At first glance, the concrete industry appears simple and straightforward. Mix the right materials and put it where you want, let it sit awhile, and soon another reliable dam or highway or building or plant is built. Add up all the pieces and you have the infrastructure we've all grown to rely on. But the reality is much more complex, and like all industries, both large and small, market forces can have significant effects on the robustness of concrete construction.
All about materials
It's a materials world when you talk about concrete construction. At the heart of it all is portland cement, which is remarkably consistent, despite being manufactured in all regions of the country from different local materials. Yet, there are variations, such as in color and even behavior, and accounting for these requires the close attention of each concrete producer.
The last couple of years have seen the demand for portland cement exceed the available supply in various regions. Much of this seems to have been due to logistics as much as capacity limitations. Peak demand in early 2006 coupled with spot shortages wreaked havoc on construction scheduling in certain areas of the country where concrete construction was booming, such as Florida. Domestic cement production capacity shortages were largely made up for by imported cement, but often the coordination of shipping destinations and industry demand were not in sync. And that made for some difficult times for contractors trying to schedule concrete work.
Why the shortfall? Partly it has been due to record demand in recent years. But it also has to do with the fact that it takes some time for cement manufacturers to bring a new plant online.
Building a new cement production facility is not a small undertaking. In addition to the technical implementation and significant financial investment required, constructing a new facility also requires a site—supported by transportation and utility infrastructure—and the attendant permits for its development. Fortunately, cement manufacturers have been making the investment and will be bringing new production capacity online throughout the next year, and beyond, in several of the regions with peak demand. The irony, of course, is that this new increase in capacity looks like it will be available just as the current industry slump bottoms out.
Another pinch point has been the availability of reinforcing steel for concrete projects. This supply uncertainty—and the price increase that has accompanied it—are the result of increasing global demand for scrap steel, which is the raw material from which rebar is made, and a reduced number of domestic mills.
Overall rebar use tracks very closely with the use of portland cement, which will be addressed shortly. Suffice it to say that domestic demand has remained strong in recent years, and continues today. But in the global context, offshore demand for scrap steel, particularly in China, has risen dramatically since 2000. That increased overall demand has driven the price of rebar up significantly, and because of the strong demand, to relatively higher prices than other steel products.
Meanwhile, consolidation of the domestic steel production industry has made scheduling and availability the key element in many projects. Buyers simply have to line up and wait their turn. For example, on one recent fast track tilt-up project, the delivery lead time for steel fabrication was 22 weeks from placing the order. The engineers scrambled to complete steel fabrication drawings as early as possible, then used the remaining time to finish other aspects of the design while the sitework and foundations were completed.
Aggregates and other ingredients
Aggregates, another critical concrete material, also is beginning to be a source of headaches. Many large population centers are facing increased aggregate costs and reduced availability. The root causes are simple and interconnected. As development closes in on existing quarries and gravel pits, complaints about noise, dust, and other operational matters increase. At the same time, easily accessible sources of good natural aggregate are being depleted, forcing material producers to tap new sources farther out of town. That in turn means additional transportation costs, which have been further increased in recent years by the high price of oil.
One bright spot is the increase in recycled pavement and other construction materials. Much, if not most, of the concrete now being removed is being crushed and used as high-grade base material for paving. But in some areas, applying stringent QA/QC guidelines to crushed concrete has led to its acceptance for use in new concrete as well. This allows the aggregate producer to get top dollar for the recycled material and, at the same time, reduce the overall environmental impact. Demolition materials that can be reused onsite do not have to be trucked away and also don't clog landfills. As a side note, it seems like most rebar is being salvaged these days, if not as part of the formal project package, then somewhere further down the line.
Admixtures are used in most concrete these days. Often it is the particular admixtures in the concrete that make it well-suited to the task at hand, adding value and durability to the finished structure. Chemical admixture suppliers continue to develop and refine these additives that make concrete easier to place and consolidate, allow it to be placed and finished in a broader range of temperatures and other climatic conditions, and help it develop higher strength.
The economic basis
Cement use estimates are provided regularly by the Portland Cement Association (PCA) and typically provide the basis for examining the overall financial aspects of the concrete construction industry. Through methods developed several years ago by the Concrete Construction editorial staff, the PCA data can be extrapolated to provide insight into where the concrete goes and where the revenue from concrete construction is coming from.
This year, PCA is anticipating cement consumption to decline by 6.4% compared to 2006, which was a very good year for concrete. In the first quarter of 2006, the industry was at all-time high levels of production, but things began to slow in the second quarter with the year ending essentially even with 2005. So the 2006 decline in cement consumption, while not good news, is understandable, particularly in light of a general economic growth slowdown.
Concrete contractors who saw the weakening in the residential market and took steps to diversify continue to fare well, as the demand for commercial work continues to be strong in many areas. But those who did not start working in areas other than homebuilding are feeling more than a pinch.
PCA's chief economist, Ed Sullivan, notes that just looking at the national cement use forecast doesn't tell the whole story. Some areas are being hit far harder than others, he says, such as Florida where 65% of the residential work is cement-based. Florida's concrete industry is feeling intense pain from the current housing slowdown, and it's likely to last longer there. In general, Sullivan says, the forecast masks some regions' pain and exaggerates that of others.
Although noting that the consumer confidence index has not eroded too badly, Sullivan says there is a more important factor to watch.
“The business confidence index will be a leader in what's going on in non-residential,” Sullivan says, and it continues to drop. For now, the risks are all on the downside, so “add an extra dose of conservatism to your projections and strategic planning,” Sullivan suggests. Although PCA anticipates a further decline of 1.8% in cement consumption for 2008, the current expectations are for a recovery to begin in 2009 with return to good, healthy levels of activity by 2010.
Another aspect of the changing industry centers on how materials are used. For example, the next big trend in paving construction is likely to be pervious concrete. This type of concrete, which allows water to flow through it into the base material, offers both environmental and economic benefits. Surface water can be more quickly returned to underlying aquifers and be cleaned in the process. Using pervious pavement also eliminates or reduces the need for drainage and retention facilities.
The keys to good pervious concrete lie in having a good mix design—most use fairly uniform, small coarse aggregate and little fine aggregate—and good placement. Several manufacturers offer equipment specifically designed for installing pervious concrete.
The opportunities for its use are many and varied. Parking lots are one good application, where ponding—and in northern climates the icing up often accompanying that phenomenon—simply go away. Another opportunity is in the rehabilitation of low-volume roadways. In Chicago, for example, a demonstration project recently used pervious concrete in the reconstruction of several alleys. Residents have been very pleased because it has not only restored a good surface, but it also has eliminated the problem of standing water. How big is the opportunity? The city has some 1800 miles of alleys, which could mean a whole lot of pervious concrete paving.
The occasional pervious project has been reported, and more are sure to come. But its general use is hobbled by the lack of formal design criteria and standardized testing. An ASTM committee convened this spring to work on developing tests for strength and for field acceptance.
Few developments in the concrete industry have made as big a splash outside the mainstream concrete contractor community as insulating concrete forms (ICFs). The technology initially was relegated to residential construction, and that only by custom design. But the approval in late September of the industry's first prescriptive code for residential concrete construction, including both removable and stay-in-place forms, sets the stage for its widespread adoption. The new standard, PCA 100-07, “Prescriptive Method for Design and Construction of Residential Concrete Walls,” is expected to be referenced in the 2009 International Residential Code.
Interestingly, though, it seems more builders than concrete contractors are adding this type of construction to their offerings. At the recent Insulating Concrete Form Association meeting in St. Louis, many of the sessions focused on helping homebuilders (i.e., carpenters) move into building with ICFs. The National Association of Home Builders presented its courses “ICF for Builders” and “Train-the-Trainer” as well. Meanwhile, most concrete contractors have claimed that they have yet to work with ICFs or are merely dabbling in their use.
The reason may be simply the desire to use forms already on hand and in storage. But the opportunity is knocking, and nonconcrete contractors are answering the call. And to confirm that this may not be just a flash in the pan, there are now 30 or more manufacturers of ICF systems continually introducing new products.
There's a definite trend toward the use of more decorative concrete in municipal work, says Doug Bannister, owner, The Stamp Store, Oklahoma City. DOTs in particular are including more decorative treatments and upgrading their utilitarian concrete from plain old gray to colorful, decorative overlayments, scoring, staining, and formliners. “They've learned that it doesn't cost that much to add color and texture,” Bannister says.
And though housing has declined, the market activity in residential decorative concrete work continues to increase. Often rather than relocating, homeowners have gone ahead with plans to remodel and upgrade, often including decorative concrete. Bannister says his firm has seen no slowdown in staining or overlay sales like the housing market.
Another trend, he says, is to upgrade garage spaces. Already part of the home, these areas often can be converted to living space with far less disruption and at far less cost than putting on an addition.
One interesting aspect of the boom in decorative work is that it's bringing a whole new group of people into the concrete construction industry. Often artists who come across concrete as a good medium for their artistic expression also enjoy the challenge of large-scale projects. Plus, unlike concrete placement and finishing, which can be fairly equipment intensive, the barriers to entry in the decorative concrete business are relatively low. The results can be stunning, as well as long lasting and useful.
Tilt-up concrete construction continues to be an area for growth within the industry. In addition to offering a solution to some of the time pressures that developers are feeling, tilt-up also has now matured to the point of being able to incorporate architectural features and provide aesthetically pleasing structures. When taken in addition to the strength and durability of reinforced concrete walls, this capability to look good as well as to come online quickly has led to more widespread use of this quick and efficient method.
Within tilt-up circles the trend to work with strategic partners is enabling contractors who specialize in this construction method to build structures of the highest quality while working quickly and safely.
Although fast-track construction has been embraced throughout the construction industry, it has made things difficult in the concrete business. Chemical admixtures have enabled the use of high-early-strength concrete to speed construction, but gaining strength isn't the only thing concrete has to do.
By its nature concrete requires time to cure, which is simply allowing the chemical reaction of cement hydration to proceed and ultimately turn the fluid concrete into a solid with the strength to support itself and applied loads. Throughout this hydration of the cement, there is a demand for water, and at the same time there is the expectation that the concrete is drying out. Although a curing period usually is allowed for, once that has passed, the expectation often is that everything can proceed at full speed. The fact is that it takes additional time for concrete to dry out, and environmental factors can greatly affect how long that takes.
The issue of excess moisture has been particularly difficult where impermeable floor coverings are installed on a concrete slab. This was identified as an industry-critical technology by the American Concrete Institute's (ACI) Strategic Development Council. It was addressed promptly through research and the issuance of ACI 302.2R-06, “Guide for Concrete Slabs that Receive Moisture-Sensitive Flooring Materials,” earlier this year.
Other factors enter into this complex business also. As concrete mixes become more sophisticated—note the increasing use of self-consolidating concrete, for example—and structural designs strive to use concrete more efficiently, such as in various post-tensioning applications, testing and acceptance criteria gain a higher profile. Yet, the testing regimen that has served well for many years now may be in serious need of an upgrade.
Personnel issues also have become a large factor to be reckoned with in any business enterprise. As the work-force ages across the industry, it will soon mean replacing a large number of experienced workers from a smaller pool of younger workers who also are being courted by other industries perceived as less demanding and more rewarding.
There is the question of technological change and how much new technology to bring into the office and onto the jobsite. Should you be an early adopter or wait until the bugs have been worked out, and risk losing a competitive advantage?
Being in the concrete construction business has never been a simple matter, and it's not getting any easier. However, the future holds many opportunities for those who can weather the changes.