Recognizing signs and opportunities for precast plant growth and advice on how to get started.
By Claude Goguen, P.E., LEED AP
The precast concrete industry is continually advancing. Technologies in both manufacturing and mix designs are helping producers manufacture higher-quality products while enhancing production efficiency. The construction industry’s use of precast also is expanding, creating a greater demand for new products.
Additionally, there is an immense need for infrastructure rehabilitation and expansion coupled with the passage of the bipartisan infrastructure bill. All of these changes may lead NPCA members to ask, “Is it time to grow?”
If you haven’t asked that question already, here are the some of the signs that may signal it is time.
Cannot take on new work: Not every occurrence of turning down work requires contemplation of growth. However, when it happens at an increasing rate, it may be time to consider expansion. Clients and customers who find themselves repeatedly denied by a producer may seek out an alternative source.
Cannot meet current obligations due to production limitations: It’s difficult to tell a customer their product shipment must be pushed back. Causes can range from labor issues to equipment trouble to weather. While these causes may be legitimate schedule-busters, there comes a time when a producer must examine ways to minimize impact.
Lack of room in the plant to get everything done: The day’s production cycle can involve an innovative choreography of formwork, supplies and products in the plant. A plant manager or owner eventually may realize that the continuous shuffling of these items is not efficient or sustainable. Insufficient space in the plant can lead to inefficiencies in production, quality issues and even safety risks for employees.
Stress in the plant due to waiting for concrete or other materials: How many plant managers have seen an eager employee standing alongside a “hungry” form? This may be a sign of too many mouths to feed with a batch plant that can only generate so much concrete in so much time. Everyone needing the next batch can increase anxiety and stress.
Ample overtime: Some employees may enjoy the benefits of overtime hours becasue of workload. However, this may not be economically, logistically or physically sustainable over long periods. Tired employees may make more mistakes, risking quality issues or even injury. Equipment used for long hours will require more maintenance. Managers may find that capital investments in production expansion can give a return on investment sooner than anticipated – with less overtime.
Greater demand on QC personnel: If QC staff start noticing a marked increase in items that need to be remedied, the plant could benefit significantly from conducting a root cause analysis. This analysis may reveal some factors that are related to the issues listed above and can help identify and resolve the issues and prevent them from occurring again.
How to grow
Growing a company may conjure up visions of acquiring more land, moving to a larger location, adding more manufacturing space, hiring more employees and buying more equipment. The good news is that expanding production capacity doesn’t always require all of these actions. Instead, growing may mean examining the process, identifying inefficiencies and making changes within existing conditions. Adding personnel and/or implementing a change in employee responsibilities may seem small but have a big impact.
Assuming it’s time to consider operational growth, owners should first consider what they want their companies to become. It’s important to establish and confirm a goal and finish line, then work toward it. Some may want to specialize in a specific field, such as wastewater treatment, retaining walls or architectural products. Others may opt to manufacture a variety of new product lines. Envisioning the destination will make it easier to plot out the journey.
Once a company identifies the direction, ownership should develop a strategic plan and assess if it has the capacity, competency and capital to grow into that vision. Does that growth entail expansion? Expansion can refer to both production capacity and market. In terms of market expansion, producers must decide whether they are seeking to make more of their existing products or if they’d like to diversify their product lines.
Expanding the market
Expanding the market can mean enhancing visibility. Precast plants sometimes can operate in obscurity. Owners often depend solely on word-of-mouth and can have little to no online presence. While this may work now, it can change suddenly as old accounts are closed, contacts retired and the owner is not equipped to replenish the lost income. Those considering growing their operations should closely examine their online presence.
Technology has changed how manufacturers produce precast. It’s also changed how customers buy and interact with suppliers. Creating and maintaining a robust online presence is key to supporting growth efforts.
Enhancing visibility also can apply to plant appearance. Precast plants are not like car dealerships. Rarely are plants and their products highly visible from a main road with pristine landscaping surrounding ornate buildings.
These measures are not necessary, but producers should consider renovating the entrance and signage. Doing so can help expand visibility to potential customers and attract a high-quality workforce.
Talking with customers
When considering growth, it’s imperative to fully understand current and potential customers’ needs and challenges. Start by engaging with existing customers. Listen and observe how they unload, store and install precast products. Speaking with them is the best way to identify any potential modifications to existing structures and the need for new products.
Let’s say a customer purchases utility vaults from a producer. That producer stays in contact with the customer, identifying the challenges the customer encounters in the field. One such challenge could be installing the pipes, valves and other equipment. The customer must rely on other trades and good weather to get these components in before backfilling the vault. The producer goes back to the plant and assesses how the product could be enhanced to address the customer’s challenges. What if the components are preassembled and installed at the plant? Here, the opportunity is not a new precast product, but, instead, the evolution of an existing one. This added service will require additional expertise and space but likely will pay for itself – and then some – in a short amount of time.
There also may be opportunities to diversify your product lines. Many ideas for new products originate with customer requests. Greg Stratis, president of Shea Concrete Products, once got a request to make oil containment curbs for electrical utilities.
“These were small structures that required inexpensive formwork,” he said. “We thought this would be a temporary addition, but now, we sell them all the time.”
Not all customer requests turn out to be viable long-term diversification opportunities. Shea once received an order to manufacture floating docks. While Stratis described the experience as fun and engaging, widespread demand doesn’t exist, and manufacturing the pieces is not very profitable.
A unique project may be appealing and could generate an impressive addition to your list of projects. However, it’s important to conduct a thorough assessment of future needs for any product beyond a one-time use. Will the cost of the equipment and materials justify further production?
Doug Starr, plant manager at Barbour Concrete – a Forterra Company, recalled getting the company’s first order for telecommunication shelters. They considered the project and decided to take a chance. The shelters turned out to be a reliable product line, and Barbour Concrete has been manufacturing them ever since.
“When the recession hit and residential construction was down, the telecommunication buildings helped a lot in keeping us going,” Starr said.
A thorough review of the market may reveal a need for specific products. This also may turn into an opportunity for diversification. When diversifying into a new product line, first determine if other businesses in the market already supply the product. Are these businesses successful at making the product? If so, determine if your operation has the competence and ability to compete with the other suppliers before deciding to diversify.
Assessing your workforce
Some growth strategies may suggest adding employees. Before doing that, however, producers must first examine the efficiency of the current workforce. Like many organizations, you likely have a core group of valuable employees that the business could not operate without. This core group will be invaluable during growth periods. Therefore, managers and owners should make sure they secure that relationship.
Sometimes, workers just need to know how much they are valued. This could involve bonuses, incentives and gifts.
Offering educational opportunities is another way to tell employees you are committing to a long-lasting career at your plant. Training employees in a few different departments and roles can boost morale and enhance productivity.
You also may find implementing lean production processes effective as you assess your workforce. Cutting down on waste through this process may help you discover that you don’t need as many new employees as originally forecasted.
Once a thorough analysis is conducted, identify any new roles the plant needs to be filled. With anticipated growth, there may be a need to discontinue outsourcing some services and hiring new positions, such as engineering, quality control, human resources, information technology and sales.
Assessing your equipment and materials
Growth does not always mean buying additional equipment, but sometimes equipment may be hampering efforts to add productivity and keep pace with demand.
Smaller changes also could pay huge dividends. Adding heat to the plant could improve productivity during the winter season. Adding a curing system could expedite product stripping and turning over forms. Sometimes, not using a certain mix ingredient can cause ineffective production. For example, using an accelerator may help offset slower set times, or using self-consolidating concrete could lead to eliminating the consolidation stage of production.
Before moving ahead with any expansion plans, assess your current technology at the plant along with what is available in the marketplace. Networking with fellow NPCA members – particularly through the NPCA Annual Convention and The Precast Show – is especially useful during this evaluation. If you plan to buy used equipment, ensure you have resources available for servicing. Some used equipment may come from manufacturers that are no longer in business.
Expanding the production facility
If you are considering an expansion of your production facility, first consider whether the expansion and potential future expansions can fit on the current piece of land. If not, can additional adjoining land be acquired?
Depending on your situation, it may be time to consider looking at another site or moving your entire operation.
When planning on how much space will be needed, think big.
“When you make plans to expand, add more space even though you think you might have enough as it is,” said Greg Roache, president of Gainey’s Concrete Products in Holden, La. “During our last expansion, we added 30% more space than planned and still ran out of room in a year and a half.”
For Columbia Precast Products in Woodland, Wash., increasing opportunities in the marketplace necessitated more space. The company’s 4-acre facility wasn’t big enough to accommodate future expansion, so they moved to a 23.5-acre facility and built a new operation.
“We require a lot of space to stage and stock our products because they take up a lot of real estate,” said Ron Sparks, founder and former general manager of Columbia Precast.
Many other considerations should be taken into account when expanding on current property or moving to a new one. For more information, refer to “Bigger and Better: Expanding Your Precast Plant” in the November-December 2016 issue of Precast. Inc. magazine.
Small steps lead to big rewards
It’s easy for precast plant owners and managers to find themselves on the proverbial hamster wheel day in and day out. When focused on keeping up with current production, it can be challenging to stop and consider adding more production capability. But as the precast industry continues to grow, it’s important not to be left behind. Remember that growth can be accomplished in small steps. Adding a product line, training employees and upgrading equipment can all lead to successful growth for your business.
Claude Goguen, P.E., LEED AP, is NPCA’s director of technical education and outreach.