Five resolutions for the ready-mixed concrete industry.
Happy New Year! From here on out, may our days be filled with more light, hope and resolutions for a better future. Taking a cue from Abraham Lincoln, who said, “The best way to predict the future is to create it,” let’s build a better outlook for our businesses and our industry. We can start with the following resolutions.
Resolution No. 1: Kill paper
Traditionally, an economic downturn for our industry enabled the lowest-cost operators to acquire others. While cost control will remain a dominant factor in this downturn, the least-hassle suppliers will have the advantage both with cost and customer stickiness. Paper in all forms is friction and cost, so kill it and go paperless.
Here is the fastest and surest way to transform to a digital enterprise. Look around your office. Every time you see a piece of paper—be it a quote, mix design, ticket, submittal, material specification sheet or something else—imagine a $100 bill stapled to it. That’s how much each piece of paper is costing you!
Numerous digital and mobile solutions are available to provide personnel and customers real-time access to the information they need. We have known this for years. With Covid-19 shutdowns pushing us to the cloud for remote operations and the avalanche to e-Ticketing, we have now run out of excuses to hold onto paper processes.
Resolution No. 2:
Standardize ticket information
On June 29, 1956, then-President Dwight D. Eisenhower signed legislation funding the construction of the U.S. Interstate Highway System (IHS). Subsequently, the rabble of fiercely independent states did the unthinkable: They aggressively began the process of standardizing traffic laws, signage and design.
Tickets are the fundamental building block of commerce in our industry, yet they remain stubbornly different state by state, producer by producer and test lab by test lab. The digital enterprise—our industry’s version of the IHS—demands standardization. Jump in with both feet to work with your department of transportation and the National Ready Mixed Concrete Association Business Advancement Committee IT Task Group to make ticket formats and processes uniform across companies, projects and transportation agencies. The task always seems impossible until it’s done.
Resolution No. 3: Diversify technology
The digital enterprise prioritizes modern, efficient, best-in-class technology. Older islands of information that do not communicate well with others are a stumbling block. With the firmly entrenched philosophy of service-orientated architecture (SOA) in today’s tech solutions, information can flow like water between systems—regardless of provider.
Now is the time to diversify your tech stack so you can move away from legacy, closed, one-stop shops and seek out the best applications for our industry. Make no mistake, this will require a transition period. You’ll have to keep the legacy technology on life support while you master the new-world business processes empowered by modern tools. However, the competitive benefits when you get to the other side are simply too overwhelming to ignore.
Resolution No. 4: Influence your elected representatives, part 1
The Infrastructure Investment and Jobs Act of 2021 was a nice start, trickling around $444 billion to meaningful construction out of the more than $1 trillion allocated. Hey, 44 percent efficient is pretty good for Washington!
The U.S. remains lowly ranked for surface transportation, sanitation, power and internet infrastructure when compared with the “Group of 20” leading rich and developing nations (aka G-20). The American Society of Civil Engineers’ 2021 Report Card for America’s Infrastructure estimates the U.S. needs ~$6 trillion for infrastructure investment through 2029. Yet only ~$3.3 trillion is funded, leaving a ~$2.6 trillion deficit. If Congress maintains a 64 percent surcharge for their pet projects, we need $5.9 trillion in the next infrastructure bill.
Resolution No. 5: Influence your elected representatives, part 2
Our industry’s hope for a better future is a soft landing for the current recession. While warehouse, multitenant housing and infrastructure continue to hold or improve, single-family housing is bust.
On December 23, 1913, then-President Woodrow Wilson created the Federal Reserve (Fed) just in time for the new year—and that was the last time it was on time. In March 2020, the Fed reduced its funds rate to 0 percent, which combined with Congress’ massive infusion of Covid-19 cash payments set the economy on fire. Politics, as always, conspired to let it burn.
To fight the fire of self-induced inflation, the Fed aggressively increased the funds rate to 4.34 percent in December 2022, which doesn’t sound too bad as compared with the historical average of 4.61 percent or the all-time high of 20 percent in 1980. However, between January 2022 and now, the monthly payment for a new 30-year mortgage has increased 65 percent. A family purchasing a home at the U.S. average price of $350,000 now pays almost $1,000 more in monthly interest.
Seeking Alpha, a financial investment website, cites home construction as the third most impacted sector by interest rates—when rates move up, demand falls. Our industry needs the Fed to stop any further rate increases. The Fed is notionally independent of politics, but it’s on us to pressure our connections to make the machine stand down.
Mark Twain’s sage advice for a new year was: “Now is the accepted time to make your regular annual good resolutions. Next week, you can begin paving hell with them as usual.” However, if we stick to the resolutions set forth in this column, we can pave a better future for the ready-mixed concrete industry.
Craig Yeack has held leadership positions with both construction materials producers and software providers. He is co-founder of BCMI Corp. (the Bulk Construction Materials Initiative), which is dedicated to reinventing the construction materials business with modern mobile and cloud-based tools. His Tech Talk column—named best column by the Construction Media Alliance in 2018—focuses on concise, actionable ideas to improve financial performance for ready-mix producers. He can be reached at [email protected].