Concrete companies increase presence and share in the civil construction scene

Despite the modest rate of 4% growth expected in civil construction works for 2013, growth in the concrete industry remains strong and steady. The scenario has been particularly good for producers of concrete, responsible for production of the material on an industrial scale. Data provided by the ‘Associação Brasileira de Cimento Portland’ (ABCP - Brazilian Portland Cement Association) indicate that cement consumption in Brazil grew over 80% in the period between 2005 and 2012. The increase was mainly due to production in concrete plants, where growth was reported to have been as much as 180% for the same period. It is estimated that last year alone, the sector’s production was 51 million cubic meters of concrete. “Considering the current projection for Brazil’s GDP and the GDP for the construction industry, we estimate that in 2017 the volume of production at concrete plants will reach 72.3 million cubic meters, representing an increase of 41.2% over a five-year period,” estimates Valter Frigieri, market director at ABCP.

According to Frigieri, what is driving this increase is the growing preference among contractors for the concrete provided by concrete companies, replacing the contractors’ self-owned and operated plants at the work site with concrete delivered by concrete mixer trucks. Providing proof of this assertion, a survey conducted by the ABCP indicates that, between 2006 and 2011, the demand for concrete supplied by concrete companies grew 136%. Additionally, according to the ‘Sindicato Nacional da Indústria do Cimento’ (SNIC - National Cement Industry Union), the increase in the participation share of concrete companies in cement consumption rose from 13.1% in 2006 to 20.7% in 2012.

Although the Brazilian construction industry has advanced in its purchases of concrete directly from concrete companies, the rates of adoption of the practice locally are not yet even close to what we see in developed countries. “In the U.S. market, for example, it has been established that about 70% of the cement sold earlier this year was sold through concrete companies,” says Frigieri. Even in emerging markets like China, about 40% of the cement consumed has been earmarked for concrete producers, strengthening the role of the sector. In short:  the use of ‘dosed cement’ grows in concrete plants, but Brazil still falls far short of the evolution of the practice observed in other more-developed countries.

The role of infrastructure and building projects in the increase of the consumption of the concrete provided by concrete companies is clear. Such works have been responsible for part of the increase in production, but it was the need for environmental and logistics solutions that led construction companies to adopt new standards/methods of production and use. One is the adoption of the system of construction that uses concrete walls in buildings. ABCP figures show that the solution cited above is the one that has gained the most ground, currently claiming for itself a 20% share among the options of building systems that use concrete.

Driven by initiatives such as the Brazilian federal government’s social housing ‘Minha Casa, Minha Vida’ (My Home, My Life) program, the system was proven to be the most efficient among the 59 prototype housing units that were built in the country. With that, the concrete wall system proved to be the most economical and with the greatest social appeal in the construction of popular homes with 42 m² in area. “Before then, it was common to construct buildings one block at a time. Today we use concrete walls, which directly impacts the market for concrete dosed and mixed at the plant,” says Arcindo Vaquero y Mayor, President of the ‘Associação Brasileira das Empresas de Serviços de Concretagem’   (ABESC - Brazilian Association of Concreting Services).

Who consumes concrete?

Besides mapping the production of concrete, the ABCP survey also shows where the product is consumed. According to the organization, three channels account for demand in Brazil. The first consists of building contractors who prefer to consume concrete that is dosed in concrete plants. Next come infrastructure works that, although major consumers of concrete, are an important part in the assembly of concrete plants at the work site itself.  Lastly, there’s the niche of “self-built/owner-built constructions” that closes the loop. In that case, they also choose to purchase the material from concrete companies, mainly due to their presence in urban areas. “It is a market that has very high potential and possibilities for expansion,” adds Eliana Taniguti, director general of the ‘E8 Inteligência’, which cooperates with the ABCP in market research.

Taniguti, a specialist in the area, believes that urban works will be the niche in which the consumption of concrete will increase most in the coming years, mainly due to the growth of investment in the sector and the need for improvements. ABCP data show that between 2010 and 2011 alone, consumption of the total amount of concrete produced in the country by urban works practically doubled to 12%. The GDP for construction in Brazil in the same period declined by 8%, as shown in the table below. In other words, the segment of urban works grows above the rate of the slowdown in civil construction in the country.

ABCP releases first complete survey on the concrete sector

Released in August 2013, the first ‘Pesquisa sobre o Panorama e Tendências Técnico-mercadológicos do Setor de Concreto’ (Survey on the Technical and Market Panorama and Trends in the Concrete Sector) was presented by ABCP in cooperation with E8 Inteligência and UBM Brazil. The survey is the first to be conducted on the segment in Brazil and involved over 300 interviews with professionals throughout the concrete business chain; from acknowledged references in the sector to concrete companies and contractors, as well as laboratories and concrete draftspeople/technicians.

According to Renato José Giusti, president of ABCP, the sector is very lacking in information and, because of that, the survey proposed structuring a complete map involving specifiers, suppliers of equipment and inputs, as well as producers and construction systems used in concrete. “Cement depends on this entire chain to serve its purpose, generating tremendous impacts and social, economic and environmental responsibilities. Taking these dimensions into consideration was crucial for us to begin this project,” the executive points out.