Concrete Work

SIC 1771

Companies in this industry

Industry report:

Special trade contractors primarily engaged in concrete work, including portland cement and asphalt. This industry includes the construction of private driveways and walks of all materials. Concrete work incidental to the construction of foundations and concrete work included in an excavation contract are classified in SIC 1794: Excavation Work; and those engaged in construction or paving of streets, highways, and public sidewalks are classified in SIC 1611: Highway and Street Construction, Except Elevated Highways.

Industry Snapshot

Concrete--a mixture of portland cement, sand, gravel, and water--is used for the construction of everything from patios and floors to dams and highways. Special trade contractors involved in concrete work provide the following products and services: private asphalt parking areas; blacktop work; concrete work for private driveways, sidewalks, and parking lots; culvert construction; curb construction; pouring concrete to build foundations; grouting work; parking lot construction; patio construction; sidewalk construction, except public; and stucco construction.

According to industry statistics, more than 42,322 establishments are involved in concrete contracting. These companies employed 326,977 in the cement masons, concrete finishers, and terrazzo industry in 2009. Portland cement consumption declined in the Northeastern and Mountain states in 2001, due in large part to the economic recession--exacerbated by the September 11 terrorist attacks-- which prompted a slowdown in commercial and industrial construction and transportation expenditures. Compared to a 5 percent growth rate in 1999, portland cement consumption grew by only 0.2 percent in 2001. However, consumption was expected to grow 1.4 percent in 2002 as every region of the United States saw gains.

Concrete was responsible for nearly 11 percent of total U.S. construction put in place in 2004, or $109.6 billion, with residential construction responsible for the majority of consumption at 199 million cubic yards, reaching 206 million cubic yards in 2005. Single-family housing starts fell 18 percent to 1.33 million units in 2006, suggesting the downturn in the residential construction market. The most notable trend in the cement industry was increased industry consolidation that began in 2007 and continued into 2008.

New housing starts continued to decline, reaching a 50-year old in 2009 at just 554,000 units. Other areas of construction also stagnated as well, with the value of nonresidential construction falling from $709.8 billion to $654.2 billion. As a result, cement demand declined during 2009. During 2010, the industry was helped by in influx of funds from the American Recovery and Reinvestment Act of 2009, but the industry remained volatile, and more steady recovery was not expected until 2011 and 2012.

Organization and Structure

The construction industry can be divided into three segments: general building contractors, heavy construction contractors, and special trade contractors, which includes those engaged in concrete work. General building contractors build residential, industrial, commercial, and other buildings, while heavy construction contractors build structures such as roads, highways, and bridges. Special trade contractors usually focus on one trade and work under the direction of general contractors, architects, or property owners. Beyond completing their work to specification, special trade contractors have no responsibility for building the structure in its entirety.

Concrete can be classified by the type of aggregate or cement used, by specific characteristics, or by production methods. Ordinary structural concrete is characterized by its water-to-cement ratio. The lower the water content, all else being equal, the stronger the concrete. For concrete to set properly, however, the mixture needs to have enough water to ensure that the aggregate particles are encompassed by the cement paste, that the space surrounding the aggregate is filled, and that the concrete is liquid enough to be poured and spread effectively. The composition of concrete varies because different aggregates are used from market to market, depending upon what kind of sand and rock is available and least expensive.

Concrete's range of durability is determined by the amount of cement in relation to the aggregate, with relatively less aggregate present in strong cement. The strength of concrete is measured in pounds per square inch (psi) of force needed to crush a concrete sample of a given age or hardness. Concrete's strength can be affected by environmental factors, especially temperature and moisture.

Cement, through its use in concrete, is used in all types of construction. The Portland Cement Association estimated that in the mid-1990s, about 55 percent of cement shipments in the United States was consumed in building construction, with 22 percent used for residential and 19 percent for commercial construction. Public works construction consumed about 42 percent of cement shipments, with most going to the building of streets and highways.

By far the largest customer for portland cement at that time was the ready-mix concrete industry, which purchased about 71 percent of the total shipments. Another 13 percent went to concrete producers of blocks, pipes, precasts, and prestressed products; 5 percent to highway contractors; 4 percent to building materials dealers; 3 percent to other contractors; and 4 percent to all others, including the government.

The Portland Cement Association reported that roughly 47.4 percent of domestic cement shipments were consumed for residential construction in 2004, followed by 25.5 percent used for the building of streets and highways, and 7.3 percent consumed by industrial construction.. Marking an increasing use of cement in highway and road construction, in 2008, the Portland Cement Association reported apparent use of domestic cement as follows: streets and highways, 27 percent; residential buildings, 25 percent; waste and waste management, 7 percent; commercial buildings, 8 percent; bridges, 7 percent; farm construction, 5 percent; public buildings, utilities, and other public works, 4 percent each; and nonconstruction uses, 5 percent.

Background and Development

Long before the discovery of cement, ancient civilizations used clay as a bonding substance. The Egyptians used a material made from lime and gypsum that resembled modern-day cement. Derived from limestone, chalk, or oyster shells, lime continued to be the primary cementing agent until the early 1800s.

In 1824 English inventor Joseph Aspdin burned and ground together a mixture of limestone and clay. This concoction, called portland cement, became the cementing agent used in concrete from that time on.

In 1867 Joseph Monier, a Parisian gardener who made pots of concrete reinforced with iron mesh, received a patent for reinforced concrete. This product, sometimes called ferroconcrete, consisted of concrete hardened onto imbedded metal, usually steel. The reinforcing steel contributed tensile strength.

A later innovation in masonry construction was the use of prestressed concrete, which neutralized the stretching forces that would rupture ordinary concrete. Because it achieved its strength without heavy reinforcements, prestressed concrete could be used to build light, shallow structures such as bridges and roofs.

During the 1980s, cement imports became a significant part of the domestic supply, peaking in 1987 at more than 17 million short tons. The reason for this rise in imports was weak worldwide demand combined with strong U.S. demand, which made the United States a target for excess supplies produced by foreign cement manufacturers. Low water transportation costs during the 1980s also was a key. Canada was the largest supplier of cement to the United States through 1985. Mexico became the primary source from 1986 through 1989, supplying 28 percent of total U.S. imports in 1989.

U.S. consumption of cement (the major component of concrete) was 84 million short tons in 1993. Cement was used to build highways and other public works and to rebuild structures damaged by natural disasters, such as the hurricane in southern Florida, the earthquake in Los Angeles, and the floods in Midwest river basins. During the mid-1990s the concrete industry benefited from a slow but steady recovery in the housing industry. New home building traditionally used about one-third of the cement consumed annually in the United States.

Prices for concrete varied widely and depended on the proximity of the nearest mill. Transportation costs continued to be a major factor in determining costs, because concrete was so heavy and had to be delivered on a timely basis. In 1994 the U.S. Justice Department began investigating possible price fixing, since the average cost of cement had jumped from $5 to about $50 a ton within one year.

New construction accounts for the lion's share of work done by concrete contractors, although firms also engage in reconstruction, maintenance and repair. Building construction includes work on single-family houses. Nonbuilding construction includes work done on private driveways and parking areas, as well as work done on projects such as highways and streets.

Ready-mixed concrete producers in North America numbered more than 2,700 in 2002. A total of 13 U.S. concrete contracts secured more than $1 billion in sales in 2002. Concrete contractors were primarily concentrated in California, Texas, and Florida. Other states with a high concentration of firms in this industry included Illinois, Michigan, Missouri, New York, Ohio, and Pennsylvania. Concrete contractors tended to cluster around those states producing the most construction sand and gravel.

Throughout the early years of the first decade of the twenty-first century, the $90 billion construction industry grew rapidly as the nation experienced a surge in housing starts. The construction boom happened in spite of a sluggish economy, due in large part to historically low interest rates. For the residential building industry, 2003 was one of the best years on record. The economic conditions of the early years of the decade proved to be a mixed blessing for the concrete industry. While residential construction reached levels not seen since the 1970s, commercial and industrial construction, as well as in non-building sectors such as transportation, saw significant slowdowns. These declines were reflected in the growth rate of portland cement consumption, which dipped from 5 percent in 1999 to less than 1 percent in 2001. Although consumption increased by 1.4 percent in 2002, growth remained well below the 1999 level.

During 2004 and 2005, housing starts boosted the concrete industry with 1.95 million starts and 2.06 million starts, respectively. Residential construction consumed 199 million cubic yards in 2004, pavement consumed 145 million cubic yards, while commercial construction consumed 32 million cubic yards.

From a record 458 million yards in 2005, ready-mixed concrete production fell in both 2006 and 2007. With housing starts plummeting to 1.80 million in 2006 and 1.35 million in 2007, producers were challenged with the downturn in residential construction, coupled with increased raw material and fuel prices throughout 2007 as well. According to the National Ready-Mixed Concrete Association, concrete production was on target to fall 8 percent or 381 million yards for 2008.

Ready-mix concrete producers in North America underwent a period of consolidation throughout 2007 and into 2008 with "large players being gobbled up by multinationals," Tom Bagsarian noted in The Concrete Producer magazine in August 2008. A few included the acquisition of Rinker Materials in 2007 by the Mexico-based parent company of Cemex; Lafarge North America acquired five plants from Evans Concrete located in Georgia in January 2008; Heidelberg Cement of Allentown, Pennsylvania purchased Hanson in 2007; and Vulcan Materials acquired Florida Rock in 2007.

Despite the slowdown in residential construction over the past few years, non-residential construction was keeping the masonry industry busy, but that was about to change in 2008. "Real construction activity is expected to decline 9 percent in 2008, and another 7 percent in 2009," Edward Sullivan, Portland Cement Association's chief economist, noted in Masonry Construction in October 2008, adding that "The combination of high home inventories, weak economy-wide demand conditions, and poor state budget conditions will hit all sectors of construction--residential, non-residential, and public." More importantly, a turnaround is not expected until the end of the decade. At that time, cement consumption was projected to climb at a mere 2.7 percent compared to 2009.

Current Conditions

According to industry statistics, there were roughly 42,322 special trade contractors primarily engaged in concrete work, including portland cement and asphalt with industry-wide employment of 324,977 workers valued at $32,307.5 million in 2009. The majority of contractors were located in California, Florida, and Texas. The largest category was the general category of concrete work with 74 percent in market share and $24.04 billion in completed projects. Blacktop (asphalt) work contributed $2.23 billion to the industry's bottom line, while foundation and footing contractors and flooring contractors added another $1.96 billion and $1.04 billion, respectively.

Like other segments of the construction industry, the cement industry was negatively affected by the recession that impacted the U.S economy during the late 2000s. In particular, the industry felt the effects of the collapse of the U.S. residential housing market, which went from record high housing starts in 2005 to record lows in 2009. Cement shipments were an estimated by the Portland Cement Association at $10.0 billion in 2008, down from $15 billion in 2006.

Cement consumption continued to spiral downward during 2009. Global consumption dropped by an estimated 1.7 percent--a number that was propped up by 4 percent growth in the use of cement in China and India, which, together, account for nearly 58 percent of the world's cement consumption. Along with the United States, developing countries also saw large declines in consumptions due to weak global economic conditions. Despite slow recovery into 2010, end of the year totals for cement consumption were expected to improve due to the stimulus package passed in 2009 by the federal government that pumped billions of dollars into public works projects, many of which were cement-intensive, such as bridge upgrades and repairs. The Portland Cement Association predicted that global consumption of cement would increase by 7.7 percent and 6.9 percent in 2011 and 2012, respectively.

Industry Leaders

During the late 2000s, the residential and commercial concrete industry was a mixture of large public companies, such as cement manufacturers, and small independent concrete contractors and laborers. Much of the cement interests in the United States had ultimate owners outside the United States. Among the largest companies involved in the industry was Houston, Texas-based Cemex USA, Inc., which operated 85 ready-mix plants and 12 cement plants throughout the United States. Cemex, which operates as a subsidiary of Mexico-based CEMEX, S.A. de C.V., posted revenues of $4.9 billion in 2009. Oldcastle Inc., located in Atlanta, Georgia, operated as a subsidiary of CRH, located in Dublin, Ireland. Oldcastle reported revenues of $13.66 billion in 2009. Lafarge North America Inc., of Herdon, Virginia, is a subsidiary of France-based Lafarge Group. The U.S.-based operations reported revenues of $4.34 billon. Vulcan Materials, headquartered in Birmingham, Alabama, had sales of $2.69 billion in 2009. Martin Marietta Materials, located in Raleigh, North Carolina, was the second largest producer of aggregate, behind Vulcan. The firm posted revenues of $1.7 billion in 2009.

Workforce

Most concrete masons worked for concrete contractors or for general contractors on projects such as highways, bridges, shopping malls or large buildings such as factories, schools, and hospitals. A small number were employed by firms that manufactured concrete products. Fewer than 1 out of 10 concrete masons were self-employed, a smaller percentage than in other building trades. Most self-employed masons specialized in small jobs such as driveways, sidewalks, and patios.

Cement masons and concrete finishers earned an average hourly wage of $18.95, while terrazzo workers earned $19.89 per hour in 2009. Many workers in this industry tend to work overtime, because a job must be completed once the concrete has been placed. Overtime tends to be paid at premium rates.

When the construction industry booms, contractors have trouble finding enough workers and building supplies. The widespread labor shortage ran from 1997 into the early years of the first decade of the 2000s. To attract workers, companies increased wages and overtime pay, but many were nevertheless forced to settle for laborers who were inexperienced or insufficiently trained. The shortage of workers stemmed from a trend among young people to attend college instead of entering the skilled trades. In addition, many construction workers had left the industry during the slump of the early 1990s. Conversely, during the late 2000s, as demand in industry waned, many contractors cut workers from their crews.

Concrete masons generally learned their trade through on-the-job training or apprenticeship programs. Many concrete workers belonged either to the Operative Plasterers' and Cement Masons' International Association of the United States and Canada or to the International Union of Bricklayers and Allied Craftsmen.

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