CUSTOMER DYNAMIC OUT OF BALANCE
Though we still haven’t sold our home, I have begun packing parts of my office, in anticipation of joining my wife, Chris, in Rochester, Minnesota. Last November, Chris left South Milwaukee to accept and start her dream job at the Mayo Clinic.
Curious by disposition … and packrat at heart … it has been difficult and time consuming going through my old Alby Materials files. It has been difficult, because I saved some pretty cool stuff – and the volume in my ‘Take’ boxes is now several times heavier than the volume in our recycle bin. It has been time consuming, because I saved some pretty cool stuff – and have been spending too much time reading and reminiscing.
For example, I came across my 1993 Wisconsin Ready Mixed Concrete Association Region Two Promotion Committee file folder. The meeting minutes (committee members met monthly) are fascinating. Target markets in 1993 included solid concrete foundation walls, patios and driveways, parking lots (traditional concrete and whitetopping), structural concrete framing technology (high-rises and parking structures) and site-cast tilt-up construction.
Although the nation had struggled through a mild recession, ready-mix demand in Southeastern Wisconsin actually increased, due to growing market share for driveways, parking structures and high-rises, and solid concrete foundation walls.
The 1993 Region Two advertising budget (print, radio, and TV) was $40,500; the trade show budget was $7,000; and the seminar budget was $7,500. Printing, postage, public relations, and a contingency account rounded up the region’s promotion budget to a healthy $65,000. Region Two producer members funded two-thirds of the budget through voluntary contributions. Member cement companies supplied the remainder of the budget.
Fast-Forward Fifteen Years
Today, the national economy teeters on the edge of recession … with many segments – housing and automotive, for instance – in recession for more than two years.
The already grim conditions impacting residential construction are expected to worsen for the remainder of 2008 … with housing starts declining 25 percent from already depressed 2007 levels, according to Portland Cement Association.
Improvement in housing sales and new construction inventory conditions is not expected to occur until the second half of 2009 … or beyond.
Unlike 1993, ready-mix demand in Southeastern Wisconsin is in decline. In the late 1990s, I thought insulating concrete forming technology (ICFs) would help Southeastern Wisconsin weather the next major economic correction.
I was wrong.
Though Wisconsin ranks third in ICF usage in North America (behind only Minnesota and Ontario), current market share for ICF construction technology is not high enough (yet) to rise above the gloom of the current housing slowdown. Perhaps if the bulk of the region’s promotion dollars since 1999 had targeted ICFs (as they did solid concrete foundation walls from 1987 through 2000, the downturn in ready-mix demand in Southeastern Wisconsin could have been assuaged.
But other markets, including decorative concrete, concrete parking lots, and pervious pavements, also required promotion support.
As the new century gained traction, regional budgets experienced a downturn, too. Based on preliminary discussions regarding the 2009 Region Two promotion budget, this downturn will continue … to perhaps 50 percent (or less) of 1993 regional promotion expenditures.
Ready-mix margins in Southeastern Wisconsin have been in decline for almost a decade now, contracting the ability of producers to maintain or increase voluntary regional promotion contributions. As cement industry contributions are based on the volume of cement shipment into the region, Concrete Promoters in Region Two will need to do more with less (yet again).
Marketplace Dynamics Out of Balance
Since I left Alby Materials in July of 2003 to start the Phill Domask Consultancy, market dynamics have, for various reasons, fallen out of balance.
But embracing and implementing information I found in another Alby Materials folder, titled ‘Partnering Manifesto,’ would help restore balance to current market dynamics.
Jerry Krueger, Alby Materials’ technical and sales representative in 1990s, and Alby plant managers Al Ragio and Pat Stammers were masters at leveraging the partnering strategies suggested in the manifesto that follows, adapted from an article by Tom Peters.
Alby Materials Partnering Manifesto
Our customers are fellow construction professionals, the source of our reputation, and our most effective and passionate ambassadors.
Our customers are individuals:
- We trust
- With whom we have personal relationships
- With whom we have emotional bonds
- Who grow with us
- In whom we have personal stakes
- Who lose when we lose
- Who win when we win
- In it with us for the long haul
- With whom we can profitably revolutionize the industry.
Adopting this type of partnership between ready-mix producers and concrete contractors would go a long way to restoring balance to today’s market dynamics.
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