This past September, prior to the American Society of Concrete Contractors' (ASCC) Annual Conference in Charlotte, N.C., a roomful of concrete construction professionals met with the editors of Concrete Construction for the Sixth Annual Roundtable Discussion.
Unsure of what to expect, panelists showed their poker faces at the outset. But shortly after delving into the discussion—realizing they shared many of the same issues as their peers—the panelists freely discussed a variety of topics prevalent in the concrete construction industry today.
Overall, concrete is solid
In 2007, the overall sense of the concrete construction industry is positive and steady, specifically on the commercial side of business. Many contractors are optimistic about 2008; however, the manner in which they accomplish their goals is broad.
Smaller contracts, and many of them, allowed some contractors to accomplish their goals in 2007, with the same expected next year. “2008 for us is looking like it's going to be another record year,” says Byron Klemaske, T.B. Penick & Sons, San Diego.
For residential concrete, obtaining consistent concrete contracting work depends on the geographic location, with some areas obviously being better than others.
Even though the general feeling is that residential construction may be stagnant, in some areas of the country, there are pockets of residential concrete construction that are still strong. “In Utah, our residential construction actually has been quite strong with the exception of the last two months. As the rest of the country seems to be falling off, Utah has stayed quite strong in residential,” says Heston Hamilton, Western Star Construction, Orem, Utah.
Regardless of the general consensus that the residential marketplace is tempered, commercial concrete work, however, is increasing. Specifically in urban areas such as Charlotte, N.C., Chicago, Las Vegas, and New York City where concrete construction is expected to be strong for the next four to five years.
Discussion also centered around 2008, and what can be expected in terms of residential work. Many expect the 2008 residential marketplace to remain flat; but a turnaround is anticipated as soon as 2009 as residential demand increases and inventory decreases. Despite the prospect of another 12 months of tempered residential work, many panelists remain optimistic. Specifically, after comparing and contrasting the current residential marketplace to that of the 1980s where it took years to get the market back on its feet.
Keeping business strong
Anticipating the parallels between the 2007 and 2008 residential construction markets, panelists discussed how to keep their companies strong. One common answer was diversifying their current business. “I just opened up a new company in Ohio, which involves decorative and site concrete,” says Klemaske. “Call me lucky, but the first job we got was for $345,000 and the second one was for $150,000. So our first two contracts were for a half million dollars doing site work around existing houses.”
Klemaske went on to say that T.B. Penick & Sons also started a new self-leveling underlayment and topping work department this year in their San Diego office targeting projects nationwide. “I think that diversification of what we have going on helps. Overall as a company, it seems there is always one segment of the company doing better than other parts of it,” he says.
Diversifying a contracting business ensures that even though there may be a downturn in one segment of the industry, contractors can take advantage of increases in other areas of the industry such as decorative concrete, commercial flatwork, or tilt-up.
As a result, contractors are trying to keep their business well rounded in order to serve the many needs of their customers. The ability to handle a variety of work can help contractors maintain client loyalty—the feeling is that the contractor should offer a broad range of services to fulfill all of their concrete needs.
“We don't do all of a client's work, but they can at least come to us for a bid, and they can try to work with us on everything from school projects to multifamily to retail. This adds to our challenges, but it's beneficial for our company to have a broad base of work and train our guys to do everything,” says Hamilton.
Contractors are diversifying not only by opening new branches of business within their existing company but they also are expanding their geographic reach. Many panelists mentioned that they are reaching out farther to keep their business profitable, often crossing state lines. But there is risk involved. “We are trying to reach out quite a bit farther, accepting the fact that we need to travel more. But when you go farther away, you do not know your customer very well. As we get farther away from our home base, we have to be more careful,” says Mike Poppoff, Poppoff Inc., Moxee, Wash.
Steve Lloyd, Lloyd Concrete, Forest, Va., often travels for jobs. While Lloyd has diversified his company to some degree—specific pumping projects as well as some decorative work—it is the negotiated work he has established in other states that helps his business grow. “We do a lot of high-rise projects around Virginia Tech and University of Virginia, but also are involved in projects in Memphis, Tenn., Savannah, Ga., and Kissimmee, Fla., so we have to travel. Our town is about 100,000 people so we travel to keep things going.”
Of course, planning for the future is what panelists at the Concrete Construction Roundtable were most concerned about. Strategic planning based on current economic conditions, as well as projections, is crucial to the success of a contracting business in the concrete industry.
“We do [a strategic plan] each and every year and update it annually,” says Klemaske. “We'll get away from the home office for a time to work on long-range plans. Then, we will meet again on a quarterly basis to adjust and fine tune the plan.”
Klemaske went on to say that having a strategic plan is very effective when it comes to keeping his business on track. It is important to have all of the key people of the company involved in the process, including the president, operations managers, and marketing. This helps them to achieve and follow the plan because all the parties responsible for carrying it out are involved on the process.
“We did a strategic plan about four years ago and it was the first time for our company,” says Keith Wayne, Wayne Brothers, Kannapolis, N.C. According to Wayne, his company reviews a large amount of predictive data from a variety of sources to help them plan for the conditions around them.
Participants of the roundtable agreed that strategic plans should be reviewed as often as three to four times per year in order to keep things on track. “It can be the best laid plan but if you don't follow or monitor progress quarterly, you run the risk of not being able to achieve results,” says Klemaske.
Addressing the business plan on a quarterly basis also can lead to new ideas and discussion that can help evolve a business plan for future-based issues and trends that are affecting the concrete industry.
An example of one of these trends is green concrete. Concrete Construction Roundtable panelists were intrigued by the notion of green concrete as discussion centered upon mix specifications and how the concrete industry is adapting to green concrete. “The concept of green is here to stay. Fast forward 20 years, green will look totally different from what it is now,” says Poppoff.
It's not as though the concrete industry has not had to deal with evolving specifications in the past—green concrete is no different. However the premise of green concrete has spread so quickly, contractors have to adjust to it with each and every new project as specifications change and become more sophisticated around green technology. Green concrete is suddenly a leading technology and contractors can't afford not to be curious. Eventually it will have a direct impact on their business plan if it hasn't already.
According to Klemaske, one of the employees of T.B. Penick & Sons recently became LEED Certified and due to the importance of LEED Certification, as well as the trend toward green concrete, additional employees are preparing for the certification test. “There is a lot that goes into [LEED Certification]. We're basically concrete contractors but you've got to know about the whole spectrum to LEED,” says Klemaske.
Contractors continue to make major investments in technology and equipment.
There is a perception by workers in the industry that technology will replace the concrete construction worker at the site. However true this perception may be, employees also enthusiastically embrace the technology. Panelists agreed that whenever a contractor gets a new piece of equipment, employees are lined up waiting for their chance to operate the new machinery.
As some projects can be done faster with less manpower, contractors also are using technology to help ease the burden on their workers. “Workers get fatigued a lot. Machines such as laser screeds and ride-on trowels help reduce their fatigue and increase their effectiveness,” says Hamilton.
According to the panelists, GPS is one form of technology that is very popular. “We finally found a system that can go out on the pump truck. If we have a problem in the field, our mechanic can go to a laptop, report the amount of pressure on the pump, and he can even provide the temperature of the hydraulics. I never thought I'd see that in my career but the technology is here now. We're pretty heavily invested in it,” says Keith Bauer, Coastal Carolina Pumping, Charlotte, N.C.
“We use it because our truck drivers are out making deliveries all day starting at 4:30 a.m. and we constantly have customers who call during the day asking ‘How fast can you get me the equipment?' With GPS, our customer service reps can go online and see where all our trucks are and how close they are to the warehouse and give the customer an accurate possible delivery time. Whereas before, he might not have known. Now he can go to the screen and find exactly where the driver is located,” says Jim Hughes, Doka USA Ltd., Little Ferry, N.J.
Many of the panelists did mention they were willing to take chances with new technology to help evolve their business. From pervious concrete to electronic time tracking systems, contractors are willing to change their systems and products even if it causes them short-term problems.
At the end of the day, the contractor knows that growing pains today will allow them to remain on the cutting edge, be innovative, and help them win a concrete contract tomorrow.
What leads to success?
The relationship between the contractor and client is an immeasurable asset that helps a contractor to maintain a healthy business.
Lloyd told panelists of a project involving a distribution center and the importance of a quality floor demanded by the client. “The owner came out to me and said ‘Steve, do you see that roof? It's going to leak one day and I don't really give a damn. I don't care about that wall either, but your floor better be right,'” says Lloyd. He went on to say that the pour was indeed correct, which led the client to offer Lloyd's company two similar jobs.
Digging further into the contractor/client relationship, communicating face-to-face can have an impact on the contractors' success.
“I really push my employees to have face-to face relationships. Whether it is with vendors or with clients, it seems to make a large difference. A telephone relationship is OK but to know a person face-to-face creates a different business relationship and promotes better harmony on a project,” says Hamilton.
It's not only client relationships but also alignment with key suppliers that contractors deal with on a daily basis that is critical. From material and equipment suppliers to ready-mix people, a positive relationship is essential to the formula that makes a contractor successful.
Success also depends on being a low-maintenance contractor. “By low maintenance, I mean we're not in our clients' face everyday with back charges; having the employees show up without a hard hat; or not showing up for work. Low maintenance means we are flying under the radar,” says Poppoff. Clients want contractors to perform quality work and be dedicated to their project.
Contractors also expect their employees to exceed expectations for their clients. “When Frito-Lay flew five of us to Salt Lake City to do a concrete job, it cost them a fortune. They said they might be able to find someone in Salt Lake City [to do the job]. But if we send you, we know you'll work hard and get it done and done well,” says Lloyd.
Cost is sometimes secondary to providing service to a client. “For 10 years, we've been doing Abercrombie & Fitch stores out in the San Diego area. If they call me and say they need someone in New York tomorrow, I'd figure out how to get someone to New York tomorrow,” says Klemaske.
Architects also key
Harmony on a concrete construction project can be accomplished by improving relationships with specifiers, designers, and engineers—especially relationships with architects. Klemaske says he offers his company as a resource to the architectural community in order to help architects build and budget a project. “We really try and emphasize that every time an architect is thinking about concrete in San Diego, we want them to pick up the phone and call T.B. Penick & Sons,” he says. He went on to say that his relationship with architects is important and it is crucial for a contractor to spend a lot of time with them. “They want to build their projects and if you can help them budget they will know costs going into the bidding process and be assured that their project can be built. The architect will want to have the best contractor they can get on the project and will believe it is you.”
Other panelists told of similar relationships with architects. “Three weeks ago, we went to an architectural engineering firm in Lynchburg, Va. We fed them lunch and talked to them about steel fibers. They were really appreciative. They are designing a new building and are now going to use steel fibers in the concrete in their building,” says Lloyd.
Architects not only need to know about foundations and slabs, but also what color the drapes are, the color of the ceiling, the fabric on the wall, and a number of other vital pieces of design information.
For concrete contractors, this means that architects can't know enough about concrete—they just don't have the time to learn how to design a quality concrete slab. So, a concrete contractor has the opportunity to help them learn what they need to know.
Considering the wide variety of topics broached during the Concrete Construction Roundtable discussion, the consensus among panelists about the concrete construction industry remains positive. Though cyclical issues concerning the residential marketplace are evident, most feel it is only a matter of time before this segment of the industry begins to rebound. Overall, despite the myriad of issues contractors face on a regular basis, it is evident by those in attendance at the Concrete Construction Roundtable Discussion that they are prepared to evolve their business in a variety of manners to ensure that they remain successful regardless of what the marketplace dictates.