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Succeeding in Inflationary Times Practical Ideas for the Producer

Succeeding in Inflationary Times Practical Ideas for the Producer. Presented by Bill Ray of Precast Consulting . Succeeding in Inflationary Times Practical Ideas for the Producer. Agenda Precast Costs Precast markets Inflationary responses Cost Reduction That Works Cement

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Succeeding in Inflationary Times Practical Ideas for the Producer

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  1. Succeeding in Inflationary TimesPractical Ideas for the Producer Presented by Bill Ray of Precast Consulting

  2. Succeeding in Inflationary TimesPractical Ideas for the Producer • Agenda • Precast Costs • Precast markets • Inflationary responses • Cost Reduction That Works • Cement • Reinforcing steel • Fuel & transportation • Labor costs • Summary

  3. Who is Bill Ray Principal at Precast Consulting Background Business owner PCI certified producer General manager Sales exceeding $15 million Project manager Projects exceeding $ 10 million Chief fin. Officer Sales exceeding $150 million Education MBA University of Chicago BS Florida state Contact info: 770-979-3711. billray@precastconsulting.com Succeeding in Inflationary TimesPractical Ideas for the Producer

  4. Succeeding in Inflationary TimesPractical Ideas for the Producer Price History & Outlook • Cement • Short Supply – rationing • Regular increases every quarter 2004 • Price could exceed $100/ton this year • Steel • Price explosion early 2004 • Rebar over $0.40/lbs. Could go higher • Fuel • Sharp price rise starting 2002 • Fuel oil – Diesel exceeding $2.00/gal • Trucking costs up sharply • Uncertain outlook

  5. Succeeding in Inflationary TimesPractical Ideas for the Producer Responses that don’t work: • Do nothing – wait for prices to go down • Produce out of spec product – cut quality • Don’t raise your prices – concern about competition • Don’t know costs – uncertainty about impact on profits • Solve the problem with automation & capital spending • Don’t involve employees in the solution

  6. Succeeding in Inflationary TimesPractical Ideas for the Producer Proven methods that will offset higher costs: • Cement • Batch plant controls • Mix design • Improved management • Reinforcing Steel • Design review • Use of Synthetic fibers • New products • Fuel • Interruptible gas • Boiler efficiency • Delivery alternatives • Labor • Industrial engineering methods • Work group productivity

  7. Succeeding in Inflationary TimesPractical Ideas for the Producer Proven methods that will offset higher costs

  8. Succeeding in Inflationary TimesPractical Ideas for the Producer Cement Costs • Will cement reach $100/ton?

  9. Succeeding in Inflationary TimesPractical Ideas for the Producer Cement Costs • Batch Plant Controls • Aggregate Moisture Control • Pile rotation • Watering management • Bin moisture • Microwave moister meter • Chemical Control • Pre-approved “fixes” to batch problems • Mix design • 30% fly ash, slag = about $3/ yard • ½ bag cement due to better controls = $2/yd. • Most producers have $5/yard from improved control

  10. Succeeding in Inflationary TimesPractical Ideas for the Producer Cement Costs • Management • Place the batch plant under good management • Minimize organizational layers • Provide incentives for improvement milestones • Start a QC program if you don’t have one now • Begin a training program • Mix design for salaried supervision • QC methods for QC technician • Batch plant training for operators • Statistical Process Control • Standard deviation for breaks • Tools for tighter control

  11. Succeeding in Inflationary TimesPractical Ideas for the Producer Cement Costs – reduce mix $5/yd

  12. Succeeding in Inflationary TimesPractical Ideas for the Producer Reinforcing Steel • Will rebar double in price ? • Will the price pull-back actually happen?

  13. Succeeding in Inflationary TimesPractical Ideas for the Producer Reinforcing Steel • Design Review • “Feel good steel” • More bars, heavier bars than engineering requirements • Reductions of 5% are typical • Over-design product • Standard product exceeds stated engineering requirements • Submit a proprietary design • Bid an alternate to the standard design

  14. Succeeding in Inflationary TimesPractical Ideas for the Producer Reinforcing Steel • Synthetic Fibers replace steel mesh • Can be used in many underground applications • Widely accepted in septic tanks • Good application to vaults • Performance equivalence in manholes • Significant savings • Septic tanks 10-15% in production cost savings • Largest savings in labor • Increased plant productivity

  15. Succeeding in Inflationary TimesPractical Ideas for the Producer Synthetic Fibers replace steel mesh

  16. Succeeding in Inflationary TimesPractical Ideas for the Producer Reinforcing Steel • Higher steel price means new competitive standing • Short span bridges • Steel bridge beams are up sharply • Speed of erection favors precast • Shelters • Cost, availability of small buildings up sharply • Security, speed of erection favors precast. • Light poles • Sound barrier wall • Stay in place floor panel systems

  17. Succeeding in Inflationary TimesPractical Ideas for the Producer Fuel • Fuel costs affect curing heat • Fuel costs affect delivery cost

  18. Succeeding in Inflationary TimesPractical Ideas for the Producer Fuel • Most producers have large savings in curing • Interruptible gas • cost/therm is less • Dual fire boilers • Gas company will show you when to switch to oil • Boiler efficiency • Review curing curve, institute control • Inspection by boiler engineer • Insulate pipes, kiln • Improve R value of curing blankets

  19. Succeeding in Inflationary TimesPractical Ideas for the Producer Fuel • There are opportunities to save in delivery costs • Dispatch training, load consolidation • Route selection & load analysis • Many producers report 10% savings in vehicle costs • Charge for delivery distance • Most producers are delivering loads that loose money • Common Carrier Delivery • Under the crane delivery • Common carriers are more efficient • No back haul • 40% savings for qualifying loads

  20. Succeeding in Inflationary TimesPractical Ideas for the Producer Fuel - Training in routes & consolidation can save 10%

  21. Succeeding in Inflationary TimesPractical Ideas for the Producer Labor cost • Industrial engineering methods • Traditional IE job design analysis • New disciplines • Six-sigma • Lean Manufacturing • Cost savings 20% or more are typical • Work Group Productivity Improvement • Most valuable underutilized resource • Focus on developing skills, teamwork • Reduce turnover • Cost reductions of 10-20% are typical

  22. Succeeding in Inflationary TimesPractical Ideas for the Producer Labor cost – What’s Lean Manufacturing • IE discipline based on continuous improvement • Separate activities into value added and waste • Value added is any activity that transforms the product in a way that the customer will pay for it. • Waste is any activity that does not add value from the customer point of view.

  23. Succeeding in Inflationary TimesPractical Ideas for the Producer Lean Manufacturing – Steel shop example Typically over 90% of work is waste

  24. Succeeding in Inflationary TimesPractical Ideas for the Producer Labor cost – What’s Lean Manufacturing • Reduce waste through: • Standardized tasks • Workplace organization • Visual controls • Plant layout • Building quality in • Mistake proofing • Setup reduction • Focus on work team effectiveness

  25. Succeeding in Inflationary TimesPractical Ideas for the Producer Labor cost – What’s Lean Manufacturing • Lean is about making improvements in processes and teamwork, not by spending money on new equipment • Lean is not high tech – it is low tech • Lean is about great ideas that cost little or no money • Lean is about teamwork, working smarter • Lean is about making small continuous improvements

  26. Succeeding in Inflationary TimesPractical Ideas for the Producer Labor cost. Cost reductions of 10-20%/year are typical

  27. Succeeding in Inflationary TimesPractical Ideas for the Producer Proven methods that will offset higher costs • Cement • Batch plant controls • Mix design • Improved management • Reinforcing Steel • Design review • Use of Synthetic fibers • New products • Fuel • Interruptible gas • Boiler efficiency • Delivery alternatives • Labor • Industrial engineering methods • Work group productivity

  28. Succeeding in Inflationary TimesPractical Ideas for the Producer Proven methods that will offset higher costs

  29. Succeeding in Inflationary TimesPractical Ideas for the Producer

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