The decorative concrete industry is in flux. Major changes will continue over the next 12 to 24 months as supplier consolidation, cost increases, and environmental pressures create a new era in the artistic segment of concrete construction. The slowdown in most areas of decorative concrete is a result of the 2007 decline in residential housing and consumer spending, the largest end-user segment in the decorative industry.
Although the decorative market as a whole is not in recession, most companies will not realize the 30% to 50% year-after-year industry growth of the last decade in 2008. Decorative concrete construction is predicted to grow 5% to 10% nationally in 2008. However, a select few market segments and regions will continue to post double-digit growth.
Consolidation in the manufacturing segment of the decorative industry began in 2008 with RPM/Euclid Chemical acquiring Increte. It is too early to determine what impact will be felt as Euclid attempts to take Increte from contractor-direct sales to a distribution-based sales model. Although no formal announcement has been made yet, insiders are saying that Solomon Colors Inc. has acquired Brickform/Rafco. This comes after Brickform/Rafco experienced significant downsizing and multiple attempts to sell the company in 2007. The true impact of these consolidations means the landscape of product selection and manufacturing services in the industry will change in the coming months and years. Industry experts agree that the end of consolidations has not yet been seen, and we may even see capacity reductions if the economic environment does not improve.
Core raw materials used in the decorative concrete industry will continue to see significant price increases throughout 2008. The U.S. market is 100% reliant on foreign iron oxide pigment sources, primarily China. A shortage of scrap iron—the key raw material in the manufacture of iron oxide pigment—has caused iron-based pigment prices on the world market to increase 30% in the first quarter of 2008 alone. This, in conjunction with significant cement, plastic, metal, and transportation cost increases, will cause decorative raw material manufacturers (integral pigments, color hardeners, releases, polymers, and sealers) to increase prices, possibly multiple times, in 2008.
On a positive note, the commercial decorative concrete sector has experienced steady growth along with the development of new and innovative decorative products. With the trend toward eco-friendly construction, low environmental impact decorative flooring systems have been a natural choice for designers and architects attempting to achieve project certification via the U.S. Green Building Council's LEED Green Building Rating System. The decorative industry has been on the forefront of environmentally friendly product development with recent introductions of soy stain and low VOC solvent-based gloss sealers. These eco-friendly materials, in conjunction with low environmental impact decorative systems such as polished concrete, are helping to lead the decorative concrete industry in new and exciting directions.
As 2008 unfolds, one thing is for sure—change is in the air, and the decorative concrete industry will continue to be an exciting place to reside.
Chris Sullivan is national sales manager for QC Construction Products, Madera, Calif. He can be reached at 800-453-8213 firstname.lastname@example.org.