Ready mixed producer survey: Margins wane as shipments increase

Sources: National Ready Mixed Concrete Association, Silver Spring, Md.; CP staff

For the first time since the 2005 market peak, ready mixed concrete production increased in 2011, according to results from the recently released NRMCA Industry Data Survey. Although last year’s modest 3 percent shipment increase—to 265.7 million cubic yards—marks a slight improvement against 2010 figures, U.S. ready mixed concrete producers continue to report losses tied to the effects of a prolonged economic downturn.

“While the increase in overall production in 2011 is a positive for the industry, companies continue to struggle to sustain their operations,” says NRMCA President Robert Garbini. “In order for the industry to survive and flourish, ready mixed concrete producers need to look beyond traditional approaches to their businesses and try something new to increase the size of the market and return to, at a minimum, break even and hopefully one day, sustainable performance levels.”

NRMCA members reported an average operating loss of $6.16 per cubic yard in 2011, an improvement over the prior year’s record average loss of $7/yd. Over the last two years, the cumulative average net operating loss per cubic yard has topped $13. Two of the hardest hit areas, the Southeast and Pacific Southwest, reported average 2011 losses exceeding $14.93/yd. and $9.76/yd., respectively. Losses totaling $29.04 and $26.36, respectively, over the last two years call into question the viability of the industry in the regions, NRMCA officials note.

The Industry Data Survey also points to respondents’ continued shedding of jobs, with total 2011 employment dropping 15.7 percent, including an 8 percent decline among driver ranks. While last year’s payrolls were down, productivity was up as the industry delivered 5 percent more cubic yards per truck and almost 2 percent more per plant compared to prior year figures. Yards per production employee figures increased 3 percent year-over-year.

More than 40 percent of all ready mixed concrete placed in the U.S. in 2011 went to commercial construction, according to the survey, representing a 7 percent decrease compared to 2010. Ready mixed concrete placed in residential projects posted a 10.3 percent gain over the prior year, representing 25.4 percent of the 2011 yardage, but still down from the historical high of 45 percent in 2007.