When Doug Groninger took over his father’s concrete business in 2004, he followed his father’s advice: Be diverse, make preemptive cuts in overhead if you have to and don’t be afraid to cut costs before it’s too late.
It’s a formula that has maintained Groninger Concrete and Landscape’s survival. Still one of the largest concrete companies in the Springs, Groninger is determined to stand the economic test of time.
Groninger credits the company’s strong relationships with general contractors — which have landed some big contracts with commercial companies and area military installations — for an increase in jobs this year.
In recent months, Groninger hired six people to bring the employee roster up to 40 — about 25 short of the company’s heyday in 2007 when it employed 65 and was pulling in $5 million in revenue. Still, it felt good to make some hires, Groninger said.
“When you are in a position to grow a little bit, you don’t have to worry about what is going to happen over the next two months,” he said. “It gives you an opportunity to look forward and spend more time on relationships instead of scrambling.”
Doug Groninger, the senior, and two partners started the concrete business in 1985. Construction wasn’t exactly booming then. But, the business survived, and then grew.
Nationally, concrete companies saw boom years from 2004 to 2008 when the industry reported annual double-digit increases. Groninger was part of that growth pattern. In 2007, new home construction represented about 40 percent of its total business.
But even concrete, the revolution of the Roman era, has taken a hit in this economic downturn. In 2008 and 2009, revenue at Groninger dropped 50 percent. Today, new home construction represents only about 10 percent of Groninger’s business.
Groninger had to follow the earlier advice from his father. He cut jobs at the company, in the field and in the office. Everyone took pay cuts, including himself.
“It gets sad over a few years to let people go,” Groninger said.
The company hunkered down for what might have been the worst of it.
Concrete companies that have diversified their offerings are making it through the recession, according to a recent survey of concrete company owners by Concrete Construction Magazine.
For the past 26 years, Groninger has maintained a diverse workload, from concrete flatwork, to foundations to decorative concrete and landscaping. And, the crew never turns down a job, even if it’s a small $500 sidewalk repair.
“We’ve really tried to stay diverse,” Groninger said. “If we were doing strictly residential new home construction; we would not have survived.”
Groninger got into decorative concrete back in 1995 and that part of the business will provide 300 jobs this year, about 10 percent of the company’s business.
Across the country, concrete companies said they expect a bump in business in 2011, according to Concrete Construction Magazine. They expect intense competition and super thin margins.
“What the last few years have really made us do is compete more on price then we had to in the past,” Groninger said. “We’ve always focused on quality and service; we’ve been forced to cut back and lower overhead, lower margins if not almost eliminate them just to get work.”
Groninger said he expects a rough couple of years ahead, especially if home building does not have a strong rebound.
But, concrete still is one of the most used man-made materials in the world. And, there is no substitute in development that might take its place as the elemental building block, Groninger said.
This year, Groninger expects to do about $2.5 million in revenue. He will stay focused on maintaining good relationships with general contractors and his 40 employees and he will continue to heed his father’s good advice.
“Every time the economy is bad, it comes back,” he said. “I know we are going to survive and we’ll be ready to take advantage when things come back.”