Ready-Mixed Concrete

SIC 3273

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing Portland cement concrete manufactured and delivered to a purchaser in a plastic and unhardened state. This industry includes production and sale of central-mixed concrete, shrink-mixed concrete, and truck-mixed concrete.

Industry Snapshot

According to a study by the American Concrete Institute, concrete is the most widely used man-made product in the world, and is second only to water as the most-used substance. The industry is heavily dependent on its primary customers, who are constructors of homes, industrial and office buildings, highways, and bridges. Consequently, the industry generally shadows the cyclical markets that are served by the construction industries. Total shipment values increased steadily through the first decade of the 2000s, and annual growth continued at a healthy pace. The industry was valued at over $20 billion during the decade, but revenues were decreasing in the final years of the decade.

The ready-mixed concrete industry includes businesses that make concrete and deliver it to contractors or other customers for construction, including buildings, bridges, roads, and sidewalks, as well as other facilities. The concrete production process involves the use of large-scale equipment and machinery that need to be located reasonably near the site where the concrete will be used, so the concrete can be delivered while it is soft enough to be shaped.

There were an estimated 5,909 ready-mixed concrete plants in 2008, with industry-wide employment of 95,069 workers. According to Edward Sullivan, the chief economist for the Portland Cement Association (PCA), cement consumption was expected to decline 30 million metric tons in 2009. The PCA issued a press release in early November 2008 that said, "The weak economy and tight credit conditions, coupled with severe job losses and the resulting decline in state government revenues, will translate into significant weakness for the construction industry through 2010." The total number of ready-mix concrete plants grew to about 6,000, with an estimated value of $30 billion in 2011.

Organization and Structure

Concrete, which is similar to stone, is made by mixing selected proportions and qualities of cement, sand, gravel, and sometimes other aggregates. Water is added, and the soft mixture is formed into the desired shapes. Water and cement interact chemically to form a solid mass, binding the ingredient particles together, but the mixture remains soft, so it can be shaped before the concrete hardens.

Concrete is a leading material resource for building construction and for various products because of its strength, its ability to be molded into any shape, its resistance to fire and weather, and the availability of materials from which it is made. Concrete's limited strength under tensile stress was substantially overcome by reinforcement with steel and other materials in various ways.

The key to achieving a long-lasting concrete product lies in the proportioning and mixing of the ingredients. A mixture that lacks sufficient paste of cement and water to fill all the voids between the aggregates will be difficult to handle and will produce rough surfaces and porous concrete. However, a mixture with too much paste, although easy to place, will be more susceptible to cracking and, in the long run, will not be economical. The National Ready Mixed Concrete Association (NRMCA) suggests that the ideal mixture has the necessary workability for fresh concrete and the desired strength once the mixture has hardened. A typical mixture contains, by volume, about 10 to 15 percent cement, 60 to 75 percent aggregates (usually sand, gravel, and rock), and 15 to 20 percent water.

Concrete businesses throughout the 1990s furnished much of the basic raw material for the construction industries and for utilitarian and artistic products like railroad ties and birdbaths. A few of the large construction contractors made their own concrete materials and products, while others relied on concrete producers for their products.

Many ready-mixed concrete companies were relatively small, having customers in one community or in a limited region, primarily because soft concrete cannot be delivered beyond about 20 miles from where it is made. Producing the concrete economically requires considerable expenditures for plant and trucking facilities. Most concrete plants are fixed, but some are portable and can be moved close to major construction sites. Many large companies grew by expanding their territories and buying smaller, local firms. In 1992 there were more than 5,250 establishments producing ready-mixed concrete. Of those, fewer than 1,400 had 20 or more employees. With increasing consolidation within the industry, the number of establishments fell for a time, but by 2007 there were about 6,000 ready-mixed concrete plants.

Most of the ready-mixed concrete producers also are involved in related concrete businesses, such as the mining of sand and gravel, the production of crushed stone, cement manufacturing, or the manufacturing of concrete blocks, pipe, building structural elements, and other concrete products. Most industry establishments compete with several concrete businesses in a small market area. In addition, several non-concrete products that were used as substitutes for concrete, including lumber, asphalt, brick, and steel, provided another area of competition.

The ready-mixed concrete industry is dependent on the construction market and is traditionally subject to economic swings in that sector. For example, in the early 1990s, the market for public works construction was strong while the other building markets were weak. At the midpoint of the decade, residential and industrial construction began to strengthen, and the level of public works construction continued to be strong. These public works projects included the construction of government buildings, highways, and public utility facilities. Concrete industries developed technologies in the 1980s and 1990s to make concrete building parts stronger and more attractive, which helped the industry strengthen its market in the construction industries. After limited growth in the early years of the first decade of the 2000s, increased housing starts and other construction projects boosted this sector.

The NRMCA is the primary trade group supporting the industry. Headquartered near Washington, D.C., with over 1,000 members, the NRMCA fosters research to federal and professional groups. The NRMCA works with many other trade associations in the ready-mixed concrete industry, including the Portland Cement Association (PCA), the American Concrete Pavement Association (ACPA), the Concrete Reinforcing Steel Institute (CRSI), the Post-Tensioning Institute (PTI), and the American Concrete Institute (ACI).

The American Society for Testing and Materials (ASTM) began providing guidelines for the manufacture and testing of concrete products in 1933. The organization continued to revise its specifications as the ready-mixed concrete industry, and the technology it utilized, evolved. Additional organizations, including ACI and NRMCA, published other specifications.

Background and Development

Although the first use of concrete dates back many centuries, widespread use did not begin until the nineteenth century, when improvements were made in the materials that are combined to form the cement ingredient. In the twentieth century, reinforcement techniques were created that made cement structural components practical for skyscrapers and large bridges over highways and rivers. The development of trucks equipped to mix concrete in transit in the 1920s made it possible for the ready-mixed method to become the dominant process for concrete use by the 1990s.

Portland cement was invented in 1824 by Joseph Aspdin, a British engineer, and had strength and water-resistance qualities superior to those of previous cements. Limestone and clay were Portland cement's principal ingredients. These raw materials were ground finely, combined, and heated in a kiln to form clinker, which was then pulverized. The name "Portland" came from the Isle of Portland, where limestone was quarried. Portland cement was the primary type of cement used from its origination.

In 1909 concrete was first mixed in transit on a horse-drawn wagon with gears from the wheels activating paddles to stir the mixture. In 1913 concrete was taken to the work site in a dump truck. The first revolving horizontal drum mixer was marketed by the Paris Mixer Company in 1926. Between 1925 and 1930, the number of ready-mixed concrete plants in the United States increased from 25 to 100. The NRMCA was formed in 1930 and helped foster industry growth.

Concrete, like stone, has very good compressive strength and withstands considerable pressure from above without crumbling. However, concrete does not have great tensile strength. A concrete beam between two posts will crack if too much pressure is placed in the middle of the beam. Reinforcing concrete techniques began to be used in the first decade of the twentieth century. To overcome tensile limitations, steel rods are placed in the concrete before it hardens, reinforcing its tensile strength. Pre-stressed concrete can withstand even greater tensile stresses. Rods or wires are stretched before the concrete hardens around them. The released wires or rods then compress the concrete, providing additional tensile strength. Pre-stressed technology allowed cement to be used in much greater spans such as those required in the construction of large-scale buildings and bridges.

Many of the large ready-mixed concrete companies benefit from centralized purchasing, marketing, and engineering operations. Many are involved in manufacturing that is related to concrete production, such as making concrete pipe, railroad ties, and construction structural elements. Because of economies of scale, the trend toward large companies in the industry was expected to continue.

The durability, appearance, and other qualities of ready-mixed concrete have steadily improved. Lowered production costs and increased quality control also were achieved. These advances were spurred by competition and aided by the many trade groups conducting research and providing training.

The construction in the United States in the late 1990s was fueled by a healthy economy and low interest rates. However, signs that the boom was beginning to slow began to appear at the end of the twentieth century. During the early years of the first decade of the 2000s, economic factors resulted in a severe slowdown in the commercial and industrial construction sectors. Although new housing starts remained robust, overall construction was down, with marginal downward movement by the industry in 2003. As a result, the ready-mix concrete industry was losing some of its momentum after 10 years of consistent growth. Total cement consumption declined more than 3 percent in 2002. By the end of 2003, general construction projects and housing starts rebounded due to renewed confidence in the economy, causing much of the growth in this industry. The industry remained cautiously optimistic, with renewed economic growth through the middle of the first decade of the 2000s.

The U.S. Census Bureau reported a shipment value of $25.65 billion for 2005. By February 2005, the industry had produced 27.6 million cubic yards of concrete each month, a jump of nearly 20 percent from the same time in 2004. According to the NRMCA, the leading trade organization for the U.S. ready-mix concrete industry, in 2007 there were about 6,000 ready-mixed concrete plants and about 70,000 ready-mixed concrete trucks nationwide.

Overall, demand for ready-mixed concrete decreased again as the economy went into recession. In the early years of the first decade of the 2000s new housing starts had offset the effects of the economic downturn for the mixed-concrete market, but in 2007 and 2008 foreclosures were increasing and new construction practically came to a stop. In the March 2008 issue of Concrete Products, NRMCA Chairman Frank Craddock said, "We still haven't seen the worst of the foreclosures, the subprime failures, and mortgage companies writing off failed mortgages." Craddock went on to say, "When you couple that with other drags on the economy, i.e., rising oil prices producing an inflationary ripple throughout the economy, there is a lot of bad news."

Declines in commercial and residential construction have caused cement sales to drop. Industry leader Holcim announced in March 2009 that it planned to idle two plants in the United States due to falling global demand for cement, following a 92 percent drop for the company's earnings in the fourth quarter of 2008.

Current Conditions

According to the U.S. Geological Survey, the U.S. cement industry recorded a decline to a "28-year low," forcing additional plants to be idled and others to shut down in 2010. Cement shipments totaled $6.5 billion, of which the ready-mix segment accounted for 73 percent of cement sales.

While the economy began slowly improving, the construction sector was expected to lag up to an additional 18 months, postponing recovery in the cement segment. The Portland Cement Association (PCA) projected a 2 percent rise in consumption for 2011 followed by an 8.5 percent increase in 2012 before a significant increase in 2013 by 18.5 percent. In a forecast for the PCA on April 26, 2011, Edward Sullivan, chief economist for the PCA said, "Tight lending standards, declining property values and reduced state infrastructure spending all need to be resolved for a true recovery in construction." Residential construction was projected to turnaround first in North Dakota, South Dakota, Vermont, Nebraska, and Iowa. Commercial construction was expected to rebound initially in North Dakota, Alaska, Washington, D.C., Texas, and Nebraska.

High operating costs caused by soaring energy prices also challenged the U.S. ready-mix cement market. In response, industry leader Holcim was forced to raise prices August 1, 2011. "Holcim has undertaken cost reduction projects over the past few years and increased efficiencies in many areas" CEO Bernard Terver told Concrete Products in June 2011, adding that "Unfortunately, it is not enough given the magnitude of the cost increases we are experiencing in order to remain a sustainable manufacturer of cement, a price increase is unavoidable." The potential environmental regulations stemming from "air pollution controls" also challenged the industry.

Industry Leaders

Holcim US Inc., headquartered in Waltham, Massachusetts, is a subsidiary of Switzerland's Holderbank Fianciere Glaris. The largest cement producer in the United States, Holcim US employed 2,700 in its U.S. offices, which included 14 cement plants and 70 distribution centers. The company reported revenues of $1.5 billion in 2005, but that figure dropped to $552.7 million in 2008.

Based in Herndon, Virginia, Lafarge North America is 54 percent owned by Lafarge SA, a French building products giant. Although the U.S. company also is involved in the production of gypsum wallboard and asphalt, Lafarge North America's cement business accounts for nearly 45 percent of its annual revenues, which were estimated to be $2.14 billion in 2008. Lafarge North America employed 16,600, and in 2009 its cement operations totaled $4.33 billion, for 20 percent of its annual revenues, and the company had a workforce of 10,883 employees.

In addition to its cement and concrete operations, Texas Industries is involved in the production of steel, manufacturing a variety of steel products from recycled material. Its principal customers are involved in construction in Colorado, Louisiana, Oklahoma, and Texas. Headquartered in Dallas, Texas, the company had 2,100 employees and posted revenues of $839.2 million for 2008 before falling to $621.8 billion in 2009.

Based in Birmingham, Alabama, Vulcan Materials Co. produces concrete along with a wide variety of other construction materials, particularly aggregates, and a number of industrial and specialty chemicals. In 2008 Vulcan had 9,300 employees and posted revenues of $3.65 billion. As the economy struggled to rebound, company revenues plummeted to $2.69 billion in 2009 and $2.55 billion in 2010, and the number of employees fell to 7,994 workers in 2010.

Other leaders in this industry include Florida Rock Industries, Eagle Materials, and U.S. Concrete. Florida Rock Industries Inc., based in Jacksonville, Florida, sells its products through much of the eastern United States. In addition to ready-mixed concrete, the company produces concrete block and a wide variety of construction aggregates. Dallas, Texas-based Eagle Materials Inc., formerly Centex Construction Products Inc., produces a variety of building materials. Its cement and ready-mixed concrete divisions together account for the majority of its revenues, which were $602.2 million in 2009. As the economy worsened, Eagle's revenues fell to $462.2 million in 2011 when the company reported 1,350 employees. Sales for Houston, Texas-based U.S. Concrete Inc., were $754.3 million in 2008 before falling 29.1 percent in 2009 to $534.5 million. Florida Rock Industries was acquired from competitor Vulcan Materials Co. in late 2007.

Workforce

Most of the employees in the ready-mixed concrete industry are production workers. Larger companies and many smaller companies use computers not only for accounting, but also for controlling the processes of concrete mixing and other production operations. The larger companies in particular employ engineers to help refine mixing and production processes.

Employment in the ready-mixed concrete industry in 2005 was 107,198, up from 2002 employment of 99,016. In 2005, 86,191 employees worked in production, earning an average hourly wage of $18.04. About 95 percent of the industry's workforce is employed by firms with 100 people or less. Industry-wide employment grew to 95,069 workers in 2008, with the majority in Texas, California, and Florida.

America and the World

Some of the raw materials in the U.S. ready-mixed concrete industry are imported from overseas, but growing operations in the United States are foreign owned. Some U.S. companies have facilities that produced concrete in other countries.

Concrete transactions between countries were somewhat limited by the fact that ready-mixed concrete production and sales were local operations. In addition, hardened concrete products, like pipe and concrete block, are prohibitively expensive to ship overseas because of their weight. However, there were significant instances of international ownership of ready-mixed and other concrete operations.

Many U.S. cement companies were acquired by foreign interests in the early 1990s when reduced profits made them vulnerable to takeovers. More than 65 percent of U.S. cement production facilities were acquired by foreign interests. Foreign cement companies either wholly owned or had partial ownership in at least 50 percent of the industry's leaders in the first decade of the 2000s, indicating the stronghold foreign producers have on the industry. Subsidiaries of such companies as Lafarge, Mitsubishi Materials Corporation, and Blue Circle Industries PLC either fully owned or controlled significant financial interests in many cement and cement products plants throughout the United States. The two largest cement manufacturers in the United States are foreign owned. One of these, Lafarge, is the largest cement producer in North America and a major manufacturer of ready-mixed concrete, is a subsidiary of French construction company Lafarge Coppee. Lafarge Coppee is a major building materials company operating in 35 countries.

In the middle of the first decade of the 2000s, ready-mixed concrete associations in North America, Central America, and South America planned to form a cooperative association, to be known as the Ready Mixed Concrete Organization of the Americas (RMCOA). In addition to increasing goodwill and sharing resources, the new association would offer a cooperative education and research group to benefit all the member countries.

Research and Technology

With keen competition forcing ready-mixed concrete companies to improve service and cut costs, many of the large companies sought to improve the quality of concrete products and reduce their production costs via research and technology. Lafarge, for example, uses scrap tires as a fuel and industrial by-products, such as spent refractory bricks and iron mill scale, as low-cost raw materials for concrete. However, this practice is not without controversy, and the manufacture of concrete-related products using cement made in hazardous waste-burning kilns in the United States was questioned. Some thought that the toxic chemicals not destroyed in the process could leach through the pipe or other products and into the environment. However, there is little research to either support or refute these claims. Concern in the mid-1990s generated legislation at the local level that would ban 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.

Environmental regulations also challenged the use of used tires as a kiln fuel. However, proponents, as in the use of hazardous waste as a kiln fuel, argued that using spent tires was an effective form of recycling. Both practices have met with numerous legal challenges.

For years, concrete producers and industry groups have endeavored to improve concrete's strength, durability, uniformity, appearance, drying time, and weight. By the early 1990s, concrete's compression strength was increased to withstand 20,000 pounds per square inch (psi), while strengths of 100,000 psi were reached in laboratory experiments. In the 1960s, 5,800 psi was considered high-strength concrete.

The American Society of Civil Engineers established the Civil Engineering Research Council (CERC) to spearhead a program of construction product improvements that the society considered to be essential for meeting the infrastructure needs of the twenty-first century. The CERC developed plans to work with government, industry, and trade groups in designing and perfecting higher-strength concrete.

Other research was conducted to create new types of concrete that could be used in products that were previously made from ceramics, plastic, or aluminum. Lone Star developed a product named Pyrament that dried quickly enough to allow traffic on a road four hours after the concrete was poured. Greater strength-to-weight ratios and improved ability to absorb energy were achieved by incorporating reinforcing materials like wood, glass, carbon, or steel into concrete.

Ready-mixed concrete companies, as well as trade groups, continued to seek more efficient manufacturing and processing approaches. Examples included enabling a longer delivery span, reducing truck and equipment maintenance costs, facilitating the filling of bags, and automating the setting of concrete curbs.

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