Coming back from the deepest construction slump in the past 75 years was never going to be easy, but the numbers for this year’s top concrete contractors makes it clear that indeed we are coming back. The strongest statistical indicator is the number of companies that had better results in 2011 than they did in 2010, making it clear that the low point was in 2009 when only 11 companies had increased revenue over 2008. The upward trend that started tentatively in 2010 (33% growing) was even stronger in 2011 (59% growing)—and from what we’re told, will be even stronger in 2012.
One interesting development is the move to No. 1 of Gulf Shores Construction, Lincoln, Neb. (following Baker Concrete, Monroe, Ohio in 2011 and 2010 and CECO, Kansas City, Mo. in 2009). Gulf Shores is a bit of an oddity in the concrete business because it has only two clients and builds only two types of buildings: distribution centers and parking garages. “All of our work is negotiated,” says Gulf Shores president Steve Stone. Although the company had $675 million in revenue in 2011, “we only have one estimator,” says Stone.
The fastest growing company in this year’s survey is Roger & Sons, Lagrangeville, N.Y. (see Contractor Profile on page 24), jumping from $43 million in 2010 to $98 million in 2011, partly based on a major project at the 4 World Trade Center project (4 WTC) (read that story in the August 2011 issue). Other companies that had big years in 2011 were Wayne Brothers, Kannapolis, N.C., Lewis Construction, Schofield, Wis., and Largo Construction, Tustin, Calif. Areyou seeing a pattern here? No, neither do I. There doesn’t seem to be any clear geographical trend, other than the absence of Florida.
The types of work done by the companies in this year’s survey have changed a little over the past couple of years. The obvious adjustment has been significantly more repair work and paving and a big drop in residential and tilt-up work. Commercial construction remains at about 50% of the total and has every year since 2002 when we started the surveys. Decorative, despite its high profile, is only about 1% of the total.
As part of the survey, we asked what would help or hinder a full recovery in 2012. The most common response as something holding us back is the tight credit market. “Until the banks start loaning money to businesses, developers, and homeowners, the construction industry will continue to recover slowly,” says Eileen Tiffany, Briegan Concrete, Apex, N.C. “The banks just need to loosen their strangle on business, period.” A couple of contractors also had concerns about skilled labor. “When the recovery takes hold,” says Jim Dollar, Dollar Concrete, Norcross, Ga., “having sufficient skilled labor will be key in maintaining the recovery long term.”
Mining the data for some patterns, here are a few observations:
- The concrete-related revenue for the top 20 companies in the survey was actually down a little in 2011 (about 12%) and seven of the top 20 had declines in total revenue greater than 5%. This is disproportionate to the overall survey, indicating that the mid-size companies did better in 2011 than the big companies. Concrete-related revenue for the top five companies was up 3.7% from 2009 to 2011.
- Revenue per project varied from a high (Webcor Concrete, Alameda, Calif.) of $99 million/project; more than 30 companies had revenue greater than $1million/job.
- Revenue per employee ranged from $1.1 million (again Webcor) to an average of $413,000. Looking back to 2008, the average was $339,000/employee and in 2007 it was $276,000/employee. This seems to indicate that the concrete industry is steadily increasing its productivity.
- The total increase in revenue for the companies in the survey was 1.6% in 2011; the U.S. gross domestic product increased 1.7% in 2011, according to the U.S. Bureau of Economic Analysis. Perhaps the concrete industry should be used as an indicator for the entire economy!
The concrete industry is coming back, stronger and smarter after having gone through the storm of the past few years. If the U.S. economy continues to improve going into 2013, as many predict, we will be ready.