costs by passing them on to customers. However, when construction markets are in a downturn, contractors become less able to raise prices in order to absorb rising costs. The price of cement is expected to increase in 2013.
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Industry Performance
Current Performance
The Concrete Contractors industry pours and sets one of the most essential building materials for modern structures, making it an integral part of the entire US construction sector. Concrete is used to lay the foundation for buildings of almost any size, from single-family houses to skyscrapers. Concrete’s strength and durability also make it an attractive choice for external cladding for commercial structures like banks and malls and thousands of square feet of concrete are used to raise sports arenas. It is also used in massive public works projects, such as in the construction of bridges and dams. The industry’s wide range of applications usually grants it a degree of resistance to specific downturns in any one of its
customer groups; however, the housing market’s collapse and ensuing recession from 2008 to late 2009 dealt a serious blow to nearly every construction market. As project pipelines ran dry, demand fell sharply during the recession and only began recovering in earnest in 2012. As such, industry revenue is expected to fall at an annualized rate of 1.9% during the five years to 2013 to $37.1 billion.
Private markets suffer The industry’s primary markets are the residential and nonresidential building sectors, which account for 36% and 27% of revenue, respectively, and include the construction of single-family homes, apartment buildings, retail structures, malls, banks, office buildings, hotels and entertainment buildings such as sports stadiums. While the largest commercial building projects offer the most lucrative contracts, only the industry’s largest firms, such as Gulf Shores Construction Services and Baker Concrete Construction, have the resources to compete for them. Instead, most industry contracts are for single-family home foundation work and small retail-establishment construction.
With such strong ties to home construction, the housing market collapse in 2007 and continued spiral through 2009 significantly affected the Concrete Contractors industry. Housing starts dropped 35.6% in 2009 to a low of
583,000 new homes built. While other specialist contractors continued to find pockets of demand in the housing market due to necessary repairs and maintenance, concrete workers, whose work is generally needed only in new construction, saw residential demand plummet. However, the commercial market offered some relief, particularly for medium-size companies, since the larger projects in this market require longer construction periods, and demand from nonresidential construction typically lags behind the housing market by about one year. Therefore, even when the decline in housing starts began to slow and show some stability in 2010, private nonresidential construction fell 23.5% according to Census data, due to the time lag that generally accompanies the commercial building sector. This contraction, combined with a weak 3.7% growth in housing starts, brought industry revenue down 16.0% in 2010.
Demand for concrete crumbled under the weight of the housing market’s collapse
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Industry Performance
Entering recovery In 2012, signs of a sustained recovery became apparent across most building markets in the United States. While industry revenue returned to growth in 2011, housing prices had not yet bottomed out, and industry markets were still unsteady. In 2012, however, housing starts jumped 29.1%, helping the single-family home market regain some ground lost during the collapse. The value of nonresidential construction rose 7.3% that year as well, according to Census data. Although government budget deficits and the end of ARRA funding led demand from bridge and tunnel
Some relief from public spending
Demand from new municipal and institutional building construction fell to a much lesser degree than markets more heavily reliant on private spending. While school and healthcare facility construction kept demand for municipal building construction from falling as quickly as commercial construction, the institutional market still registered a 12.9% drop in 2010, according to Census data. Subcontracting work on highway and road construction projects greatly benefited from government stimulus spending through the American Recovery and Reinvestment Act of 2009 (ARRA), which invested billions of dollars to fund highway expansion across the country. The ARRA also bolstered demand from bridge and tunnel construction, public works that require thousands of tons of concrete. Likewise, heavy private industrial construction contracted less severely during the recession, to the benefit of the largest concrete contractors that compete for these highly valuable contracts.
These companies were also more capable of handling volatile input costs and staying afloat amid lower demand.
Concrete contractors are faced with higher purchase costs than many specialty contractors since they must buy the ready-mix (i.e. cast-in-place) concrete to apply at the worksite. Though cement, one of the primary ingredients in concrete, fell in price during the past five years, the price of aggregated ready-mix concrete rose 3.0% and 2.5% in 2008 and 2009, respectively. With costs on the rise and revenue spiraling down in 2009, average profit margins fell to about 3.0% of revenue that year, forcing many small players that relied on housing starts to exit the industry. As such, the number of enterprises in the industry fell 4.0% in 2009, and employment has fallen at an annualized rate of 1.1% during the past five years to reach 368,061 this year. As demand stabilized in 2011 and began building momentum in 2012, companies returned to the industry. As a result, the number of industry enterprises has shown flat annualized growth of 0.0% during the five years to 2013, with 68,403 companies expected to be in operation this year. Additionally, profit margins are expected to reach 7.0% of revenue for 2013.
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Industry Performance
Entering recoverycontinued
construction to fall, private construction’s resurgence offset this contraction. With these positive trends
in place, industry revenue grew 7.1% in 2012 and is expected to rise an additional 8.2% in 2013.
Markets strengthen The demand for concreting services in the housing construction market, which contributes about 36.0% of annual industry revenue, will surge in the five years to 2018. The upswing in housing investment is expected to gather momentum during 2014 as a result of improving economic conditions, the gradual absorption of excess housing stock and reduced foreclosures. The rise in housing investment will principally drive up demand for the smaller-scale concrete contractors in regional markets. Population growth and pent-up demand as a result of the stagnant housing market will also boost the need for new residential construction. The number of new housing starts is forecast to climb at an annualized rate of 10.0% in the next five years. However, while the housing recovery will be strong, the number of housing starts will not eclipse the number of new homes built before the housing bubble burst.
Demand for concreting services from the nonresidential building construction market, which accounts for 27% of annual industry revenue, will primarily benefit from improvements in the commercial building sector. As the labor market improves, business expansion will lead to reduced vacancy rates, which will create demand for new office, retail and warehouse buildings that require concrete contractor services. The value of private nonresidential construction is forecast to rise at an average annual rate of 5.1% in the five years to 2018 to total about $472.0 billion. In the smaller manufacturing and industrial building market, demand for concreting services will likely be focused on formwork for distribution, warehousing and other storage facilities, particularly those located at transport hubs servicing interstate or international trade.
The downstream highway, bridge and tunnel construction markets, which generates about a third of industry
Industry Outlook
Resurgence in the housing, nonresidential and infrastructure construction markets are forecast to return the Concrete Contractors industry to strong growth over the next five years. In 2014, a 6.9% jump in the value of nonresidential construction and a 20.5% increase in housing starts are projected to boost industry revenue 10.0% to $40.9 billion. In the five years to 2018, IBISWorld forecasts industry revenue to grow at an annualized rate of 5.1% to total $47.7 billion, driven by strong recovery across most downstream construction
markets. Though concrete has largely already gained dominance as an essential construction material and there are few new applications for it, continued advances in durability and load strength will continue to solidify its importance.
Renewed demand from downstream construction markets will return the industry to growth
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Industry Performance
Markets strengthencontinued
revenue, are also forecast to display solid growth in the five years to 2018. The stream of funding from a new federal multiyear transport-infrastructure funding bill, which is expected to focus on maintaining and repairing existing infrastructure, will drive this growth. State and local
governments are anticipated to increase funding for infrastructure construction and maintenance as the economic recovery boosts tax receipts; however, these investments are expected to only strengthen after 2014 due to the large budget deficits that continue to challenge governments.
Profit and employment to rebound
The industry’s profit performance is forecast to improve considerably by 2018. The recovery in downstream markets is expected to boost industry profit, measured as earnings before interest and taxes, to about 10.0% of industry revenue in 2018, up from about 7.0% in 2013. In response to healthy demand, the industry is expected to enjoy an upswing in employment and wages over the next five years. Employment is forecast to grow at an annualized rate of 2.2% to reach 409,399 people during the period.
Meanwhile, the number of industry enterprises is forecast to increase at an annualized rate of 1.6% to 74,118 in 2018.
A surge in the number of small-scale companies with fewer than five employees each is projected to support growth in company numbers. Contractor outfits of this size primarily serve the single-family residential market, and as housing starts rapidly increase during the next five years, rising demand will attract many industry entrants. While these new firms may face an uphill battle against well-known local contractors that survived the housing market’s collapse, they may be able to win contracts by maintaining the aggressive pricing competition that industry veterans will be eager to avoid.
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Industry PerformanceIndustry value added is expected to grow more slowly than US GDP during the 10 years to 2018Industry performance relies heavily on the health of construction marketsConcrete is an essential part of modern building design and has complete market acceptance
Life Cycle Stage
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DeclineShrinking economicimportance
Quality GrowthHigh growth in economic importance; weaker companies close down; developed technology and markets
MaturityCompany consolidation;level of economic importance stable
Quantity GrowthMany new companies; minor growth in economic importance; substantial technology change
Key Features of a Mature Industry
Revenue grows at same pace as economyCompany numbers stabilize; M&A stageEstablished technology & processesTotal market acceptance of product & brandRationalization of low margin products & brands
Road & Highway Construction
Industrial Building Construction
Precast Concrete Manufacturing
Road & Highway Maintenance
Commercial Building Construction
Concrete Contractors
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Industry Performance
Industry Life Cycle The Concrete Contractors industry is in the mature stage of its life cycle. Demand is principally subject to fluctuations in investment into the downstream construction markets, though concrete as a building material enjoys widespread acceptance and use in the laying of foundations and as a component of walls and exterior cladding for large buildings. As such, the industry has a high level of market acceptance, a key characteristic of maturity.
Additionally, during the 10 years to 2018, industry value added (IVA), which measures the industry’s contribution to the economy, is projected to grow at an annualized rate of 1.1%. In comparison, US GDP is forecast to rise at an annualized rate of 2.1% during the same period, indicating that the industry is growing more slowly than the economy as a whole. The sluggish growth in IVA is due to the unprecedented drop in
demand from construction markets from 2007 to 2010. After this downturn in industry performance, IVA is forecast to grow at an annualized rate of 3.8% in the five years to 2018.
Technological advancements are limited to the quality of concrete products (e.g. strength and flexibility) and the construction techniques that concreting services use. A fundamental change in concrete products is unlikely during the next five years. The use of precast concrete components, such as blocks and pipes, somewhat detracts from industry demand because precast components are set in factories in strictly controlled environments, which make for higher strength and resistance to heat and cold. However, cast-in-place concrete – the primary application of the industry – is not expected to be overtaken by precast technologies.
This industry is Mature
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Products & Services Construction cast-in-place work and slabsThe primary activity of the Concrete Contractors industry is the laying and smoothing of cast-in-place (CIP) concrete, a process in which concrete is poured into a mold or set constructed on-site. CIP concrete is transported in ready-mix or unhardened form, usually in a truck agitator that spins the concrete to prevent it from setting. CIP concrete is
the standard building material for structural uses, including foundations, slabs, walls, beams and floors.
Nonindustrial and non-highway CIP work accounts for about 55.0% of industry revenue. Of that total, 20.0% of industry revenue is specifically from laying slabs, or foundations and other large, flat concrete areas such as residential driveways, footpaths and parking lots. Because this service segment is related to commercial and
Products & MarketsSupply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations
KEY BUYING INDUSTRIES
23331 Industrial Building Construction in the US Operators in this industry require concreting services in the construction of factories and other industrial buildings.
23332a Commercial Building Construction in the US Concreting services are required in the construction of commercial buildings.
23332b Municipal Building Construction in the US Concreting services are used in the construction of institutional buildings.
23411a Road & Highway Construction in the US Concreting services are used in the construction of pavement surfaces, pathways and curbing on highways and streets.
23411b Road & Highway Maintenance in the US Companies in this industry require concreting services in the construction of pavement surfaces, pathways and curbing on highways and streets.
23412 Bridge & Tunnel Construction in the US Companies in this industry require concreting services in the construction of bridges and tunnels.
23611a Home Builders in the US Builders demand concreting services in the construction of foundations, driveways and pathways for new and existing houses.
KEY SELLING INDUSTRIES
32732 Ready-Mix Concrete Manufacturing in the US Companies in this industry manufacture and supply ready-mixed concrete.
32739 Precast Concrete Manufacturing in the US Manufacturers in this industry supply prestressed and precast concrete products.
42371 Tool & Hardware Wholesaling in the US This industry supplies small personal building tools.
42381 Construction & Mining Equipment Wholesaling in the US This industry supplies heavy construction machinery and equipment used by concrete contractors.
44419 Lumber & Building Material Stores in the US This industry supplies building materials such as cement and aggregate.
Supply Chain
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Products & Markets
Products & Servicescontinued
residential construction activity, it contracted substantially during the recession and has only recently begun recovering.
Highway and heavy industry applicationsThis service segment includes applying CIP concrete for highways and roads, heavy industry structures like ports, energy infrastructure and plants and other large-scale public works like dams and aqueducts. This segment has grown as a share of revenue during the past five years as government investment in infrastructure received a huge boost from the American Recovery and Reinvestment Act of 2009; additionally, heavy industries were less drastically impacted by the recession because they are less directly dependent on consumer spending. During the next five years, this segment is forecast to shrink somewhat as construction activity regains lost ground.
RepairsRepair work is typically done on roads, driveways, sidewalks and other exposed concrete work. With little new construction during the recession, repairs’ share of
revenue grew strongly in 2009 and 2010, causing this segment to grow as a share of revenue at the expense of segments more reliant on new construction. As commercial and residential markets pick up during the next five years, this product segment is forecast to shrink somewhat.
Other servicesOther industry services may include general construction work (e.g. curb, culvert and shotcrete work), mixing concrete, applying decorative concrete work or finishes, or other sales activities, such as renting equipment or truck agitators. This segment also includes the installation and finishing of precast concrete, though this work requires less labor and is a less significant source of revenue than cast-in-place work. This segment has remained steady over the past five years as changes in different services offset one another. For example, falling housing starts reduced demand for shotcrete, which is commonly used in in-ground pools, but other firms may have turned to renting unused equipment to open a secondary revenue stream in the face of lower demand.
Products and services segmentation (2013)
Total $37.1bn
55%Construction cast-in-place
work and slabs
21%Other services
16%Highway and heavy industry applications
8%Repairs
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Products & Markets
DemandDeterminants
Demand for concrete contractors comes from a diverse range of construction markets, which largely fall into three overarching segments: residential, nonresidential or commercial and industrial or infrastructure. While demand for each market correlates strongly with overall economic activity, specific drivers for each segment differ.
Residential building marketThe bulk of the residential market is derived from the single-family housing market and includes the laying of slab foundations, flooring, steps, pathways, driveways and patios. Key factors influencing demand for residential construction are the underlying demand for housing, such as demographic factors (e.g. household formation and population size, growth, mobility and immigration) and the age of housing stock and short-term economic factors, such as the affordability of housing (e.g. housing prices, interest rates and household income). In the past year, investment into new housing construction has been significantly dampened by the tightening of mortgage lending practices in the aftermath of the mid-2007 collapse of the subprime mortgage finance market.
The demand for special trade construction services in the housing construction market is also affected by one-off factors, such as damage to existing property by natural disasters (e.g. hurricanes, forest fires, and earthquakes).
Nonresidential building constructionFactors influencing demand for nonresidential construction vary according to the type of building (see IBISWorld reports 23331, 23332a and 23332b). Key short-term factors influencing investment decisions include prevailing interest rates, expected general economic growth, expected yields on investment, and taxation treatment of building investment compared with other
types of assets. Investment into office construction is principally determined by growth in the service sector workforce, office vacancy rates and the replacement rate of existing office stock, and foreign investment inflow. Investment into manufacturing building construction activity is principally determined by trends in domestic manufacturing production, changes in production technologies, industry decentralization, and the vacancy rates of existing stock.
Heavy engineering construction marketKey factors determining long-term demand for highway, street, spillway and dam and other engineering construction include demographic trends affecting demand for urban infrastructure such as roads, water and sewerage; new private-sector developments in the mining, manufacturing, recreation and tourism industries; and the aging of existing capital stock. Short-term determinants of investment in engineering construction include public sector capital expenditure programs, interest rate levels and expected yields on investments, and government policies that affect private-sector investment decisions in the mining and manufacturing industries (e.g. taxation policies and tariff reform policies).
Technological advancementsTechnological advancements have directly stimulated demand for concrete contracting services. Improvements in on-site concrete construction techniques have resulted in a higher quality product (e.g. tilt-wall slabs) produced more efficiently in terms of time and cost. Continued technological advances in concrete materials and components (particularly steel reinforced concrete and shotcreting) have contributed to a long-term trend of substitution of concrete for traditional building materials (e.g. steel, timber, asphalt and ceramics).
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Products & Markets
Major Markets Residential constructionThe residential market for concrete contractors includes single-family homes and multifamily apartment buildings and complexes. Industry activity in this market mainly involves laying slab foundations, flooring, steps, pathways, driveways and patios. All contractors have the capacity to operate in the residential construction segment of the market, but it is a particularly competitive segment and is dominated by small-scale local contractors. Additionally, most single-family home contracts are smaller and less lucrative, and the industry’s largest firms focus their efforts on winning contracts for large projects in other markets. However, the majority of industry firms are small, local players that focus on contracting for homebuilders. IBISWorld estimates that the residential construction market accounts for 36.0% of revenue in 2013. This share fell sharply during the housing crisis of 2007 to 2009 but has since regained some ground, particularly in 2012, when housing starts jumped 29.3%.
Nonresidential constructionThe nonresidential market includes commercial buildings (e.g. retail, restaurants, hotels, movie theaters, warehouses, storage units and sports arenas), for which concrete contractors build foundations, walls, steps and flooring, accounts for an estimated 27.0% of industry revenue in 2013. Lucrative
nonresidential construction contracts, such as those for professional sporting stadiums, are aggressively bid for by the industry’s largest contractors. These projects are undertaken by national- or global-scale general contractors such as Turner Corporation, who in turn hire subcontractors with the resources to complete thousands of square feet of concrete application. This market segment has decreased as a share of revenue during the past five years as infrastructure projects were buoyed by government spending during the recession, while private-sector construction ground to a halt. Like the residential market, commercial and other nonresidential building projects are forecast to grow as a share of revenue as the economy gains more steam during the next five years.
Highway, street and sidewalk pavingHighways, roads, streets, sidewalk and parking lot paving account for an estimated 26.0% of industry revenue in 2013 (asphalt paving activities are included in the Highway and Road Construction industry, but this industry subcontracts concrete workers). This market segment is largely determined by government spending at the federal, state and local level; as such, it has grown as a share of revenue during the past five years thanks to government stimulus spending during the recession. The American Recovery and Reinvestment
DemandDeterminantscontinued
Product and labor substitutionProduct substitution has occurred, with on-site concrete casting being replaced by concrete products that are precast in the factory. Concreting contractors are required to place and finish the precast concrete products although the labor
content of construction is lower. Competition with the specialist contractors of this industry has increased for concreting work done on construction sites, coming from general building contractors or from other construction trades (e.g. carpenters and flooring contractors).
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Products & Markets
International Trade Specialty contractors serve local markets and do not import or export goods or services. The industry’s largest companies may be able to compete for projects in
Mexico or Canada, but all revenue generated in another country is considered a part of that country’s industry, rather than the US Concrete Contractors industry.
Major Marketscontinued
Act of 2009 shored up infrastructure spending across the country, much of which went toward highway and road construction and repair. As private-sector markets recover during the next five years, this market’s share of revenue is forecast to fall in turn.
Manufacturing, industrial and heavy infrastructureConcrete work for factories, industrial plants, utilities and energy infrastructure (e.g. spillways, hydroelectric dams and steam towers for nuclear plants) generates an estimated 11.0% of industry revenue. Though there are typically few projects in this market each year, they are highly valuable because of the large volume of concrete required and specialist applications needed, such as
shotcrete used for non-standard designs.However, because of the conditions
building materials are exposed to over the course of some infrastructure’s lifetime – such as extremely high or low temperatures or constant water erosion – precast concrete is somewhat more common in this market. Precast concrete is set in factories in a controlled environment and can be made to very specific load and environmental-resistance requirements; it is then delivered to the worksite pre-fabricated. Concrete contractors primarily use ready-mix concrete and set the concrete at the worksite, and while the installation and finishing of precast concrete is included in the industry, it is a less labor-intensive service and generates less revenue for contractors.
Major market segmentation (2013)
Total $37.1bn
36%Residential construction
27%Nonresidential construction
26%Highway, street
and sidewalk paving
11%Manufacturing, industrial and
heavy infrastructure construction
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 18
Products & Markets
Business Locations 2013
MO2.7
West
West
West
Rocky Mountains Plains
Southwest
Southeast
New England
VT0.1
MA1.2
RI0.2
NJ1.6
DE0.3
NH0.3
CT0.6
MD3.9
DC0.1
1
5
3
7
2
6
4
8 9
Additional States (as marked on map)
AZ3.2
CA12.7
NV1.3
OR1.2
WA2.0
MT0.4
NE1.0
MN1.2
IA1.5
OH4.1 VA
3.6
FL5.6
KS1.6
CO2.7
UT1.3
ID0.7
TX12.7
OK1.4
NC2.9
AK0.1
WY0.2
TN1.5
KY1.0
GA2.5
IL3.1
ME0.4
ND0.9
WI1.3 MI
1.9 PA2.8
WV0.2
SD0.5
NM0.9
AR0.7
MS0.4
AL1.1
SC0.9
LA1.1
HI0.3
IN2.0
NY4.0 5
67
8
321
4
9
SOURCE: WWW.IBISWORLD.COM
Mid- Atlantic
Employment (%)
Less than 3% 3% to less than 10% 10% to less than 20% 20% or more
Great Lakes
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 19
Products & Markets
Business Locations The Concrete Contractors industry is distributed throughout the United States largely in line with the distribution of population and economic activity. Because most operators in the industry are small companies that work in the residential market, employee concentration, which reflects nonemployers as well as employers, is somewhat stronger in regions with highly active housing markets, such as the Southwest and West regions.
However, the Southeast region holds the highest number of industry employees (21.5% of the total) because of its size (with 25.4% of the US population) and economy. The region includes Florida, which has several large metropolitan areas and active housing markets like Miami. The Southwest region has the second-highest number of industry employees, with 18.2% of the total – much higher than its 12.2% share of population. The disproportion stems from highly volatile housing markets in areas like Phoenix, AZ. The region also includes Texas, which holds 12.7% of employees and has one of the most extensive road networks in the country. The third most-concentrated region for
the industry is the West, with 17.6% of employees compared with 17.1% of population. California alone accounts for 12.7% of employees and 12.1% of the population, and though construction markets in the state were devastated by the subprime crisis and recession, areas like Sacramento and San Francisco have grown substantially since the end of 2011.
%
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Mid
-Atla
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ains
Sout
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EmploymentPopulation
Distribution of employment vs. population
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 20
Cost Structure Benchmarks
ProfitAverage profit (measured as earnings before interest and taxes) in the Concrete Contractors industry is estimated at 7.0% of revenue in 2013, down slightly from margins of about 7.3% in 2008, when smaller contractors had already begun feeling the effects of the housing market collapse. Intense price competition among local firms and large-scale, national contractors, as well as steadily rising purchase costs, forced average profit to a low of about 3.0%, on average, in 2009. However, recovering demand,
particularly since 2012, is helping contractors regain profitability. IBISWorld forecasts margins to expand to about 10.0% of revenue during the next five years as construction rapidly takes off across markets in the wake of released pent-up demand.
WagesConcrete work is highly labor intensive, and although concrete contractors typically make more use of heavier equipment and machinery (e.g. truck agitators and shotcrete guns) than other
Key Success Factors Ability to expand and curtail operations rapidly in line with market demandConstruction work is highly seasonal, as bad weather can prevent on-site work. It is also highly cyclical, with construction cycles depending on economic activity. Contractors must be able to cut costs when demand is low.
Having a good reputationHaving an established reputation among potential clients for high standards in quality, timeliness and efficiency is key.
Ability to compete on tenderMuch of this industry’s work is obtained through open tendering. Successful firms position themselves to win tenders at rates sufficient to maintain profit margins.
Ability to clearly specify requirements to suppliers/contractorsSuccessful firms are adept at specifying the appropriate attributes and quantities of ready-mix concrete input to construction. Reducing waste improves margins, and correct specifications result in superior concrete strength and application.
Market Share Concentration
Like most specialty contracting industries, the Concrete Contractors industry has a low level of market share concentration. The largest firm in the industry, Gulf Shores Construction Services, has an estimated market share of only 2.0%, and the four largest firms account for less than 6.0% of industry revenue. As a whole, the industry is largely composed of small-scale enterprises that operate in a single local area, serving as subcontractors on residential or small commercial projects. The vast majority of companies run only
one location, and the average crew has five workers. The industry’s largest companies are national in scale and employ upward of 1,000 people, but they compete for highly lucrative public works and large-scale private contracts like sports stadiums, leaving the local markets to the area contractors. IBISWorld forecasts industry concentration to fall during the next five years as the single-family housing market – primarily the domain of small contractors – recovers and more revenue is earned by smaller firms.
Competitive LandscapeMarket Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
Level Concentration in this industry is Low
IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 21
Competitive Landscape
Cost Structure Benchmarkscontinued
specialist contractors, wage costs far outweigh capital investment in the industry. Total wage costs amount to an estimated 39.6% in 2013, including 33.6% of revenue in in-house employee compensation and 6.0% in subcontractor payments. Though concrete contractors themselves are usually subcontractors to a general contractor, they may still hire day laborers or independent concrete workers to increase the size of a work crew when the job calls for it. Wage costs accounted for about 33.7% of revenue in 2008 but have fluctuated during the past five years, with costs rising as a share of revenue as demand and revenue fell. Contractors can only lay off so many workers before they are unable to complete whatever projects they successfully bid for; as such, revenue fell more quickly than wage costs during the recession. Wages’ share of revenue is projected to fall during the next five years
as revenue rises and companies maintain the leaner operations achieved during the recession.
PurchasesPurchase costs are higher for concrete contractors than other construction specialists because high volumes of aggregate, cement, gravel and sand must be bought to lay concrete. Contractors also buy wooden framing supplies and rebar to construct the sets for laying unhardened concrete. Ready-mix concrete used for cast-in-place applications – the most important input for the industry – has grown more expensive during the past five years, including price increases of 3.0% and 2.5% in 2008 and 2009. These increases occurred when industry revenue fell 6.1% and 9.9%, respectively, leading purchase costs to rise as a share of revenue during the recession. In 2013, recovering
Sector vs. Industry Costs
■ Profi t■ Wages■ Purchases■ Depreciation■ Marketing■ Rent & Utilities■ Other
Average Costs of all Industries in sector (2013)
Industry Costs (2013)
0
20
40
60
Perc
enta
ge o
f rev
enue
80
100 6.00
12.63.6 1.12.0
31.2
43.5
7.00
9.32.0 1.0
2.9
38.2
39.6
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 22
Competitive Landscape
Barriers to Entry The Concrete Contractors industry is characterized by low barriers to entry, with the high level of competition in local markets being the primary deterrent. Start-up costs are very low, particularly if an entrant begins work as an independent concrete mason willing to join established
crews before starting his or her own company. There are no nationwide formal qualifications or licensing requirements for working in the industry, though some states issue licenses, and industry demand is expected to grow quickly in 2013 and during the next five years.
Basis of Competition Competition in the Concrete Contractors industry is largely based on reputation, experience, price and capacity or services offered. Most companies in the industry are small, with about five workers, and compete for residential or retail construction projects. The largest concrete contractors have a national presence and bid fiercely for highly lucrative public works and large-scale private projects, like sports arenas and stadiums.
Because the basic services offered by industry contractors are largely homogenous, a company’s reputation, portfolio of past work and previous customers’ testimonials can be more important in winning a bid than price. During construction slumps, this situation reverses, with price becoming
much more important as contractors aggressively undercut one another to gain an edge and win work from a much smaller pool of contracts. For more specific kinds of work, such as repairs and patchwork, or new construction in nonstandard designs, shotcrete equipment is often needed, and contractors who offer this service have an edge over those who do not.
During the next five years, competition is expected to lighten slightly as more construction projects break ground. Pricing power will be slow to return to contractors, since property developers have come to expect lower prices, but reputation and experience will return to being the most important factors in choosing a winning bid.
Cost Structure Benchmarkscontinued
demand has helped firms buffer these costs with higher revenue, and purchases are estimated to account for 38.2% of revenue. During the next five years, purchase costs are forecast to fall slightly as demand growth outpaces increases in material prices.
Other costsThe Concrete Contractors industry is fairly capital intensive for a specialty labor industry, and depreciation accounts for about 2.9% of revenue. Operators’ capital expenses include transportation such as truck agitators for keeping ready-mix concrete in an
unhardened form, and specialty equipment like shotcrete guns and pneumatic air compressors.
Because most work is done on site, rent and utilities costs are low in the industry, accounting for a combined 2.0% of revenue. Additionally, most work is won through a tender process or through word-of-mouth recommendation rather than by saturating customers with advertising; as such, marketing costs account for only about 1.0% of revenue. Other costs, including general business overhead, repair expenses and insurance costs, combine to make up an estimated 9.3% of revenue.
Level & Trend Competition in this industry is High and the trend is Steady
Level & Trend Barriers to Entry in this industry are Low and Steady
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 23
Competitive Landscape
Industry Globalization
There is no international trade and no evidence of significant foreign ownership in the domestic industry.
Barriers to Entrycontinued
Competition among contractors in most construction industries is based primarily on experience and reputation, and concrete work is no exception. Timeliness, cost control and quality of work are typically the most important factors to property developers and general contractors, and a demonstrable portfolio of past success is a contractor’s best shot at winning bids. Completely new entrants to the Concrete Contractors industry lack an established reputation and generally have difficulty convincing project managers to hire them. For some projects, cost may be a more important factor, and new entrants can find success winning bids by offering much lower quotes. New entrants can
also compete more effectively in niche applications, such as decorative concrete work or shotcrete repair and patchwork. These barriers are not expected to change substantially during the next five years.
Level & Trend Globalization in this industry is Low and the trend is Steady
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Other Companies The Concrete Contracting industry is characterized by many small-scale firms operating in geographically limited markets. Most of the companies in this industry employ one to six workers. However, a number of specialty concrete contractors have a national presence and are able to compete in many geographic markets. These larger firms are also better equipped to bid for lucrative public works and entertainment-market projects, such as bridges and sports arenas. Regardless of size, however, industry firms are typically the subcontractor for a building project and are hired by the project’s general contractor, except in specific, small-scale applications, such as the installation of a concrete driveway for an existing home.
Gulf Shores Construction Services Estimated market share: 2.0%Headquartered in Lincoln, NE, Gulf Shores Construction Services is a leading specialty concrete contractor with reported revenue of $675.0 million in 2011, according to the latest information from Concrete Construction, a publication that provides insights to the concrete industry. The company employs about 1,700 people but only serves two niche markets: distribution centers and parking garages. Gulf Shores operates across the Great Plains, Southwest and West regions.
IBISWorld estimates that Gulf Shores will bring in revenue of about $770.0 million in 2013. The company has grown rapidly during the past five years, even throughout the recession, with triple-digit growth in 2009 and the number-two spot on Concrete Construction’s top 10 fastest-growing companies list. From 2009 to 2010, Gulf Shores’ revenue skyrocketed from $111.4 million to $718.6 million.
Baker Concrete Construction Inc. Estimated market share: 1.7%Baker Concrete Construction began in 1968 as a small, privately owned Ohio
cement business, handling placement and finish work in the local residential market. Over the next 40 years, it expanded operations to include light commercial and industrial projects, super-flat industrial floors, tunnel form construction and tilt-up construction. It now operates 12 regional offices in nine states, and is licensed to operate in 48 states altogether. Baker is ranked first in Engineering News-Record’s top 20 list of concrete contractors in the United States in 2012 (latest available data), based on reported revenue of $594.0 million for 2011.
The company’s contracts have included large projects across the industry’s downstream markets, including shopping centers, multifamily residential apartment buildings, sports stadiums and hospital expansions. The company has also completed superstructures for industrial build-outs and parking garages. Baker’s work on the Florida Marlins’ baseball stadium from 2009 to 2010 earned a Gold LEED Certification, the first retractable-roof facility in the world to receive the designation. IBISWorld estimates that Baker Concrete Construction will generate about $664.0 million in revenue in 2013 as continued commercial construction, particularly in the healthcare sector, drives demand for large-scale concrete work.
Structural Estimated market share: 1.1%Based in Hanover, MD, Structural (formerly Structural Group) is privately owned and comprises a number of diversified companies: Structural Preservation Systems Inc., one of the largest specialty contractors focusing on structural repair and strengthening; VSL, which operates in the post-tensioning market; Pullman Power, which focuses on chimney, silo and stack construction, maintenance and repair; Electro Tech CP, a specialty provider of corrosion control
Major CompaniesThere are no Major Players in this industry | Other Companies
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 25
Major Companies
Other Companiescontinued
and water intrusion prevention services; and SPS infrastructure, which provides concrete restoration, commercial roofing and waterproofing services.
Structural operates across the United States, in Singapore and in the Middle East. In recent years, the company has expanded through acquisitions. In 2009, Structural Systems acquired Salem Contracting, a leading repair and restoration company that focuses on construction problems related to concrete, steel, masonry, wood and foundation soils. In 2010, Structural Systems acquired Shared Systems Technology Inc., a New Jersey-based company providing refractory linings, fireproofing, flooring systems, and concrete and masonry restoration services.
In 2012, the company was ranked second on Engineering News-Record’s list of the top 20 concrete contractors in the United States, with a reported $365.0 million in revenue for 2011. IBISWorld estimates that company revenue will reach about $409.0 million in 2013 as a result of improving commercial and municipal construction.
Ceco Concrete Construction LLC Estimated market share: Less than 1.0%Founded in 1912, Ceco Concrete Construction is a formwork subcontractor specializing in site-cast concrete projects. The firm has established a reputation for its work on sports stadiums, including the Rose Garden Arena, Kiel Center Arena and Jacksonville Stadium. Ceco also operates in the commercial, municipal, multifamily residential and industrial markets. The company operates 19
locations nationwide and is headquartered in Kansas City, MO.
According to Concrete Construction magazine, about 50.0% of Ceco’s total revenue is from commercial cast-in-place concrete work, 40.0% is from industrial concrete work and the remaining 10.0% is from slab and foundation work. In 2010 the company completed concrete work for Target Field, the sports stadium of the Minnesota Twins baseball team, and recorded 12.0% revenue growth in 2011. In 2012, Engineering News-Record ranked Ceco number three on its list of the top 20 concrete contractors. IBISWorld estimates that rising investment into commercial and multifamily residential buildings will help push revenue to $248.0 million in 2013.
S&F Concrete Inc. Estimated market share: Less than 1.0%Founded in 1965 in New London, CT, S&F Concrete moved to Massachusetts, where it was incorporated in 1968. Employing about 185 people, S&F Concrete operates four divisions: formwork, flatwork, architectural concrete and specialty floor work. S&F Concrete’s markets include commercial, institutional, sports, parking and government. The company’s recent projects include work on the Massachusetts General Hospital and a $300.0 million contract for a computer center at the Massachusetts Institute of Technology. S&F’s revenue contracted sharply during the recession, but managed to grow 3.0% in 2011, and IBISWorld expects company revenue to continue rising and reach about $126.0 million in 2013 thanks to rising demand from the healthcare market.
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Capital Intensity The Concrete Contracting industry has a low level of capital intensity, though concrete workers typically use more heavy equipment than other specialty construction contractors. Major companies that work on large-scale projects, like highway and bridge construction, usually have higher levels of capital investment than local contractors that primarily work in the single-family home construction market. On average, a concrete contractor is expected to spend about $0.08 in capital investment for every $1.00 spent in wages. As an industry that brings skilled tradesmen and women to a worksite, labor is more essential to operations than machinery, and total wages (including
subcontractor payments) account for 39.6% of revenue. However, some heavy
Operating ConditionsCapital Intensity | Technology & Systems | Revenue VolatilityRegulation & Policy | Industry Assistance
Tools of the Trade: Growth Strategies for Success
SOURCE: WWW.IBISWORLD.COM
Labo
r Int
ensi
veCapital Intensive
Change in Share of the Economy
New Age Economy
Recreation, Personal Services, Health and Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation.
Traditional Service Economy
Wholesale and Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.
Old Economy
Agriculture and Manufacturing. Traded goods can be produced using cheap labor abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.
Investment Economy
Information, Communications, Mining, Finance and Real Estate. To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.
Road & Highway Construction
Industrial Building Construction
Precast Concrete ManufacturingCommercial Building Construction
Concrete Contractors
Capital intensity
0.5
0.0
0.1
0.2
0.3
0.4
SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of capital intensity
Capital units per labor unit
Concrete Contractors
ConstructionEconomy
Level The level of capital intensity is Low
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Operating Conditions
Revenue Volatility
Technology& Systems
Developments in building technology have contributed greatly to a long-term trend of substitution of traditional building materials with concrete (e.g. concrete slab flooring replacing timber, tilt-up walls replacing clay or concrete bricks). Developments such as these have contributed to significant improvements in most areas of construction, in terms of materials, cost efficiency and time savings.
Ready-mix concrete suppliers such as Cemex and US Concrete have introduced steady improvements in the quality of concrete supplied (i.e. concrete yielding greater durability and flexibility), but concreting contractors have shown resistance to these products as the higher price of these materials may reduce the contractors’ cost competitiveness. The increasing versatility of concrete and the broader range of applications in the building industry have substantially
benefited concreting contractors by opening up more markets and generating a greater volume of work.
Concrete suppliers and concrete contractors are becoming increasingly reliant on advanced pumping technology to better deliver and distribute ready mixed concrete on a construction site. Boom pumps, placing systems, trailer pumps, shotcrete and mortar pumping machines have substantially altered the capacity for manufacturers to deliver concrete and the flexibility for contractors working on site. Significant developments have also occurred in the actual machinery used for working the concrete (e.g. extruders used in curbing and channeling and vibrators to “settle” the concrete). This has given a competitive advantage to companies that have invested in such technology, though such equipment is generally available for rent.
Capital Intensitycontinued
equipment is essential to performing concrete work, including truck agitators for transporting ready-mix concrete. As
such, IBISWorld does not expect capital investment levels to change significantly during the next five years.
Level The level of Technology Change is Low
Level The level of Volatility is Medium
SOURCE: WWW.IBISWORLD.COM
Volatility vs Growth
Reve
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Five year annualized revenue growth (%)–30 –10 10 30 50 70
Hazardous
Stagnant
Rollercoaster
Blue Chip
* Axis is in logarithmic scale
Concrete Contractors
A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment.
When a fi rm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 28
Operating Conditions
Regulation & Policy Few states have licensing requirements specifically for concrete contractors, but contractors may be subject to broader licensing requirements (e.g. certificates for general building practitioner). The regulatory environment governing construction activity is varied and complex, covering a range of issues including building standards, pollution controls and occupational health and safety issues. Compliance with regulations generally adds to the underlying cost of operating in this industry, but in the long term, it may reduce a firm’s vulnerability to litigation regarding faulty workmanship and workplace accidents, and may also lower insurance premiums.
Health and safety regulations set out by the Occupational Health and Safety Administration (OHSA) are detailed with respect to construction loads for concrete structures, reinforcing steel protrusions, post tensioning specifications and practices, use of concrete buckets, personal protection equipment, shoring inspections, lift slab operations and ergonomics. Other OHSA regulations address hazards from the use of cement, curing agents, bond breakers and sealants, including hazardous goods
identification, communication, training and air monitoring. State and municipal authorities assess and enforce these regulations. State-based environmental protection regulations include monitoring noise emission and litter on building sites.
Model building codes developed by code organizations encourage uniformity in building construction and standards. Specific concrete building codes have also been developed by industry organizations and adopted by various states. These standards include: Building Code Requirements for Structural Concrete and Structural Plain Concrete; Structural Design Guide to the American Concrete Institute Building Code; Cracking in Prestressed Concrete Structures; Design of Concrete Buildings for Earthquake & Wind Forces; and Code Provisions for Deflective Control of Concrete Structures.
Concreting contractors operating mixing machinery are also required to comply with driver safety standards and vehicle classification. The National Safety Council provides training and certification for concrete truck operators and involves vehicle inspection techniques, loading, driving skills and work site safety practices.
Revenue Volatilitycontinued
Revenue in the Concrete Contractors industry has fluctuated moderately during the past five years, contracting as much as 16.0% in 2010 and growing as much as an expected 8.2% in 2013. Like the rest of the construction sector, concrete contractors suffered during the recession, as overbuilding during the housing boom and a wave of foreclosures led demand for home building to plummet. Meanwhile, decreasing consumer spending cut into demand for retailers and led the rest of the
economy into recession, thus lowering the need for new buildings across a variety of construction markets. Just as these trends forced revenue to fall during the recession, though, their reversal helped the industry grow strongly in 2012 and is expected to buoy it through 2018. With returning demand, price competition will ease, allowing contractors to offer higher quotes without fear of losing a bid. With steadier growth during the next five years, revenue volatility is forecast to smooth.
Level & Trend The level of Regulation is Light and the trend is Steady
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 29
Operating Conditions
Industry Assistance The industry does not receive government assistance in the form of subsidies or tariffs. The primary industry trade association, the American Society of Concrete Contractors (ASCC), hosts conferences and events and provides a forum for members to share expertise
and information. The ASCC Safety Council provides guidelines for contractors and business owners to ensure worker safety on the build site. The Council also publishes articles and white papers detailing safety methods and techniques for contractors.
Level & Trend The level of Industry Assistance is None and the trend is Steady
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Jargon & Glossary
BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.
CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.
EXPORTS Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.
Industry Jargon
IBISWorld Glossary
CAST-IN-PLACE CONCRETE Also known as ready-mix concrete. Concrete that is kept in an unhardened form to be applied at a construction site and set to the required surface area or shape.
PRECAST CONCRETE Concrete formed and set in a factory in certain shapes. Precast concrete usually has higher tolerances for weight, heat, cold and moisture because it is formed under controlled conditions.
SHOTCRETE A sprayed concrete or mortar that involves the premixed ingredients (including water) pumped through a nozzle and blown by compressed air into a substrate; also called wet-mix shotcrete.
WWW.IBISWORLD.COM Concrete Contractors in the US August 2013 32
Jargon & Glossary
PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.
VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.
IBISWorld Glossarycontinued
Disclaimer
This product has been supplied by IBISWorld Inc. (‘IBISWorld’) solely for use by its authorized licensees strictly in accordance with their license agreements with IBISWorld. IBISWorld makes no representation to any other person with regard to the completeness or accuracy of the data or information contained herein, and it accepts no responsibility and disclaims all liability (save for liability which cannot be lawfully disclaimed) for loss or damage whatsoever suffered or incurred by any other person resulting from
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