October 24, 2011 - Last week we conducted an auction at a precast concrete forming facility in Troy, Missouri.  The auction went really well with strong prices across all asset classes.  We had great participation with over 100 registered on site and over 200 online.  Combined, these bidders came from over 30 states and 7 countries internationally.

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If you're like most folks, then you haven't spent too much time thinking about precast concrete.  But if you're in the building and construction industry, you spend a lot of time thinking about it.  Heck, in light of the woeful economy, it's likely that you are even losing sleep over it.  For those who might not be too familiar with precast concrete, we thought we would share a bit about it

 

Precast concrete, as opposed to standard concrete, is a construction product produced by casting concrete in a reusable mold or "form." It is then cured in a controlled environment, transported to the construction site and lifted into place.  In contrast, standard concrete is poured into site-specific forms and cured on site.

It rivals traditional concrete in a bunch of ways:

·        Precast concrete actually gets stronger over time, while other materials can deteriorate, experience creep and stress relaxation, lose strength and deflect over time.

·        Installation is quicker, easier, and less costly.  It also requires less maintenance over time, reducing the likelihood of future problems. 

·        Precast concrete products are ready to install when they arrive at the job site.  This can reduce the labor time by weeks and also reduces the need for skilled labor on site.  

·        Precast products generally exhibit higher quality and uniformity because they are produced in a controlled environment.  Variables typically affecting quality on a job site - temperature, humidity, craftsmanship - are closely controlled in a plant environment.

 

Along with the rolling stock and support equipment, our auction had all kinds of molds.  The majority were for water drainage, septic and those kinds of things.  We also had some really nice panel molds used for walls. 

 

Although the benefits of precast concrete seem endless, it's still a tough sell when the construction industry is as depressed as it is today.  In a recent blog, Ty Gable, president of the National Precast Concrete Association, speaks about the continued struggles for precasters.

"'We are now five years past the peak of the construction industry, and folks, things are still not looking that great. One indicator this week provides a ray of hope for 2012, but you've got to squint to see it. The American Institute of Architects announced that it has trimmed its forecast on nonresidential construction for 2011 and expects the sector to lose 5.6% this year. For 2012, AIA is forecasting a 6.5% gain. In other words, with a little luck, we'll recover what we lost this year and maybe add 0.9% to that meager figure.

Construction spending has continued to lag across the board, but it has been steadily down this year on the public side, where so many precasters make a living. We are now at an 11-year low, which puts the industry roughly at the level of 1999-2000. According to Ken Simonson, AGC chief economist, highway construction is down 11.3% this year. Oh, and since Congress failed to reauthorize the Federal Aviation Administration, an additional 70,000 construction and related jobs are at risk this summer, along with $2.5 billion in airport construction projects.

My point? The tail of a construction recession is always a desperate time for manufacturers, and this recession has a very long tail. We're still bumping along the on the bottom, and if our source for optimism is a forecast that shows us clawing back 0.9% in 2012, it's a serious sign that we're in for a long, slow slog. There's a lot of fear and outright panic in the industry. It's understandable. But this not the time to abandon your core business principles. Quality, safety, intense knowledge of costs and appropriate pricing are more important than ever, and those companies that continue to pursue lean manufacturing without compromising those core principles will survive and be well positioned for the future.'"

Based in Buffalo NY, Blackbird Asset Services is a boutique auction and valuation firm that caters to secured creditors and bankruptcy professionals. With a national practice, our auctioneers and appraisers work all over North America and conduct USPAP certified appraisal reports as well as on site and online auction sales.