Farmers and contractors have to be the most optimistic people on earth. Every spring, they swear this year is going to be better than the last, even if the evidence points differently. In the face of three years of double-digit declines in revenue and margins squeezed drier than a lime left out in the sun, concrete contractors told Concrete Construction that 2011 will be better than 2010 and 2013 is going to be the breakout year.
Take Jim Dolente, CEO of Madison Concrete Construction, Malvern, Pa. Despite having seen his company’s revenue drop from $181 million in 2008 to $51 million in 2010, he still sees the bright side. “Before the downturn, we looked ahead and did what was necessary to be prepared in case sales got soft. So even though we weren’t able to maintain sales we would have liked, we made inroads into infrastructure and bridge work, and that will be a part of our future.”
More fun to grow
Here’s a sign of how difficult things were in 2010 for concrete contractors: CC could only got 88 of you to send in revenue numbers. Back in 2005 when the industry was growing at 20% per year, there were more than 150 entries in the CC100. As Jim Dolente says, “Is it harder to shrink than it is to grow really fast? It’s a lot more fun to grow fast!”
So with the fun at least temporarily a thing of the past and faced with this lack of information, I took some steps to artificially expand the list to 100 companies. I pulled out the 12 largest concrete contractors based on 2009 data that didn’t report for 2010. Then I calculated their 2010 revenue by decreasing their 2009 revenue by the average decrease in volume (-8.5%) among all those companies that did respond. I appended those companies to the end of the list.
I certainly make no claim that these revenue numbers are accurate—some will be too high, some too low. But I’m fairly certain these 12 companies are indeed still among the 100 largest concrete contractors in America, albeit reduced in revenue from the last great year in 2007.
Ups and downs
This is important to remember—only three years ago, the industry was in its third year of double-digit increases in volume. And the last time CC documented a decline in total sales was—well, I don’t know when because it was prior to 2000 when the CC100 tracking began.
That doesn’t make the difficulties of 2009 and 2010 any easier, but if the industry has yet to see any significant recovery, at least it appears it has reached the bottom. After concrete-related revenue declines of 1% in 2008 and 26% in 2009, the drop in 2010 was only 5%. Of the top 100 companies, 44 reported losses in 2008, 81 in 2009, but “only” 51 in 2010. Does this mean a leveling off? Or does it just mean we can’t go any deeper into this hole?
Reviewing the data, I can make a few observations:
• The percentages of work have changed, led by an increase in the percentage allocated to highway and heavy construction. This is due to the impact of the stimulus money from the federal government combined with drops in building construction.
• Residential concrete construction is still down—no surprise there—from 9% of the total in 2008 to only 2% in 2009 and 2010.
• Tilt-up also has taken a hit with the lack of construction of offices and warehouses. Tilt-up was 10% of the total in 2007 but only 4% in 2010. The total revenue for the top 10 tilt-up contractors dropped from a high of $612 million in 2007 to $215.4 million in 2009 to $168.5 million in 2010—a 72% drop from 2007 and a 22% drop from 2009.
• This year only companies making at least 10% of their revenue from decorative work are listed. This shows those companies performing significant work in this sector, although we know most decorative concrete contractors are small. Following the general trend, though, most of these companies saw decreased revenue in 2010 for decorative work.
• Commercial construction took a massive hit in 2010. The top 20 commercial contractors saw revenue from structural work and slabs drop to $23.4 billion, a drop of 45% from 2009. Again, this is because of the lack of building construction. Some companies managed to shift to highway and heavy construction and maintain a reasonable revenue volume.
So perhaps we’ve passed the bottom, but most concrete contractors aren’t expecting a big bump in 2011 or 2012, and they expect fierce competition to keep their margins razor thin.