Date: April 1, 2010
News - We Are On The Road To Economic Recovery!
The economic climate in which we are operating is the worst that it has been since the early 1930’s. While our country and our state are in a recession, our industry is operating in an economic depression. In February, the U.S. Department of Labor reported a 27% unemployment rate in the construction industry. Housing starts nationwide for January and February were at a yearly adjusted rate of 329,000 housing units for 2010, but to meet the demand for new housing in the United States we should be building approximately 500,000 new housing units per year. In addition to these discouraging statistics, we were severely impacted by the harsh weather conditions we experienced this winter. Two back-to-back blizzards in February dumped 40 to 60 inches of snow on various parts of our market area, closing our companies for three consecutive days for the first time in our history. When the snow finally cleared, record-setting amounts of rain fell in late February, further deterring us from providing our products and services to our customers. With all of this distressing news how can we proclaim, “We are on the Road to Economic Recovery”?
We address this by first asking what has caused this economic depression in our industry. The three primary factors are greed, corruption and excess. The banks, insurance companies, financial institutions and government agencies, which were the root cause of our current financial predicament, have been overhauled, fined and in many cases, gone out of business. The developers and builders, who readily accepted this easy money, over-built and over-extended their financial capabilities in pursuit of the excessive profits available to them, are now generally out of business. The solid, financially stable developers and builders are still in business. Now, we have step one of our economic recovery in place. In general, we have financially stable and responsible financial institutions, developers and builders in place with whom we will conduct business in a responsible manner.
During the early and mid-2000’s, the greed, corruption and excess allowed a tremendous surplus of housing units to be built in our country. It is estimated that in 2005 we had a surplus of 2,500,000 housing units in America. It will take quite a while for this excess inventory to be absorbed. This process is elongated by the fact that we have record number of homes going into foreclosure, which are being sold at discounts of 20 to 40% off their original sale price. These homes are the direct competitor for the builders and developers who would normally be building new homes. But despite the excess inventory of homes on the market, the inventory is shrinking. Currently 1,300,000 homes are on the market in the U.S., and the inventory of homes for sale in our market area has decreased from a 16 month supply to a nine month supply. This is encouraging news. When we get down to a six or seven month supply, we will see housing starts increase and thus the demand for our products and services. Now, we have step two of our economic recovery coming into place. We are experiencing a slightly increased demand for new housing units.
While the state of Maryland finds itself in dire economic straits, there is hope of receiving some of the promised economic stimulus money. Of the $787 billion stimulus budget, only about one-third has been spent, with only about 10% going to the much talked about shovel-ready projects.
Our companies have participated in only one construction project as a result of the economic stimulus program, which was a
parking lot at Salisbury State College. However, we believe that there is a reasonable prospect that economic stimulus funds will be made available in our market area to help build schools, streets and roads, government buildings, wastewater treatment plants and other public service construction projects. Now, we have step three of our economic recovery coming into place. We are expecting increased demand in the public/government sector of our market.
The real stimulus for our economic recovery lies in the growing acceptance of concrete as the construction material of choice because it decreases carbon dioxide emission while increasing energy efficiency, sustainability and lifecycle cost benefits. Concrete paving, whether it be for
parking lots, streets, local roads or highways, provides the greatest area of opportunity for our companies. Concrete is competitive with asphalt in initial cost and in lifecycle cost is approximately 54% less expensive than asphalt paving. Concrete paving offers fuel savings of 4 to 7 percent while simultaneously reducing carbon dioxide emissions.
Pervious Concrete offers tremendous environmental and economic advantages because it acts as a filter while allowing rainwater to go directly into the ground and allows land owners, builders and developers to maximize the usable square footage of their land. Now, we have step four of our economic recovery coming into place. We are expecting increased demand for our concrete products and services in all segments of the construction industry.
Every cubic yard of concrete requires approximately 1,300 pounds of sand and 1,800 pounds of gravel. Our companies are the largest and best producers of sand and gravel in the state of Maryland. We have the most consistent quality sand and gravel available, which is the key ingredient in producing high quality concrete. Now we have step five of our economic recovery coming into place. We are expecting increased demand for our sand and gravel products as the demand for our concrete products increase.
Next, through The Concrete Store we supply the ancillary products that facilitate the use of concrete, sand and gravel. We have over 3,000 products, including hardscape products, stamped and
Decorative concrete, environmental products, power and hand tools, wire and steel products, curing compounds, culvert pipe and sonatube available for pickup or delivery. An amazing 98% of our orders are filled from our own inventory and delivered within 48 hours of the time of order. Now, we have step six of our economic recovery coming into place. We are expecting increased demand for our Concrete Store products and service as the demand for our concrete, sand and gravel increases.
Finally, the most important component of our economic recovery lies in the dedicated people who operate our great companies and provide the superior products and service that our customers have come to expect and demand. Our people have exhibited a special “e’sprit de corps”, which has allowed us to prevail through this extremely difficult economic depression in our industry. These last few years have been very difficult for all of us and everyone's lives have been changed in some form or fashion. There is an old saying that “Tough Times Do Not Last, But Tough People Do!” This is exactly where our companies believe we are. This time we are in agreement with the economists. We are through the bottom of the recession/depression and beginning to see the light at the end of the tunnel. We will experience an increase in demand for our products and services over the next two years, and beginning in 2012 through 2016 we are expecting especially dramatic growth in the construction industry. It is imperative that we stay focused on increasing internal and external customer satisfaction, productivity and efficiency while simultaneously reducing costs and eliminating waste. We are on the road to economic recovery, and it will be paved with concrete, produced and delivered by our great people, made of our sand and gravel and put in place with products from The Concrete Store!
Other news articles from April 2010