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Published on 6/24/2018

Published by timharrison0064@gmail.com

Is there any money in concrete plants?

“Can I make money out of a batch plant?” Let's find out


 

Is there any money in concrete plants?

 

Often when people are looking at purchasing concrete plants or entering the concreting industry they call me and say “Is there any money in concrete plants?” Or “Can I make money out of a batch plant?”

 

 

Concrete plants aren’t cheap to build or buy. The industrial land is rarely inexpensive and local government approval is costly due to environmental concerns, traffic requirements and noise constraints. Whilst the batch plant itself is a large capital outlay. As an example good batch plants producing 100 cubic metres an hour or more cost in excess of 300,00 USD (or Euro’s) to buy. And then there is the cost of adequate computing systems and office space, not to mention the concrete trucks themselves. In short whether you are you are purchasing a new or second hand concrete plant, you are not going to receive much change from 1 to 2 million dollars. And then is the price tag of the location. Commercial property in a city, as opposed to regional location, could blow that cost out to 5 or 10 million dollars. Therefore when buying or building a concrete plant you need a bullet proof business plan, local government approval and adequate finances in place, before you even start to contemplate whether or not the plant is going to succeed. 

 

Whether concrete plants are economically viable or financial failures depends very much on the concrete plants location, its quality assurance systems, the cost of raw materials and the overall management style of the plant. In other words, how its run.

 

  1. Lets take a look at location. The  presence or lack of existing competitors is either a hindrance or godsend for new concrete plant owners, depending on where they are located. Strong competition from existing plants nearby is not a good way to get your plant off the ground. Whilst if you are buying a plant that is looking to increase market share by taking customers from your competition, be wary. Concreting customers often only move based on price, and winning work based on price alone can prove costly. For you require a healthy profit margin to keep your concrete plant afloat, with machinery breakdowns, wear and tear on trucks and increasing labour costs all in the mix. You really need to be located close to either new or ongoing commercial developments, increasing populations or zero competition. If you are too far away from the action, or close to solid competition, think again.
  2. Quality assurance systems are important when considering the efficiency of your concrete plant. You need to have competent and professional systems in place. A safety culture is important and so is the need to maintain and continually renew your existing plant and equipment. Satellite navigation systems monitoring truck flows, safe work method statements monitoring employee behaviour and modern computer batching systems for allocating concrete mix designs appropriately, are just some of the quality assurance systems you need to succeed
  3. The cost of raw materials, and by raw materials I mean cement (GP) Flyash, aggregates (rocks), sand and water is a major factor you need to consider before purchasing your concrete plant. Ideally raw materials need to be close by and cost effective to transport in to your batch plant. Access to a long term supply of good quality aggregates is a must. Remember many of the big concrete players own their own quarries, therefore competing against them if you are an independent owner can be tough. For unlike you large players can reduce the cost of their concrete per cubic metre, and still make money from the sale of their aggregates and sand.  
  4. Finally a concrete plants management style is key to success. Clients or customer relations are important. Its not just about delivering a product, its all about ensuring the customer is satisfied. Whilst keeping your employees satisfied is crucial to your success as well. The cost of training staff is high, whilst having employees with local knowledge can prove invaluable. Each and every plant has its own intricacies based on its location, operational features and customer base, and having long term employees familiar with these is a bonus. 

 

 

 

So should you buy or build that concrete plant? And is there any money in concrete? To be honest there are good margins in concrete production and delivery for those who can tick many of the above mentioned boxes. The margin or difference between what it costs to produce a cubic metre of concrete, and what you receive for selling a cubic metre of concrete, is often quite high. Therefore on paper you may think you’ve hit on a goldmine, if you have the money to buy a concrete plant and sit back for the long term haul. But remember all that glitters isn’t gold. Concrete plants have many moving parts and variables, and it only takes one or two of them to fall over for your profit margin to be eroded, if not wiped out, overnight.

 

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Tags: aggregates batch plant business business plan commercial property concrete concrete plant concrete trucks concreting finance for sale plant quarry


This article was written by timharrison0064@gmail.com all rights reserved. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect those of concretebroker.com