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Ready mixed industry data survey: margins languish, volumes rebound.

For the first time since the 2005 market peak, ready mixed concrete production increased in 2011, according to results from the recently released National Ready Mixed Concrete Association Industry Data Survey. Although last year's modest 3 percent shipment increase--to 265.7 million cu. yd.-marks a slight improvement for the industry against 2010 figures, U.S. ready mixed concrete producers continue to report tosses tied to the effects of prolonged economic downturn on construction starts.

NRMCA members reported an average operating toss of $6.16 per cubic yard in 2011, an improvement over the prior year's record average toss of $7/yd. Over the last two years, the cumulative average net operating toss per cubic yard has topped $13. Producers in two of the hardest hit areas, the Southeast and Pacific Southwest, reported average losses of over $14.93 and $9.76 per cubic yard, respectively, in 2011. Losses totaling $29.04 and $26.36, respectively, over the last two years call into question the viability of the industry in the regions, NRMCA officials note.

The Industry Data Survey also points to members' continued shedding of jobs, with total 2011 employment dropping 15.7 percent, including an 8 percent decline among driver ranks. While last year's employment was down, productivity was up as the industry delivered 5 percent more cubic yards per truck and almost 2 percent more per plant compared to prior year figures. Yards per production employee figures increased 3 percent year-over-year.

More than 40 percent of all ready mixed concrete placed in the U.S. in 2011 went to commercial construction, according to the survey, representing a 7 percent decrease compared to 2010. Ready mixed concrete placed in residential projects posted a 10.3 percent gain over 2010, coming in at 25.4 percent of the 2011 yardage, but stilt down from the historical high of 45 percent in 2007. The largest increase in yards placed occurred in public works: 15.3 percent of ready mixed concrete went to such projects, an annual increase of over 31 percent.

"While the increase in overall production in 2011 is a positive for the industry, ready mixed concrete companies continue to struggle to sustain their operations," says NRMCA President Robert A. Garbini. "In order for the industry to survive and flourish, ready mixed concrete producers need to look beyond traditional approaches to their businesses and try something new to increase the size of the market and return to, at a minimum, break even and hopefully one day, sustainable performance levels."

"The findings from the Concrete Sustainability Hub at the Massachusetts Institute of Technology on concrete's advantages in life cycle cost comparisons and embodied energy should help the industry move beyond traditional markets and expand the use of ready mixed concrete," adds NRMCA Vice Chairman William Childs, president and CEO of Waldorf, Md.-based Chaney Enterprises. "As the focus on sustainability and resilient construction continues, concrete's advantages should start to pay dividends to the communities we operate in as we bring them a more sustainable and resilient product at a lower initial and life cycle cost."
CONTRACTION REVERSED

Industry Data Survey volume
from peak to trough to recovery

2005-458.3 MILLION CU. YD. * 2006-456.8 MILLION CU. YD.
2007-414.6 MILLION CU. YD. * 2008-351.7 MILLION CU. YD.
2009-258.6 MILLION CU.YD. * 2010-257.7 MILLION CU.YD.
2011-256.7 MILLION CU.YD. * 2012-295 MILLION CU.YD.*

* NRMCA PROJECTION

TYPICAL PRODUCER
2011 AVERAGE SALES
PRICE/CUBIC YARD: $89.36
PRE-TAX PROFIT/LOSS: -$6.16

MATERIAL COST $50.47
DELIVERY COST $19.14
PLANT COST $6.35
FIXED COST $19.78

LOWER QUARTILE PRODUCER
2011 AVERAGE SALES
PRICE/CUBIC YARD: $82.75
PRE-TAX PROFIT/LOSS: -$9.57

MATERIAL COST $47.85
DELIVERY COST $19.28
PLANT COST $6.26
FIXED COST $19.27

UPPER QUARTILE PRODUCER
2011 AVERAGE SALES
PRICE/CUBIC YARD: $94.25
PRE-TAX PROFIT/LOSS: $4.29

MATERIAL COST $48.58
DELIVERY COST $18.91
PLANT COST $5.71
FIXED COST $16.290

SOURCE: NRMCA 2011 Industry Data Survey, Version 1

Note: Table made from pie chart.
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Title Annotation:NEWS SCOPE: MARKET RESEARCH
Publication:Concrete Products
Date:Nov 1, 2012
Words:677
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