The big ones, sure, we all hear about: Cemex buys two more plants, or GCC just bought a smaller company in the Midwest. Although Cemex has led the way in acquiring more wives than Warren Jeffs, it’s not the only company snatching up plants before they even come of age.
Consolidation is happening all over, says Kathleen Carr-Smith, managing director of membership and communications, National Ready Mix Concrete Association, Silver Spring, Maryland. It all depends on where and when the opportunity arises. “Cement companies are looking at everything that’s available,” she says.
Contractors like Sherman D. Balch, vice president, Balch Enterprises, Hayward, California, don’t like it. “We are having a real trouble with the concrete ready mix suppliers. These big companies—you can’t keep track of who bought whom last,” he complains. He liked it better before because the bigger companies are doing a lousy job right now in their customer service, he says.
“Before, you could talk to someone when something was wrong with your mix,” Balch insists. “Now you get the dispatcher and all they do is route the trucks. They don’t know anything about this industry.”
Balch has reason to complain. Recently the ready mix company sent him a truck with a mix that didn’t look right. He says he suspected it didn’t have any cement in it. But it is all “computerized” so how could it be wrong? When he called up the dispatcher she said, “What do you mean there is no cement in it? This is a cement truck.” He said, “No this is a concrete truck. Cement is the powder.”
As Balch went up the line of command in the company he says they hardly knew what he was talking about. “Eventually we got to the right person, but we miss the old way. Now, you don’t have that personal one-on-one contact with the decision-makers. You are more at their mercy,” he insists. “You can’t get the specific mix or type of truck you need for your specific job anymore.”
Balch is more vocal about his dissatisfaction than some contractors dare to be, but that doesn’t mean he’s alone. Other contractors express similar frustrations but wouldn’t go on the record for fear of ruining their business relationships.
On the other side, the folks purchasing the ready mix companies defend their reputation, declaring that consolidation is improving customer service. “Consolidation is not lowering customer service; just the opposite,” says Wally Johnson, vice president of marketing and sales, U.S. Concrete, Houston. “If a company with one plant and four trucks break down or has a big job, they can’t service anyone else, whereas the bigger companies can ship trucks from plant to plant, depending on the workload.” As his company gets bigger, he says it gets better. In some cities like Memphis and Dallas, recent acquisitions mean that U.S. Concrete can almost cover the entire city.
“We couldn’t do that before,” Johnson says. “We may have had a very good customer that we would have to turn down because we couldn’t cover the job. Not so anymore.”
The bigger companies also have an advantage when it comes to technology. Because of their size, the larger companies can justify a tech service department and GPS units that help them to keep track of where each truck is at all times, and that improves customer service, he says.
“The smaller companies rely on vendors to be the customer service department, which may be good or bad,” Johnson says. Unfortunately, vendors may just be serving their own interests, instead of the contractor’s.
To ease the transition in consolidations, Prairie Material in Chicago tries to keep the same management and employees when it buys a new company. “This way we have the same people on the front lines to deal with the clients,” says Will Glusac, president, Prairie Material.
U.S. Concrete usually tries to keep management, too, but this is problematic when it’s a family-owned company, Johnson confides. “The biggest problem when buying a company is the people,” he says. When it changes from family-owned to corporate; private to public, the people sometimes have trouble with the changes that new owners have to make.
It’s these same changes that discourage contractors like Balch. From his standpoint, when companies that buy smaller companies try running them like big corporations “it kind of messes it up for the people in the field,” he says. But luckily for him, it appears there will continue to be a place for the smaller company.
“There’s always a place for an independent,” Glusac says. “They hustle hard, work hard and they’re very good competitors.”
NRMCA’s Carr-Smith agrees, “There is always a place for a smaller family-owned business. Consolidation seems to be spurring competition rather than squashing it.”
Meanwhile, “consolidation is not done; not even close to being done,” Johnson insists. “Consolidation will continue. I think it’s a good thing. It’s good for the industry. And good for the customers.”