Optimistic investors inject $1.3 million into concrete-pumping business
Even as private and public project owners scale back on building plans and contractors here report a soft market, a group of out-of-state investors and a Wisconsin-based concrete pumping professional are betting on increased demand for pumped concrete.
Great Lakes Concrete Pumping Wisconsin was incorporated as a limited liability corporation last December and opened its doors in February. The West Allis company, which has invested $1.3 million in capital equipment, is owned by Richard Farrell and a group of investors based near Denver.
Farrell’s partners, Jeff Moll, Bob Rosendale and Pete DeGrood, own Southwest Concrete Pumping, which operates in Denver, Atlanta and Minneapolis.
The strength of the combined companies – coupled with favorable market projections from the Portland Cement Association, cause Farrell to be optimistic, despite a slow start.
"We had a pretty lousy February through March," Farrell said. "It was rainy and cold, compared with January and February."
Concrete pumping is a specialized way of delivering concrete into a form on a construction site. Concrete pumps push specialized concrete mixes through a lubricated pipe.
Great Lakes Concrete Pumping owns three pumps, but Farrell said that for larger jobs, additional equipment could be brought in from the Southwest Concrete Pumping fleet as needed. The company has already handled some significant jobs, including the 1,000-yard Elmbrook Hospital project for general contractor C.G. Schmidt.
The slow start – weather not withstanding – is not surprising, given figures cited by Portland Cement Association chief economist Ed Sullivan. Sullivan gathers a variety of data and predicts macro, construction-specific and concrete-specific trends for the US and specific markets.
According to Sullivan, Portland cement consumption will decline this year in Wisconsin.
"We have it declining in 2003, in part because of Wisconsin’s exposure to manufacturing," Sullivan said. "It is not expected to pick up until the second half of the year. Then we have it increasing 1.2 and 1.9 percent as you move further out in the horizon."
Farrell also cites anecdotal evidence of ongoing demand for pumped concrete, specifically in the residential market.
"A number of years ago, 90% of the homes built were concrete block," Rosendale said. "Now, 90% have poured walls versus blocks."
Bob Stelter, chief financial officer of Bentley Construction Co., Milwaukee, agrees with Farrell about the increasing popularity of concrete pumping versus block for residential construction, in part because it is harder to find brick masons to lay block walls for a basement.
However, Stelter, who also serves as president of Associated General Contractors (AGC) of Greater Milwaukee, cautions against placing too much emphasis on any specific construction market indicator as a basis of predicting the future.
For his own edification, Stelter looks to data collected by AGC chief economist Ken Simonson. Simonson provides regional reports, dividing the country up by Federal Reserve office. Southeastern Wisconsin technically falls into the Chicago Fed territory, which presents challenges.
"I try to blend between the Chicago and Minneapolis forecasts," Stelter said.
Because of its reliance on manufacturing, the economic wind might blow differently in Wisconsin than in neighboring markets, according to Sullivan. The economy here may even react differently to economic forces than other manufacturing-heavy states.
"If I recall, compared with the national average, the Wisconsin manufacturing base has more exposure to the export markets than say Michigan, which is basically servicing the domestic auto market," Sullivan said, pointing to the large number of job shops and smaller manufacturers in Wisconsin. "It is possible that the manufacturing base in Wisconsin may lag the manufacturing recovery that you might see nationally."