I have always been fascinated with the game of chess, and played it extensively in my youth. The game has a particular affinity to those of us from New Orleans because America’s most famous chess master, Paul Morphy, was a native, born and raised in my hometown before the Civil War.

Chess reflects the pecking order and eternal conquests of real medieval life, from the pawns through the rooks, knights, and bishops, to the king and queen themselves. Originating in India in A.D. 600, it’s one of the oldest games still played in modern times.

“The TCP 100 list of producers will continue to evolve.”

At our firm, we study each year’s TCP 100 carefully, as it is the great chess game of a consolidating ready mixed concrete and construction materials industry. For the biggest players, while they may be hiding behind the notion of constantly growing their sales and profitability to enhance shareholder value, it really is about conquests, or growing the footprint of ownership and volume, which drives their motivations.

The key theme in this year’s list, which reflects 2005 revenue, is continued growth and consolidation. Just look at these striking numbers:

  • The total revenue of the Top 100 producers in 2005 totaled $42.2 billion, compared to $36.3 billion in 2004, a 16% increase.
  • Revenue for just the top 10 producers in 2005 jumped to $26.8 billion from $22.6 billion in 2004, an increase of 18.6%.
  • The top 10 accounted for 63.6% of the Top 100’s revenue, up from 62.2% in 2004.
  • The average revenue for the top 100 in 2005 was $421.5 million, up 16% from $363.3 million in 2004.

Change is constant
Even more striking is how things have changed in just four years. Here is an even more dramatic comparison, reviewing the 2003 list, reflecting 2002 revenue:

  • Ten of the top 25 in 2003 are no longer on the list. They have either consolidated through acquisition or been bumped off by the evergrowing bigger players.
  • Huge names like Peter Kiewit Sons, Aggregate Industries, and RMC are no longer independent companies, and therefore do not appear on the list, having been acquired by Rinker, Holcim, and Cemex, respectively.
  • In that period, Hanson has jumped from number 23 to 2, Trinity Industries has leaped from 35 to 5, and Titan America has climbed from 26 to 14. Many others have climbed the ladder as well.

What will the 2007 TCP 100 bring? I believe we’ll see more re-shuffling of the deck. A series of acquisitions by U.S. Concrete this year will catapult it upward, with more than 9 million cubic yards of production. The producer is closing in on $1 billion in revenues from a standing start in 1999.

More interesting is the sudden increase in Latin American-based companies that are following in Cemex’s footsteps, marching into the U.S. construction industry. Compañía de Cementos Argos S.A. has made a series of stunning recent acquisitions, growing from a quiet cement importer to a major, multi-million-yard ready mixed concrete producer with the acquisitions of Southern Star in Texas and Ready Mixed Concrete in North Carolina.

Grupo Cementos de Chihuaha S.A de C.V. has jumped into the Top 25 with its growing presence in the U.S. Southwest and West. Brazil’s Votorantim has been pursuing its own conquests throughout Florida the last couple of years.

Like the medieval game of chess, the conquests will continue, and the TCP 100 list will always be worth studying as the big players grow even bigger, and new international players continue to enter the United States.

Pierre Villere is President and Managing Partner of Allen-Villere Partners. Contact Pierre Villere at pvillere@allenvillere.com or telephone 985-727-4310.

© 2006 Hanley Wood, LLC. All Rights Reserved. Republication or dissemination of “A Dizzying Game of Chess” (The Concrete Producer, October 2006) is expressly prohibited without the written permission of Hanley Wood, LLC. Unauthorized use is prohibited. Allen-Villere is publishing “A Dizzying Game of Chess” under license from Hanley Wood, LLC.