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Production of ready mixed concrete

Introduction 4.1. During the course of the inquiry, visits were made to a number of ready mixed concrete depots in five areas of the country. The areas, Devon and Cornwall, West Glamorgan, Lothian, Greater Manchester and Greater London, were selected as representative regions offering contrasts in their levels of urbanisation and industrialisation and, so far as could readily be judged, the pattern of competition. The purpose of the visits was first to learn the way in which the industry operates both at national and local market levels, and secondly, to seek to assess the efficiency of the industry as a whole and the vigour with which it pursues cost reductions. 4.2. The companies visited in each area were as follows: RMC Ltd Devon and Cornwall ARC Ltd RMC Ltd West Glamorgan British Dredging Aggregates Ltd Hobbs Quarries Ltd Tarmac Roadstone Holdings Ltd Lothian Tilcon Ltd Greater Manchester RMC Ltd Steetley Construction Materials Ltd Pioneer Concrete Ltd Greater London Willment Ready Mix Concrete Ltd A typical ready mixed concrete depot 4.3. There are a variety of depots for producing ready mixed concrete, but a typical structure includes hoppers for storing the coarse aggregates and sand together with separate silos for cement. There are basically two types of plant; one is a central mixing plant, which provides a full wet mix, and the other is a dry-batch plant which delivers the dry concrete materials into the truck mixer vehicle and injects the necessary volume of water at the same time. The product of both types of plant is then held in the drum of the vehicle which revolves and agitates the wet mix whilst delivering it to its destination. The type of plant operated by the producer will be determined largely by the location of the site and the output of ready mixed concrete required. 4.4. A depot usually has stocks of two sizes of coarse aggregate, ie stone or crushed rock, depending on local availability, and also of one or two types of sand. Some depots are located close to, or at, the quarries from which their aggregates are extracted. Two types of cement are normally stocked; the type most commonly used is Ordinary Portland Cement. Sulphate Resisting Portland Cement may be required where local environmental conditions 20

make Ordinary Portland Cement unsuitable. Depending upon its volume of work, a depot may keep between 1 and 3 days supply of materials in stock.

4.5. A typical depot is likely to be operated by two men, of whom one is a batcher who controls the mixing process and is responsible for the general maintenance of the depot, and the other a general hand responsible for keeping the aggregate hoppers supplied while the plant is working. The general hand may also undertake duties as a relief driver. The depot manager will be principally concerned in general administration and seeking business: he will often be responsible for two or three neighbouring depots.
Transport and distribution

4.6. Although on occasions customers may use their own vehicles to collect concrete from depots, most is delivered in trucks operated under the control of the ready mixed concrete producers. The truck mixer which is used for this purpose is a vehicle chassis on which is mounted a concrete mixing unit designed to mix concrete materials and to agitate mixed concrete in transit from the batching plant. The capacity of these vehicles varies, but current types are generally capable of carrying six cubic metres of concrete. 4.7. Within the industry there are two basic methods of organising delivery of concrete, either centrally by means of a central shipping office (CSO), or locally from the production depot. A CSO is responsible for organising the trucks operating from a number of depots and its main purpose is to use the available trucks to best effect by switching them between depots as demand requires. 4.8. In localised depot control any excess demand has to be balanced by calling in a truck from another depot or trying to get the buyer to accept delivery at a different time. Because local control does not allow the same flexibility in the use of trucks, utilisation cannot be expected to be as high as when under control by a CSO; however, many customers, particularly in rural areas, seem to prefer to deal directly with a local supplier.
Supervision of depots by BRMCA

4.9. All the depots visited were members of the BRMCA. As explained earlier in Chapter 2 the BRMCA has drawn up a Code which contains an Authorization Scheme for the production of ready mixed concrete in its members' depots; the scheme provides for the initial approval of depots and thereafter for periodic inspections to ensure that standards are maintained. The Authorization Scheme is controlled by the Director General of the Association with the day-to-day work being undertaken by eight regional engineers, two assistants and administrative support staff. When a depot has been approved as meeting the requirements of the Authorization Scheme it is given a certificate; it is then subject to inspection under the control of the regional engineer. He is entitled to enter a depot for this purpose at any reasonable time and carries out an inspection without warning at least once a year. If a deficiency is found in a depot its certificate is not reaffirmed until the matter 21

has been put right and a further inspection carried out. The Association has told us that about 10 per cent of depots are required to remedy deficiencies before their certificates are reaffirmed each year. 4.10. Where an inspection discloses a more serious deficiency (ie one which is likely to affect the quality or quantity of concrete produced by the depot) the member company is informed that the depot's certificate is suspended and will be withdrawn unless the deficiency is rectified within a specified period (not exceeding one month); failure to comply results in the removal of the depot from the Association's approved list. Publicity is given to such actions. Suspensions of certificates are notified within the Association to all members; notices of their withdrawal are published outside the Association in four trade journals where possible. The competitive position of a depot subject to either of these penalties is likely to be much impaired. 4.11. The Association also has a system for investigating complaints made against any of its members. When conducting their inquiries the regional staff have access to member companies' records. If the Director General finds that the complaint is justified he is empowered to suspend or withdraw the depot's certificate. A summary of BRMCA certificates suspended or withdrawn for any reason over the years 1975-80 is set out in the following table.
TABLE 4.1 British Ready Mixed Concrete Association. Summary of BRMCA certificates suspended or withdrawn Numbers of certificates Suspended Withdrawn

1975 1976 1977 1978 1979 1980

10 6 2 2 7

2 1 2 1 5 28

Status of depots 4.12. Under the provisions of the Authorization Scheme members' depots have the status of either (a) a BRMCA Approved Depot, or (b) a BRMCA Approved Depot with Quality Control Procedures. The requirements for each category are as follows: (a) A ready mixed concrete depot which conforms to the minimum standards for personnel, materials, plant and equipment, and operating procedures is designated as a 'BRMCA Approved Depot'. This signifies that the depot meets these minimum standards, is capable of producing concrete of consistent quality and is approved for the supply of prescribed mixes. A prescribed mix is a mix in which the purchaser defines the cement content per cubic metre and/or the other essential ingredients to produce the concrete he requires; and the supplier provides a properly mixed concrete in compliance with these requirements. (b) A depot which conforms to all minimum standards including quality control procedures for designed mixes is designated as a 'BRMCA Approved Depot with Quality Control Procedures'. This signifies that the personnel, plant and equipment, materials, operating methods, and mix design procedures are subject to continuous control and that the 22

depot is approved for the supply of prescribed mixes and designed mixes. A designed mix is a mix in which the purchaser defines the level of strength and/or other qualities required in the end product leaving the producer to select the mix proportions and produce a properly mixed concrete in compliance with the customer's requirements. Hence in a designed mix the cement content is normally not specified but left to the supplier's technical judgment. There is a recent tendency to specify a minimum content even in a 'designed' mix (see paragraph 4.22). Quality tests 4.13. As part of the BRMCA scheme members are required regularly to ensure that the materials which they use in the production of concrete (ie cement, aggregates and admixtures) comply with the appropriate British Standards. Measurement of the moisture content of aggregates, especially sand, is also undertaken by the ready mixed concrete companies at varying intervals to ensure that this is within specified tolerances. 4.14. When the ready mixed concrete has been produced it may also be subject to two control tests: (a) The slump test It is normal when specifying ready mixed concrete to request the supplier to provide concrete having certain properties as to workability (ie ranging from very wet to a dry mix). The slump test entails taking scoops from a ready mixed load as it is being poured at the site, and placing the scoops into a metal truncated cone of prescribed dimensions. The cone is filled and tamped and is then carefully removed. The distance that the concrete 'slumps' from its initial position in the standard cone is taken as a measure of workability. (b) Compressive strength test Random samples of the concrete are taken at the time of pouring and made into cubes in accordance with British Standard specification which are cured under controlled conditions. The cubes are subsequently tested for strength in a laboratory, usually after 7 and 28 days. The laboratories used by BRMCA member producers operating quality control procedures for designed mixes must be approved by the Association. Tests may also be carried out independently by or under the supervision of the contractor's and/or the consultant's site engineer. Efficiency 4.15. The investigations at depot level strongly indicated that certain sectors of the business operation are critical to success. A typical breakdown of cost levels, expressed in percentage terms, within the overall selling price would be as follows: %
Aggregates Cement Haulage Prime gross margin Selling price
Source: MMC study

31 35 14 20 = 100


Within the selling price the cost of cement is fixed under arrangements operated by the members of the Cement Makers' Federation which have been cleared by the Restrictive Practices Court. The effect of this agreement is that throughout England and Wales a standard delivered price is charged based on the distance between the nearest cement works and the point of delivery. The cost of aggregates in a locality is likely to be broadly similar for all producers. The fixed costs of the depots and those of the site operatives also do not vary markedly. The life of the plant is usually a minimum of 15 years and many producers are using plant for which the original capital cost has been written off. Consequently the costs upon which the companies can exercise greatest control are haulage and the overheads contained in the prime gross margin.
Operation of transport fleets

4.16. As indicated above, haulage accounts for 14 per cent of the characteristic selling price for concrete. A feature of the industry is that most of the major company fleets are operated by a mixture of both company employed drivers and self-employed drivers (generally known within the industry as owner-drivers). The latter enter into contracts to haul concrete exclusively for a particular ready mixed concrete company. The proportion of drivers in each group varies among the companies depending upon company policy. 4.17. Many companies see the use of owner-drivers as having financial advantages because it enables the financing of transport to be undertaken with less capital expenditure. Finance for vehicles is arranged by the companies through hire purchase or leasing agreements which characteristically lead to the chassis only belonging to the driver whilst the mixing unit remains company property. Under some leasing arrangements drivers do not become owners of their vehicles but are nevertheless treated as owner-drivers. Under the terms of the contracts, drivers' earnings are usually broadly related to the number of loads carried. The drivers are responsible for the maintenance and general running costs of their vehicles. To varying degrees companies provide owner-drivers with maintenance facilities for vehicles, group buying facilities for spares, accountancy advice and the benefits of group insurance premiums. 4.18. The companies favouring the high use of owner-drivers told us that, because of their financial commitments, owner-drivers have an incentive to seek additional loads in order to increase earnings and are therefore usually more productive than company drivers. We were told that they tend to look after their trucks better, to undertake maintenance in their own time and are generally less likely to be absent from work. 4.19. In the case of mixed owner-driver/company driver fleets there is generally no preference given to owner-drivers in the planning of work. However, some companies tend to employ company drivers on those jobs where longer on-site waiting is required for movement of concrete in barrows or awkward placing of concrete. We were told that company drivers are more flexible in times of reduced volume or labour shortage; the majority of companies will expect a company driver to take alternative duties (eg batching) in a labour shortage. 24

The quality of cement and its effect upon efficient production of concrete for designed mixes

4.20. The quality of cement used in ready mixed concrete operations affects the amount needed to achieve the strength required in a designed mix. The base level of cement quality is specified by BS 12, but most cement works produce cement of a quality in excess of the minimum. Although some progress toward standardisation has been made by the cement manufacturers, the quality of cement (ie the quantity required to produce a mix of given strength) varies between different cement plants. 4.21. The efficient supplier of ready mixed concrete can, if he has access to the available knowledge and technology, provide a design of ready mixed concrete to specified strengths which will offer cost savings by reducing the quantity of cement needed. The sophistication of the technology available in-house varies between the ready mixed concrete companies. The resources necessary to achieve successful balances between cement quality and quantity, plant production variability and aggregate quality demand systems of control that only the larger companies are likely to be able to achieve. These companies have computer programmes to which the latest test results of cement, aggregate and quality control data are input on a regular basis. Outputs are then obtained on the optimised mix configurations to achieve specified strength mixes. If these outputs vary outside prescribed limits, then depots are issued with a new printout of mix specifications for each depot (ie each depot will have its own mix formulae due to local or depot variations in cement quality, aggregate quality or source and plant efficiency). 4.22. We have been informed that between 70p and 1 per cubic metre can be saved on the material cost for some designed strength mixes compared to the nominal amounts of cement usually specified for concrete strengths to BS 1926. We understand, however, that in recent years there has been a tendency for architects and specifying authorities to specify a minimum cement content, even in designed mixes. It is possible that a widespread insistence on a minimum cement content in designed mix specifications could have an adverse effect on the competitiveness of the larger ready mixed concrete companies.
The use of cement substitutes (including Pulverised Fuel Ash)

4.23. On the whole there seems to be a reluctance on the part of architects and engineers preparing concrete specifications to recommend the use of partial cement substitutes including Pulverised Fuel Ash (PFA) despite the fact that these are cheaper than Portland cement. They tend to the view that formal technical approval of cement substitutes through a BSI standard (which we understand is in course of preparation) and a code of practice covering their use is required before there can be wider acceptance. However, where the specification allows it, some of the larger ready mixed concrete producers will use partial cement substitutes in consultation with the customer, but we have been told that the additional inventory cost and associated capital investment costs (for example, extra storage facilities), together with increased costs for quality control and transport, could offset any savings resulting from the use of reduced amounts of cement. 25


4.24. In some circumstances chemicals (known as admixtures) are added to concrete during the mixing process in order to achieve particular results. Their principal effects are either to retard or accelerate the hardening process of concrete, or to increase its workability without increasing the water/cement ratio. We understand that in certain countries, particularly the United States of America, Australia and Japan, admixtures are far more widely used than in the United Kingdom because the building practice in these countries is to pour a more fluid mix of concrete. Geographical and climatic factors also affect practice in different parts of the world. 4.25. In theory there would appear to be cost advantages for United Kingdom producers in operating fewer depots and using retarders to enable concrete to be carried over longer distances. However, we have been told that the high cost of transport limits the economic delivery distance to little more than ten miles, at which point it is probably cheaper to consider constructing another depot. Furthermore, it seems to be the view in the industry that admixtures should be used only when there are valid technical reasons for so doing.
Market intelligence

4.26. The scope and scale of the marketing activities varied markedly between the companies visited. All regularly examine local planning applications and other sources of information about impending building works. Company representatives then follow up the larger projects with a view to submitting a quotation for the supply of ready mixed concrete. The less sophisticated smaller companies do not analyse the market further. 4.27. The larger companies conduct surveys of the market to varying degrees. Some ready mixed concrete companies allocate management time to a detailed analysis of the scale of business competitors are achieving in an area; this may involve observing the output of a competitor's depot and following trucks to their destinations over a number of days. RMC, for example, has a highly sophisticated market intelligence system. All factors of the market are analysed with computer assistance, ranging from its estimate of competitors' current output through to detailed analysis of all tenders won and lost as well as the trends in the market for individual types of construction work.
Other production of ready mixed concrete

4.28. In addition to the ready mixed concrete depots discussed in this chapter, there are also a few small suppliers who produce and deliver ready mixed concrete in self-loading truck mixers, normally of 2 to 3 cubic metres capacity. In the light of our enquiries we estimate that at present probably less than 100 trucks of this type are in use and that only a proportion of these are being used for the commercial production of ready mixed concrete. The scale of this production within the scope of the reference is very limited and we have therefore disregarded it.