Seeking concrete cures

RELATED ARTICLES:  Top 10 billion-dollar projects in Abu Dhabi | Sharjah C&ID, Arkan, RAK Co a mixed bag for cement | Oman Cement Company sales and profits dip

Of all construction materials used for large scale projects, ready mix concrete is a volatile market indicator of just how healthy the industry is.

Construction relies on the steady flow of its lifeblood: a constant stream of laden cement trucks plying the highways to job sites. When the industry is quiet, so are the roads. And right now, in the UAE at least, there’s a need for a transfusion.

Nigel Bush, General Manager of Sharjah-based company Conmix Ltd, one of the UAE’s largest suppliers of ready mix cement, said the past year had been exceptionally testing for the company.

“There are no words really, well, no printable ones anyway. The best way to describe the past 12 months is horrendous. Where we were delivering about 150,000m³ a month, we’re currently doing about half that.”

And Conmix is not alone. Smaller operators like Essam Mansour, plant and branch manager of National Ready Mix in Abu Dhabi, said that demand for product had been ‘unstable’ for the past three months. Where the company was supplying around 30,000m³ of ready mix cement per month up until late 2009 for several villa development projects, production was now down by around 35%.

With 30 cement trucks and 100 staff to keep busy, Mansour said decisions on tenders he’d placed with projects in the capital couldn’t come soon enough.

“We are awaiting decisions on tenders we have placed for the Capital 2030 project in Abu Dhabi. I hope the market picks up soon,” he said.

Conmix has about 500 people throughout its bases in Dubai, Sharjah, and Ajman, with two thirds of them working for the ready mix side of the business.

Bush said that, “We’re not, as some of our competitors are doing, adjusting our costs to secure contracts. That’s a recipe for disaster, and I’m looking forward to seeing how it pans out for some of them. I refuse to do so: it doesn’t make good business sense to reduce your bottom line.”

But the drop in demand within the UAE for ready mix concrete had prompted the company to explore its options.

[[page break]]

“It’s meant a lot of adjustments. We’re currently setting up operations in three different countries (Oman, Saudi and India), and have been through a period of restructuring where we’ve let a lot of people go. The workforce is demoralised – and now we’re faced with having to let some of our more valued staff go now too.”

He said the company’s expansion in to Saudi Arabia had been fuelled by the fact that the country’s reliance on foreign investment isn’t as pronounced as in some of the company’s current markets, meaning it was easier to establish and maintain business there.

“This new toll road in Sharjah, for example, doesn’t do much to enhance confidence in the current economy. At AED 100 per truck, and not AED 4 per vehicle, it’s a huge cost that we simply can’t cover. It means we’re not delivering to the other side of Dhaid.”

Earlier this week, Sharjah Cement and Industrial Development – the only producer of cement in the Emirate – announced that its net profits for 2009 had more than halved from AED51.37 million to AED23.87million, while first quarter year-on-year sales turnover had taken a sharp dive this year, plummeting from almost AED 300million in 2009 to AED 173million in 2010.

That should have been good news for the ready mix industry but a 10% jump in the price of cement, expected on May 10, meant suppliers were bracing themselves for more bad news.
“All we can do is keep the silos fully stocked prior to the increase,” said Bush.

Ready mix concrete suppliers claim advantages over onsite mixing because their product is generally cheaper, cleaner and more environmentally friendly to produce. Site dust and noise is cut, while offsite batching plants are able to store more raw material than can be held on building sites.

However, batching and transporting ready mix also creates issues. Transporting it to project sites places pressure on road networks, not only by adding traffic to the roads but by the sheer weight of the product.

At 2.5 tons per cubic metre, concrete places a great deal of stress on roads. Ready mix also needs to be prepared precisely, batched no more than 90 minutes before pouring, while curing temperature, controlled by chemical additives and flaked ice in the summer months, is critical.