The industry will benefit from improved utility and transport infrastructure construction
New York, NY (PRWEB) January 25, 2015
This industry manufactures wet-batch concrete and delivers it to construction sites, where it is purchased, mixed and poured by a variety of contractors in downstream construction markets. The main markets for ready-mix concrete are residential construction, utilities and infrastructure sectors and the oil and natural gas industries. Concrete is popular in these markets for its strength, durability and affordability. However, volatile conditions in downstream markets have confined the industry's growth over the five years to 2015.
The annualized rate conceals oscillating performance, with recurrent shifts in year-on-year revenue. In turn, this owes to changing and often contradictory trends in downstream construction markets. Throughout, the industry has suffered the repercussions of a weak housing market as well as recurrently declining levels of activity in utilities and transport infrastructure construction. According to IBISWorld Industry Analyst Amal Ahmad, “Bad weather conditions, including floods in 2011 and 2013, halted various construction projects further, compounding challenges for operators.” Conversely, performance has been buoyed by accelerating construction of nonresidential spaces such as offices, shopping centres and educational facilities. In addition, the Keystone Pipeline project, though operational intermittently since 2010, has been a major boost for operators since concrete is key to the pipeline's construction. Overall, the result has been positive, though weak, growth in the Ready-Mix Concrete Manufacturing industry.
The industry exhibits a relatively low level of concentration. The remaining two-thirds of industry revenue is generated in large part by numerous local firms operating in geographically narrow markets. In fact, low concentration is directly attributable to the fragmented nature of industry operations. Because concrete is heavy and quickly perishable, it must be transported quickly to purchasers at construction sites for pouring, with most concrete transport limited to a radius of 20 or 30 kilometres. In turn, only the biggest firms are able to spread facilities across the country in proximity to different markets, although that, too, is limited, given the fact that companies' economies of scale (lower unit costs) are diminished if facilities are dispersed. Remaining operators with lower capabilities stay localized, keeping the industry fragmented.
Market share concentration is expected to increase in the five years to 2020, due primarily to the expected merger of major players LaFarge and Holcim in mid-2015 (see Industry Performance for more information.) However, the nature of ready-mix concrete operations will limit the degree of concentration and keep the industry somewhat fragmented.
In the five years to 2020, the industry is expected to benefit from improved utility and transport infrastructure construction. However, residential construction is likely to remain weak while nonresidential construction slows down. “Adverse weather conditions may also sidetrack important construction projects and curtail demand for ready-mix concrete,” says Ahmad. Furthermore, there is the possibility that the Keystone project might be vetoed by US authorities, curtailing the project in Canada as well and limiting demand for ready-mix concrete by contractors. As a result, IBISWorld expects the industry to grow modestly through 2020.
For more information, visit IBISWorld’s Ready-Mix Concrete Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures wet-batch concrete, in a facility or in transit, and delivers it to construction sites in a plastic and unhardened state. The batches are ready for mixing and pouring, although this is undertaken by purchasers, not by industry operators. The production of dry-batch concrete is excluded from industry operations.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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