Since CONCRETE CONSTRUCTION started monitoring the financial health of the concrete industry in 2001, concrete-related revenue for the top 100 companies has decreased only once prior to 2008 (that was in 2002 by 1.5%). But that was followed by a pretty good year in 2003 and big jumps in 2005, 2006, and 2007. This trip through the cycle seems likely to be different.
Ron Schuster, CEO, CECO Concrete Construction, Kansas City, Mo., says, remember commercial concrete construction is “a lagging industry—nonresidential lags housing and we all know that housing isn't fixed yet. I think industrial work—petrochemical and chemical facilities, not automotive—will be back next year because oil's coming back. But I don't think commercial nonresidential is coming back anytime soon. In fact, I think 2010 will be worse than 2009. That's unfortunate for all of us, but we've dealt with this sort of thing before.”
This year's CC100 listing shows contractors dealing with it in different ways. Some found lucrative markets; others have suffered. All in all, 2008 wasn't so terrible.
- Total revenue for the CC100 companies increased about 5% in 2008 due to big gains from some larger companies—both concrete subcontractors and general contractors.
- Concrete-related revenue for the entire 100 companies was down about 1%, but was up 17% for the 20 largest commercial concrete contractors. Perhaps that was simply momentum coming out of a very strong 2007. “We do big jobs so we work off an eight- to nine-month backlog and we saw the market for new work decline about August 2007, but we had the work already sold and in the pipeline,” says Schuster. “We saw the bad news coming out of housing in late '06 and I've been in this business long enough to know that when housing goes in the tank, one or two years later commercial nonresidential goes in the tank. We made the decision then that we needed to get diversified so we bought two companies to allow us to move into industrial markets—specifically petrochemical and refining. Most of our growth in 2008 was through acquisition.”
- Some companies grew in 2008 while some sharply declined. The split was right down the middle with 40 companies growing, 20 staying about flat (±5%), and 40 having significant revenue declines. That is the worst performance in the past 10 years—only 2002 came close.
- Maintaining growth is difficult. Only three companies on last year's fastest-growing list made the list again this year—Baker, Urban, and Ruttura. This is Baker's third consecutive year of double-digit growth. In fact, most of the companies on last year's fastest-growing list had lower revenue in 2008 than in 2007; eight of the 20 had double-digit revenue declines.
- Despite overall revenue growth of 17%, the 20 largest commercial concrete contractors also were split evenly between those that saw growth from 2007 to 2008 and those that contracted.
- There is no discernable geographical pattern to the companies that had significant growth in 2008. Their locations vary from Utah to Pennsylvania to Arizona to Georgia. Conspicuously missing are companies from Florida and California, which have seen the downturn earlier than other areas.
- Two of the top three fastest-growing companies are in Utah—D&F and Gulf Shores, and there's another connection: Steve Stone is owner of Gulf Shores and a partner in D&F. “With Gulf Shores, all we build is distribution centers, like for Rubbermaid,” he says. “We had that niche and they had cash so they just kept building. D&F, on the other hand, is a local Utah company that builds high schools, fire stations, recreation centers, and lot of other county work. We foresaw the economy crashing and went after a lot of county work where the bonds already were funded and that allowed us to grow fast. Not a lot of jobs but some big contracts—from $2 million up to about $6 million.”
Types of work
As has been true for the last several years, commercial structural concrete, floors, and slabs encompass slightly more than half of the work of CC100 companies—that total has ranged from 51% to 53% for the past five years of our survey. Some other observations include:
- Residential, as would be expected considering the state of the housing industry, has dropped from 13% of the total revenue in 2006 to 9% in 2007 and to 6% in 2008. Of the top 10 residential concrete contractors in 2004, only five are still in the top 100 companies, and those are diversified companies that simply shifted their efforts to nonresidential. Of the companies in 2005 that had more than 50% of their work in residential, all but one—Hill Construction in Puerto Rico—are gone from the list.
- Tilt-up construction was down 17% in 2008; the first drop in many years. All of the big Florida and California tilt-up contractors that have led the way in recent years were down significantly in 2008, by up to 50%. Note that due to an entry error in last year's listing, Tilt-Con was left off the tilt-up list. That means that Tilt-Con was actually the No. 1 tilt-up contractor in 2007 and the total tilt-up revenues shown last year should have been $100 million higher.
- Decorative concrete still represents a small portion of the CC100 companies' business (1%). Our list of the top decorative contractors includes those that responded to our survey even if they didn't make it into the top 100. The total for all respondents is $123 million, which is exactly the same as for the 2007 survey and only a little more than in 2008.
So 2008 was difficult for some companies and it appears that 2009 is difficult for most. Next year may be better—or not. But remember, as Chip Webster wrote in the March 2009 issue of Concrete Openings, “Tough times never last, tough people do.”
Interesting Data Tidbits
- Productivity among the CC100 companies in 2008 ranged from $67,500/employee to $2.8 million/employee with an average of $339,000/employee. In 2007, the average was $276,000/employee. This represents a 23% increase between 2007 and 2008, which shows the ability of companies to survive, even thrive for some time, with fewer employees.
- Of the more than 300 concrete construction companies in our database, the most common first letter of a company's name is C, which is not too surprising, although only eight of those start with the word concrete. The next most common first letters are S, M, and T, in that order.
- There was a lot of turmoil in the listing this year with 26 companies moving up or down by 10 or more places from their rank in the 2008 CC100. The greatest rises in ranking were Gresser (+18 to No. 58), Danko (+20 to No. 63), and Lindblad (+20 to No. 76). The largest drops in ranking were Fly & Form (-18 to No. 74), Inland (-20 to No. 66), and Morley (-26 to No. 45); Morley's overall revenue basically was flat, but the percentage booked as concrete work dropped from 45% in 2007 to 20% in 2008. Only three companies remained in the same position as last year: Webcor (No. 8), United Forming (No. 11), and Hill Construction (No. 50).
- CECO is No. 1 for the first time, although it has been in the listing every year since the CC100 began in 2001. Although CECO has expanded its operations to include nearly every aspect of concrete construction, it remains the nation's largest formwork subcontractor. CECO's CEO Ron Schuster says that they use whichever formwork system they feel is best for the job, including steel-beam parking garage systems, Titan H-V, EFCO high-strength scaffolding, Doka shoring and wall form systems, and CECO's own aluminum hand-framing forms.
- The CC100 companies employed 52,300 people as of April 2009. In April 2007, that figure was 67,600 employees—a 22% decrease, which is very close to the current unemployment figures for the U.S. construction industry as a whole (about 20% according to the AGC).
- Of the 100 top companies, 52 are members of the American Society of Concrete Contractors (ASCC)—a number that has not changed for the past three years. Of those companies that are members, 32 had positive growth in 2008 (or 62%); among the nonmembers of ASCC only 37% had positive growth in 2008.
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