According to experts, concrete construction is in for a rough ride over the next year. At the Concrete Producers Economic Summit Luncheon on Tuesday, opening speaker Ed Sullivan, chief economist with the Portland Cement Association, suggested that attendees "eat quickly, because you may not have much of an appetite when we're done."
Sullivan and fellow speakers Jonathan Dienhart, director of published research with Hanley Wood Market Intelligence, and Pierre Villere, president of event sponsor Allen-Villere Partners, offered their views on the ups and downs they anticipate in the near future, and what producers need to do to survive them.
Sullivan predicted a severe retrenchment, with demand for concrete weakening just as substantially increased production capacity comes online. He expects that it may be the 3rd quarter of 2009 before the recovery begins in earnest. He emphasized, however, that long-term population trends will lead to growth in construction spending and that long-term cement consumption will grow. He urged listeners to add an extra dose of conservatism to their business plans for the next year or two.
Dienhart advised attendees to "batten down the hatches," in order to survive what he called the Storm of 2008. He described a housing market that has been disconnected from its traditional drivers for the last few years, with inventories growing as population and job growth declined. He predicted that it will take a year at least for the mortgage market to stabilize, and the housing market to begin its recovery.
Villere focused on longer-term and far rosier prospects in his talk on the concrete industry in 2030 and beyond. He pointed to population and other demographic trends that will drive greatly increased demand, and predicted that by 2030, fully one-half of all buildings in the U.S. will have been constructed after the year 2000. He foresees significant improvements in fleet efficiency, significant impact from technological advancements, and more sophisticated marketing that will play a key role in growing the concrete industry. He said permitting and compliance will become even more daunting factors for producers in the future, and that human resources will continue to be a challenge.
The event ended with a lively question-and-answer session, giving producers who were present the chance to gain a competitive advantage in business planning and purchasing.