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Tough decisions in a tough concrete market

Hanson Concrete managing director Max Colligan explains how the company is coping with a ready-mixed concrete market that has shrunk by more than 40 per cent in the past five years and shows few signs of an upturn.

The past 12 months have been among the toughest for UK ready-mixed concrete producers since the banking crisis sent the economy into freefall in 2008.

Demand fell away after a promising start and prices came under severe pressure as hungry producers chased a dwindling amount of work.

“As producers we have to accept that the market is the market and there’s not much we can do about it”

Something had to give, and in the summer Hanson announced plans to close nine production plants from Bangor in North Wales to Liskeard in Cornwall. By the end of the year that figure had risen to 15 as the market continued to decline.

The company also took the decision to reduce its customer sales centres from three to two, resulting in the loss of 35 jobs – not easy decisions but essential in the current climate.

North-South divide expands

What has become clear over the last year or so is that there is a growing North-South divide. While construction activity in London and the South-east remains relatively buoyant, with concrete volumes returning to 2008 levels, in other regions the work has dried up.

The South-west and the North-east of England are the hardest hit, but Wales and Scotland have also gone backwards. Producers have to accept that the market is the market and there’s not much they can do about it. And that in tough times, competition will be fierce.

Running the business more efficiently

What companies such as Hanson can and must do is to get better at what they do and run business more efficiently.

Although Hanson operates nationally, its concrete operations are managed within eight clearly defined areas, each run by a general manager who has full responsibility for production, sales and profit. It means the company can get much closer to customers and respond to the widely differing dynamics of local markets.

That will be critical over the next few years. The merger between Lafarge and Tarmac has brought a new national player – Hope Construction Materials – into the market, which will increase competition. Jobs will have to be won on quality and service as well as price.

Mobile plants, quality and sustainability are the future

That’s why Hanson believes there is a big future for mobile plants that can be erected on site in a few days and produce quality concrete to very high standards.

Quality and sustainability are key deciders on big contracts, so being able to offer consistent concrete supplies on site without miles of truck journeys really strengthens bid submissions.

“Having the flexibility to offer an onsite supply is a critical factor in winning new contracts”

Hanson has 13 mobile plants and a number of high-profile projects on its radar, from the proposed new Hinkley Point C nuclear power station in Somerset to the Mersey Gateway bridge.

It’s early days for these, but having the flexibility to offer an onsite supply is a critical factor in winning new contracts.

The advantages are clear to customers and many of Hanson’s biggest and most high-profile contracts in recent years have been successfully supported by one or more of its mobile plants.

Among them are Kincardine Bridge in Scotland, the nuclear reprocessing facility at Sellafield in Cumbria and the St David’s shopping centre in Cardiff. The company is also supplying concrete from site and fixed plants to Crossrail in London.

On the product side, Hanson has launched a new range of concretes designed to help reduce the CO2 emissions associated with construction projects.

Max Colligan is managing director at Hanson Concrete

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