Turkish Ready-Mixed Concrete Association Releases "Ready-Mixed Concrete Industry Report"

Türkiye Hazır Beton Birliği (THBB) has released the "Ready-Mix Concrete Sector Report," which provides a scientific analysis of the ready-mix concrete sector. Prepared in light of data from the Turkish Ministry of Science, Industry and Technology Entrepreneurship Information System, Turkish Statistical Institute (TÜİK) and Turkish Central Bank, the Report contains analyses of the sector's expected development, growth performance, price trends, competitiveness and impact assessments. The Report demonstrates for the first time the economic importance of a "ready-mix concrete sector quality control system" for Turkey, which lies in an earthquake zone. The Report notes that the ready-mix concrete sector overcame the effects of the 2009 financial crisis in terms of production volume by 2014, yet states that when evaluated on a per-enterprise basis, it is impossible to speak of balanced growth in the sector. The sector has been unable to sustain its upward trend for longer than two years, which represents a significant problem for producers. The Report shows that negative developments in the construction sector have had a deeper impact on the ready-mix concrete sector, with fluctuations in ready-mix concrete being more severe than in construction. The Report also demonstrates that high volatility in the sector has prevented producer companies from making accurate projections. The Report determined that while production volume showed significant increases in the post-2010 period, price levels showed only limited growth. The increase in the number of enterprises operating in the market has led to increased competition in the sector, cited as one of the reasons for this limited price increase. Analysis in the Report showed that by 2018, the ready-mix concrete sector needs to achieve approximately 10% annual growth and exceed a turnover figure of TRY 20 billion.

The Report examining sector profitability showed that throughout 2006-2014, profitability in the ready-mix concrete sector was significantly below the average for the manufacturing industry.

Although the Report notes that profitability in the ready-mix concrete sector increased in the post-2010 period, this increase is considered insufficient. During 2006-2014, the profitability of the ready-mix concrete sector averaged 41% below that of the manufacturing industry. Yavuz Işık, Board Chairman of the European Ready-Mix Concrete Organization (ERMCO) and THBB, commenting on the Ready-Mix Concrete Sector Report, stated that the ready-mix concrete sector is the most important component of the construction sector with production of 109 million cubic meters and revenue exceeding TRY 16 billion. Noting that Turkey has been Europe's leader in concrete production since 2009 and is the world's third-largest ready-mix concrete producer after China and the United States, Yavuz Işık said that the sector's performance and employment of over 38,000 make a significant contribution to the country's economy. Stating that the Report conducted a comparative analysis of the degree of competition in the sector, Yavuz Işık said that competition levels were compared among the ready-mix concrete, construction, manufacturing and cement sectors, and noted that among these four sectors, the ready-mix concrete sector has the highest degree of competitiveness. Yavuz Işık continued his assessment of the Report as follows: "In the ready-mix concrete sector where there is price-sensitive demand and simultaneously high relative competition levels, producers competing by reducing prices will lead to quality compromises in a sector where product differentiation is quite limited.

A level of competition above construction and manufacturing averages will have negative consequences for a critical product such as ready-mix concrete in terms of building safety. In a country like Turkey located in an earthquake zone, competition in the ready-mix concrete sector needs to be quality-focused as much as price-focused.

Price competition in the sector must not operate against companies that do not compromise on quality, which requires that quality control be applied across all ready-mix concrete producers. Otherwise, intense price competition in the price-sensitive ready-mix concrete sector will harm not only the sector but also the housing sector and consequently all consumers. To prevent this market failure and establish a healthy competitive environment in the market, the quality control system needs to be expanded to cover all ready-mix concrete producers." The Ready-Mix Concrete Sector Report can be accessed on the Türkiye Hazır Beton Birliği website.