Turkish Ready Mixed Concrete Association (THBB) announced the “Report on Ready Mixed Concrete Sector” analyzing ready mixed concrete sector in a scientific way. Prepared based on the data from Republic of Turkey Ministry of Science, Industry and Technology (TÜİK) Entrepreneur Information System, Turkish Statistical Institute (TurkStat) and the Central Bank of the Republic of Turkey, the Report contains the expected development of the sector, its growth performances, price, competitiveness and impact analysis. The Report introduces the importance of “the quality control system regarding ready mixed concrete sector” financially for the first time to Turkey located on a seismic belt.
Stating that the ready mixed concrete sector managed to get over in 2014 the impacts of the financial crisis of 2009 on the basis of amount of production, the Report drew attention to the fact that it is not possible to mention a balanced growth in the sector when the amount of production per enterprise is taken into consideration, that the sector cannot keep up its increase trend more than two years and this situation causes an important problem for the producers.
Revealing that the problems occurring in construction sector affected the ready mixed concrete sector more deeply and that the fluctuations in the ready mixed concrete sector were deeper compared to the construction sector, the Report also indicated that the fact that the high volatility in the sector hindered the producing companies from performing projection.
It specified that while the amount of production showed a serious rise after 2010, the price level demonstrated a quite limited increase. The rise of the competition in the sector as a result of the increase in the number of the enterprises running business in the market was shown as one of the causes of this limited increase.
Analysis made in the report indicated that the ready mixed concrete sector needs to exceed a turnover of 20 billion TL by 2018 following an annual growth by 10%.
Reviewing the profitability of the sector, the report showed that the profitability of the ready mixed concrete sector during the entire period of 2006-2014 was quite lower than the average of manufacturing industry. The report noted that although an increase in the sector’s profitability was witnessed after 2010, it did not seem sufficient and the profitability of the ready mixed concrete sector between 2006-2014 remained under the manufacturing industry’s average by 41%.
Passing remarks on the Ready Mixed Sector Report, the European Ready Mixed Concrete Organization (ERMCO) and Yavuz Işık, Chairman of Board of Directors of THBB, said that the ready mixed concrete sector with its producing capacity of 109 million m3 and an income volume of over 16 billion TL are the most important part of the construction sector. Pointing out that Turkey has been the leader of concrete production in Europe since 2009 and it is the third biggest ready mixed concrete producer following China and the US, Yavuz Işık stated this performance of the sector as well as the employment volume exceeding 38 thousand made a great contribution to the country’s economy.
Yavuz remarked that the Report made a comparative analysis of the magnitude of the existing competition in the sector and pointed out that the competition levels of the ready mixed concrete, construction manufacturing and cement sectors were compared and the ready mixed sector had the highest level of competition out of these 4 sectors.
“In the ready mixed concrete sector where a priceresponsive demand as well as a high level of relative competition is seen, the fact that the producers compete each other for the purpose of decreasing price is likely to lead them to compromise on quality in such a sector where production differentiation is quite limited.” said Yavuz Işık continuing passing opinions on the Report. “A competition level higher than the average of the construction and manufacturing sector is likely to bring about negative effects regarding ready mixed concrete, a critical product in terms of building safety. The competition in the ready mixed concrete sector needs to focus on quality as much as it does on price in such a country as Turkey which is located on a seismic belt. In order to prevent the price competition from working to the disadvantage of the companies that do not compromise on quality, the quality control must involve all ready mixed concrete producers. Otherwise, the fierce price competition in the price-responsive ready mixed concrete sector will cause harm not only to the sector but also to the residential sector, hence all consumers. The quality control system must extend to all ready mixed concrete producers in order to prevent market failure in question and establish a reliable competition environment in the market at the same time.
