Concrete Products, Except Block and Brick

SIC 3272

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing concrete products, except block and brick, from a combination of cement and aggregate. Contractors engaged in concrete construction work are classified in the construction industries, and establishments primarily engaged in mixing and delivering ready-mixed concrete are classified in SIC 3273: Ready-Mixed Concrete.

Industry Snapshot

The products included in this industry are made of concrete, formed and hardened at the cement facility, and shipped in finished form to customers or users. Many of the items are prefabricated parts to be assembled into buildings, bridges, or parking structures. Pipe is another major segment of the industry. Other products include a variety of utilitarian and decorative items, such as burial vaults, septic tanks, monuments, and bird baths.

In contrast to products that are poured on site, the products of this industry are made in a controlled environment, away from a construction job site. Such controlled production conditions enable concrete products to be made more structurally sound and in accordance with construction specifications.

According to industry statistics, there were an estimated 5,464 establishments engaged in manufacturing concrete products, except block and brick, from a combination of cement and aggregate. Products in this industry were valued at $10.16 billion in 2008, down from $15.99 billion in 2005, with industry-wide employment of 96,068 workers. Florida, California, and Texas accounted for more than 25 percent of market share. The industry has been negatively impacted by the global economic recession that economists claimed was beginning to show some signs of a slow recovery in 2011.

During 2010 the total number of establishments fell to 5,111, and the workforce dropped to 88,153 workers from 96,068 in 2008. In contrast, product shipments reached $12.21 billion for 2010, an increase from the $10.16 billion that reported in 2008. Florida, California, and Texas continued to capture the bulk of market share with a combined 26 percent. Based on shipment values Texas led with $1.82 billion, followed by North Carolina, which had shipments totaling $1.29 billion in 2010. The majority of establishments were small, with 33.9 percent of manufacturers employing between two and four workers.

Organization and Structure

The majority of customers for concrete products are building contractors and construction firms. This requires industry firms to deal with architects and engineers as well as management. Many of the industry's sales include standard or off-the-shelf items that are produced, warehoused, and sold to multiple customers. Other items are tailor-made to the specific design of particular buildings, bridges, parking structures, or other facilities. Where products made of plastic or lumber are possible alternatives, pre-cast concrete products are sometimes preferred and selected for environmental reasons.

Companies in the industry tend to grow by acquisitions and mergers. The larger size enables the companies to spread their marketing, research, and engineering costs over a greater number of activities. Industry firms also joined to form several trade groups, which generally conduct research into materials and methods to improve the products, perform promotion of the product specialty, and represent the industry in governmental matters. These associations include the American Concrete Institute, the American Concrete Pressure Pipe Association, the Concrete Reinforcing Steel Institute, the Post-Tensioning Institute, the Portland Cement Association, the American Segmental Bridge Institute, and the Precast/Prestressed Concrete Institute.

Industry firms continually conduct research to improve the qualities of concrete products. Areas of focus include workability, strength, durability, weight, and insulating ability. Minimum quality standards for products were established by the American Society for Testing and Materials (ASTM) and are continuously modified as technology developed and changed.

Background and Development

Concrete is made by mixing together cement, sand, gravel, possible other aggregates, and water. The concrete then is molded and might be reinforced in a variety of ways to meet its different purposes. Molds are made of wood, fiberglass, concrete, or other materials. Pre-cast concrete is poured into molds of the desired product shapes, then hardened and cured. Reinforced concrete is strengthened by inserting steel rods or mixing in fibers. Pre-stressed concrete has steel wires or rods inserted and stretched to compress the concrete and make it resist tensile stresses. Other qualities of concrete are modified by the use of different types of sand, gravel, crushed stone, and cement in differing proportions. All these factors affect the properties relating to its strength, durability, workability, curing time, resistance to temperature and humidity changes, and appearance.

Public works projects in the United States for infrastructure construction, ranging from construction of public buildings and highways to conduits for utilities, increased for a time, then leveled. A 1992 review found that many of the 600,000 bridges in the Federal Highway Administration's jurisdiction required either replacement or significant repairs. In addition, the water distribution system in New York City broke and caused frequent flooding in the 1980s and early 1990s. In response to increased demand, the concrete products industry continued to enhance the qualities and usefulness of concrete through engineering improvements.

In 1967, there had been 2,687 companies in the concrete products industry, employing 70,000 workers, and shipping products valued at $5.8 billion. By 1982, there were 2,749 companies employing 20 percent fewer employees and shipping 39 percent less in product value. In the middle of the first decade of the 2000s, there were slightly fewer than 2,300 establishments with about 66,000 employees. Shipments for 2002 were estimated at $12.46 billion.

The concrete products industry largely depends on the construction business, which results in the two sharing cyclical changes. The industry's business fluctuations are most apparent in the number of employees. The industry had approximately 58,000 employees in 1975; 66,000 in 1979; 54,200 in 1983; 70,000 in 1987; 61,000 in 1991; 80,100 in 2000; 66,000 in 2002; and 107,000 in 2005.

Although the number of establishments in the industry dropped between 1997 and 2005, the value of shipments increased from $5.9 billion to $15.99 billion. About 63 percent of shipments in the middle of the first decade of the 2000s were in pre-cast concrete products, the largest share of which were concrete slabs and tiles and roof and floor units. Other pre-cast concrete products include concrete architectural wall panels and burial vaults and boxes. A smaller proportion is in pre-cast concrete products, such as concrete joists and beams and roof and floor units; concrete piling, posts, and poles; architectural stone products; prefabricated building systems; and septic tanks. About 20 percent of shipments are of pre-stressed concrete products, such as concrete bridge beams and other types of beams, arches, piling, and solid and hollow cored slabs. The remaining percentage of shipments include other concrete products.

According to the National Precast Concrete Association, industry shipments fell 10 percent in 2008 as a result of the weakened construction market as a whole and the ongoing recession. One area that was not affected was the architectural wall panels sector, which increased 38 percent to $1.04 billion.

In terms of revenues in 2008, the top performing industry sectors included building materials, except block or brick concrete, with $1.3 billion; pre-cast concrete products, not elsewhere classified, with $1.2 billion; pre-cast stone siding, with $924.6 million; cylinder pipe, pre-stressed or pre-tensioned concrete, with $696.7 million; cast stone concrete, with $622.5 million; pre-cast terrazzo or concrete products, with $486.4 million; burial vaults, concrete or pre-cast terrazzo with $388.7 million; and pre-stressed concrete, with $338.8 million.

In February 2009, U.S. President Obama signed into law the $787 billion American Recovery and Reinvestment Act (ARRA), providing stimulus funding to boost the concrete products market, especially pre-cast concrete bridge and pavement systems, insulated pre-cast wall panels for energy efficient buildings, and pre-cast concrete wind turbine tower sections. In the May/June 2009 issue of Precast Inc., the U.S. Federal Highway Administration (FHWA) reported the advantages of pre-cast and pre-stressed pavement slabs, saying "Economic downturns are daunting, but these times also present opportunities to take advantage of new precast technologies for infrastructure initiatives."

Current Conditions

According to the National Precast Concrete Association (NPCA), the precast industry generated sales of $19.5 billion in 2009 and $19.3 billion in 2010. "Like the rest of the construction industry, the precast sector is struggling," according to Ty Gable, president of the NPCA in an article in Precast, Inc. in August 2011, adding that "Precast is very diversified, so we can weather a recession better than most construction sectors, but we're basically stuck in neutral here." The industry maintained its sales volume through 2009 and 2010, even as it shed 15 percent of their workforce. Another important factor was the 4 percent increase in precast concrete production to 40 million cubic yards in 2010, although sales remained stagnant for both 2009 and 2010. Gable added that this suggested the industry "sold more product for less money."

During 2010 building materials, except block or brick concrete, reported $1.9 billion in revenues compared to $1.3 billion in 2008. Shipments of pre-cast concrete products, not elsewhere classified, increased from $1.2 billion in 2008 to $1.6 billion in 2010, although pre-cast stone siding shipments fell from $924.6 million in 2009 to $679.8 million in 2010. Producers of pre-stressed or pre-tensioned concrete reported a decrease in shipment values from $696.7 million in 2008 to $510.8 million in 2010, while cast stone concrete revenues grew from $622.5 million in 2008 to $901.5 million in 2010. Pre-cast terrazzo or concrete products shipments totaled $539.5 million compared to $486.4 million in 2010. Demand for burial vaults, concrete or pre-cast terrazzo, outperformed other industry sectors in 2010 when shipments surged to $600.3 million from $388.7 million for 2008. Pre-stressed concrete producers shipped $552.8 million in products in 2010, an increase from $338.8 million reported in 2008.

The Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA-LU) was extended for the eighth time prior to the September 30, 2011 deadline. However, dissension between the Republicans and Democrats in Congress was delaying permanent action on the bill.

Industry Leaders

The largest companies in this industry in the middle of the first decade of the 2000s included LaFarge North America, Inc., of Herndon, Virginia, and Oldcastle, Inc., of Atlanta, Georgia. Titan America, LLC, of Norfolk, Virginia, produced Tarmac brand concrete products. It completed a number of acquisitions and expansions in the mid-2000s, including the 2007 acquisitions of Powhatan Ready Mix of Virginia, S&W Ready Mix Concrete Company (based in the Carolinas), and the Cumberland Quarry in Kentucky.

Another industry leader was Rinker Materials Concrete Pipe Division of Houston, Texas, which changed its name from Hydro Conduit Corporation in 2005, without any change in ownership or management. Rinker Materials Concrete Pipe Division was acquired by Mexican concrete supplier Cemex S.A.B. de C.V. in 2007.

LaFarge North America, Inc., was responsible for 20 percent of parent company LaFarge S.A.'s revenues of $25.9 billion in 2007. The company operated in 1,000 locations throughout the United States and Canada with an estimated 16,600 employees. LaFarge North America reported revenues of $4.33 billion in 2009 with 10,883 employees. The company announced that the cement plant in Fredonia, Kansas, that had been operating since July 1907 would close in March 2012, a reflection of the struggling economy.

Oldcastle, Inc., a subsidiary of Ireland-based CRH, was a $14 billion company with more than 1,900 locations and approximately 50,000 employees in the middle of the first decade of the 2000s. Oldcastle posted $11.17 billion for 2010 with 36,101 employees.

Titan America, LLC, a subsidiary of Greece-based Titan Cement, has operations in Florida, Maryland, Massachusetts, Mississippi, New Jersey, North Carolina, Pennsylvania, and Virginia. Titan had sales of $700 million in 2010 with 2,109 employees.

Research and Technology

During the twentieth century, firms in this industry conducted continual research to enhance the qualities of concrete products and construction operations and to improve the methods for producing and delivering concrete. Additional advances were made by businessmen and managers, such as the adaptation of trucks for deliveries and mixing in the early part of the century.

Continual and sometimes dramatic changes in science and engineering produced positive changes in the industry. Industrialization of the pre-cast concrete products industry began in earnest in the 1960s and 1970s as an increasing number of improvements in the strength and other qualities of concrete were made by scientific, engineering, and chemical research and analysis. Technicians in these specialties combined steel with concrete to enable its use in structural elements of large bridges and skyscrapers. They also applied computer technology and automation to control and mix raw material ingredients accurately. Many studies and tests were conducted to determine the effects of different material ingredients, as well as proportions of those ingredients, in producing desired new concrete qualities. These scientific activities were performed by individual companies, in efforts to improve their individual competitive position, as well as by industry-supported trade associations and institutes. Existing elements in the pre-cast concrete industry have evolved to become new products. The industry also has worked to develop solutions to environmental problems related to highway and railroad noise.

In the mid-1990s, there was some controversy in the United States regarding the manufacture of concrete-related products using cement made in hazardous waste-burning kilns. Some thought that perhaps the toxic chemicals not destroyed in the process could leach through the pipe or other products and into the environment. Although there has been little research to support or refute these claims, the concern spawned legislation at the local level banning the use of or sale of "toxic cement," including the use of concrete pipe manufactured with cement made from hazardous waste-fueled kilns in public water supplies.

Recycling tires as a kiln fuel was also challenged by environmental regulations. However, as was the case with the use of hazardous waste as kiln fuel, proponents argued that using old tires was an effective form of recycling.

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