- BIM and 3-D estimating
- Paperless project administration
- 3-D concrete paving screeds
- GPS in vehicles
- Field electronics
- More energy-efficient equipment
- GPS layout equipment
- Floor polishing equipment
- Pervious concrete equipment
- More efficient forming/shoring systems
- F-meters to measure floors
Last year's CC100 report started with a quote from the National Association of Home Builders that a “dramatic downward correction in housing production still is underway.” Little did we know then that the drama was only just beginning.
Today, residential construction is approaching historic lows, while commercial is holding up well in most areas. Yet, there seems to be a storm on the horizon that everyone is preparing for, not knowing whether it will be a brief shower or a hurricane. “We need to be a little quicker, a little smarter,” says Clay Fischer, Woodland Construction in Jupiter, Fla. “But I think we're going to come out of this a lot stronger, ready to take on the next wave.”
The story of 2008 and 2009 is yet to be written, but maybe we can get some insight by looking at trends from the past few years. Here is what we can conclude from the 2007 numbers.
Revenue figures (Figure 1) tell the story of 2007—and a very good story it is. But let's look a little closer: As in years past, we have included in the CC100 some large general contractors (GCs) who self perform their concrete work. This year we have three large GCs that were not on last year's list: ARB, Barton Malow, and Oltmans. The total revenue from these three companies is $2.1 billion, which has inflated the total revenue amount for 2007 ($23.8 billion—up 38% from 2006). If we look at reported 2006 income for all of this year's CC100 companies instead of the 2006 revenue for last year's group of CC100 companies, we get a different story. In that case, 2007 income growth was a still very healthy 12.7%, but not the astounding 38% shown on the chart.
- Concrete revenue, however, is not greatly affected by the addition of the GCs, because leaving them out would only add smaller companies to the bottom of the list. The 15.9% increase in 2007 concrete revenue over 2006, therefore, reflects real growth and is right in line with what we've been hearing from contractors around the country. This follows a blistering 27% rise in concrete revenue between 2005 and 2006.
- The Top 20 Commercial Concrete Contractors (Figure 2) did very well in 2007, increasing their concrete-related revenue by 30%. This dramatic increase is reflected in the fact that 16 of the 20 had double-digit growth in 2007 and one had triple-digit growth. Only one of these 20 companies had lower concrete revenue in 2007. Apparently, 2007 was a good year to be a commercial concrete contractor.
Revenue increases in 2007 versus 2006 were not quite as dramatic as 2006 to 2005, although still very impressive. Some observations:
Only three companies that were among the 20 fastest growing (Figure 3) last year are again on this year's list (Baker Concrete, Concrete Strategies, and Concrete Structures of the Midwest). In fact, several of last year's fastest-growing companies had down years in 2007.
- Three of the fastest-growing companies from 2006 to 2007 actually had significant declines in 2006 versus 2005 (Marion Construction, Ace/Avant, and Structural Group), showing that strong companies can rebound from one bad year.
- Looking at the bar chart titled Growing or Declining? (Figure 4), we note that 2007 is very similar to 2004 in terms of ups and downs. Based on what we're hearing from many contractors, we suspect that 2008 results will decline further, perhaps back to the figures we saw in 2001 through 2003.
- Of the five fastest-growing companies in 2007, three are based in Georgia and the other two in the Pacific Northwest.
Types of work
Changes in the mix of concrete work (Figure 5) that the CC100 companies perform is always interesting to analyze. We changed the categories a bit this year, though, so some of the numbers are not directly comparable, but here's what we see:
Commercial abovegrade structural work and commercial slabs are almost exactly the same percentages as last year, adding up to 52% of the total concrete revenue.
- Residential, as would be expected, is down quite a bit to 9% (from 13% in 2006). The decline in SelectBuild's business alone accounts for a big piece of that.
- Tilt-up continues to grow (Figure 6) as an important concrete construction technique, increasing from $667 million for CC100 companies in 2006 to $960 million in 2007 (a 44% increase). In part, this is due to the addition of a couple of large Florida tilt-up contractors (Builders Plus and Empire Tilt Up). Also note that 43 of the CC100 companies made more than $1 million on tilt-up in 2007 compared to 38 in 2006. Of the top 20 tilt-up contractors (Figure 7), only one company had negative growth in 2007. Tilt-up construction continues to be concentrated in the Sun Belt states with 14 of the top 20 based in Florida, Texas, Arizona, or California.
- For decorative concrete work, we include every company that submits data, even if their revenue doesn't put them into the top 100. Note that many of the CC100 contractors don't do decorative work—leaving that mainly to the smaller companies; three of the top 10< (Figure 8) aren't on the list and only four companies make more than $10 million on decorative work. This year, we asked everyone to break down the types of decorative work (Figure 9) they perform. Among these companies, more money is made doing stamping and exposed aggregate that anything else.
- Cost to keep key employees
- Interest rates
- Immigration issues
- Preparing for a downturn
- Finding profitable niche markets
- Lower margins due to increased competition
- Residential contractors entering the commercial market
- Workforce quality
- Green construction
- New materials: self-consolidating concrete, pervious concrete
A few closing insights:
The number 100 company this year (Goss Foundations) had concrete revenues of $15.2 million. To get into the CC100 in the 2007 listing it only took concrete revenue of $11.5 million. In the 2006 listing, the 100th company earned $9.5 million from concrete work. This increase is due to inclusion of some GCs, to adding more midsized concrete contractors, and simply to growth in the concrete industry.
In conclusion, 2007 was a very good year for concrete contractors, although those focused on residential had to make some adjustments.
— William D. Palmer Jr. is president of Complete Construction Consultants, based in Lyons, Colo.
- The upcoming election will be key in 2009. We see continued growth in healthcare, industrial, and institutional. —DeWitt & Associates
- In 2007 we entered a new geographic market and this has allowed us to increase our target market and potential revenue base while staying true to our mission of working within a 60-mile radius. —Madison Concrete Construction
- Because residential is so slow we are seeing the large residential concrete contractors bidding commercial work and even the smaller residential contractors bidding commercial site packages and small retail. —MK Concrete Construction
- The need to get cost-saving strategies into our clients' hands in time to prevent costly design and construction issues is shaping the progression of our business. Design-build and design-assist methods give us a broader arsenal to tap into to solve cost-related issues. —T.B. Penick & Sons
- Many homebuilders moved into the commercial market and have driven down sales prices; 2008 and 2009 are going to be ultra-aggressive. The companies that survive will be those with a proactive approach. —Riggs Contracting