BUILDING: Readymix Market Won't Set
Recent Western Cape Business News
THE low barriers to entry have made readymix concrete supply a very competitive and, consequently, a low margin business. There is currently a surplus of capacity over demand but customers need to be wary about buying product purely on price.
“Even though concrete manufacture is a relatively simple process, it has to be done correctly and there are many things that can go wrong which can have serious implications for the success of a structure,” says Grant Neser of AfriSam.
“Concrete is certainly one of the most versatile construction materials and can be used for very high specification and high strength purposes as well as in relatively low specification, unsophisticated applications as well,” Neser says.
The major advantage with concrete is its durability, i.e. its resistance to corrosion and degradation relative to other building materials such as steel which needs ongoing protection in the form of treatment and painting.
Concrete is used in bricks and blocks, in screeds, mortar, plaster, for floors, reinforced structural elements and in highly sophisticated high strength structural components. It can be cast in virtually any shape and is ideal for aesthetically pleasing off shutter concrete structures.
In first world countries there is a growing trend towards the sophisticated application of concrete and the use of concrete that, through its ability to be easily placed, results in labour savings. “Examples of this are self levelling and self compacting concrete and we are also seeing a move towards architectural concrete which includes special finishes and pigmented concrete,” Neser says.
“However, in a developing country such as South Africa, we do not suffer the labour savings pressures which are apparent in first world countries. So, while self placing, self levelling and self compacting concretes are available, these are generally not considered cost effective. This is due to the fact that the additional costs associated with the special concrete and the additional shutter preparation these products require tend to outweigh the labour cost savings that can be achieved.”
“While there are applications in certain circumstances where this product is being used we do not predict a significant penetration of this type of product into the local market,” Neser says.
“There is an emerging trend in architectural concrete with special finishes and this is probably related to a greater appreciation for the aesthetics that architectural concrete offers. It is easy to obtain a smooth uncluttered finish on a good off shutter beam or column, and pigmented concrete as well as textured or exposed aggregate concrete have their own aesthetic appeal.”
Neser says that there is an appreciation from certain clients for these aspects and recognition by architects and engineers that one can limit cladding, thereby reducing the weight of the structure through selecting architectural concrete finishes. “Again, the move towards this has not been overwhelming and most new structures in South Africa still tend to be clad. However, there is a move to engage with architects to celebrate architectural concrete.”
Neser says the introduction of readymix concrete started in the US in the late 1950s/60s and it was brought to South Africa shortly thereafter.
“The advantages of pumping readymix concrete include the placement of high quality concrete of uniform consistency at a faster rate than normal concrete into areas which are not readily accessible by other means.”
“Pumped concrete is fluid, yet highly cohesive, to allow for easy placement, compaction and finishing, and it results in minimal bleeding and segregation.” All these factors make it ideal for congested sites with limited space for transporting concrete as well as for high-rise projects, and it also facilitates a reduction in both plant and labour needs.
“In South Africa the amount of cement that goes through the readymix channel currently stands at just less than 20% whereas in developed countries this figure can be as high as 60%. This can be partially attributed to the geographical spread of South Africa as concrete does not travel very well. This is coupled with the entrenched site batch culture that exists among the major construction companies who are encouraged by the fairly accommodating environmental laws on building and construction sites to retain the status quo,” Neser says.
In the last six years, this figure rose from 12% where it had been for many years and rapidly expanded to the current 20%.
A negative impact has occurred because there are low barriers to entry in the readymix market and when opportunists realised that there was a demand, additional capacity was introduced. “This means that the market is currently oversupplied, the penetration is not growing and the demand for readymix is declining in line with the decline in the demand for cement,” Neser says.
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