The Inspector Clouseau ________________________________________ The Concrete Pumping Industry has gone through the largest and longest building boom we have seen in our lifetime. I am going to say that 99% of the people in the industry made no money. This is due to the greed of pumping “Companies Too Big To Fail” in most markets in America. They forced the pricing down in order to try to achieve 130% equipment utilization by reducing hourly and yardage prices down to levels consistent with 1970’s pricing by quoting jobs at flat rates, yardage rates, etc. when they had no control of the job site, crews, schedules, etc. Some companies thought they were making money by being able to make their pump payment, and with that, they thought they were building equity in their equipment. Later they learn there is no equity due to how fast concrete pumps have depreciated to the point that there was very little remaining value in the machine. The other 50% of the industry went broke through years of operating by the seat of their pants in order to try to obtain business at a ridiculous pricing level. “Companies Too Big To Fail” basically, worked on a Ponzi scheme, and kept inflating the price of their equipment with lenders that accepted inflated appraisals of the equipment they were running; and finally that scheme ran out when they were unable to cash flow due to the downturn of the economy and their pricing of services. What caused this problem was the basic greed of pumpers and two major pump manufacturers that provided special discount pricing on the machines pumpers were purchasing and running, which included no payments terms of up to a year or more, including parts, service, and etc. at these same ridiculous terms. Those same manufacturing companies, especially one of them, went into different markets of the United States and provided pumps valued at up to millions of dollars to pumpers with nothing down, a year to pay, etc, in order to get market share. This unsustainable policy contributed to the downturn of the industry even though the majority of those companies that were given the equipment failed in the first or second year, then, the equipment moved on to another user with the same scenario starting all over again. The manufacturers created unfair competition with their customer base due to this practice. Now the local pumping companies are competing with the manufactures in their own market. Now we have to address “The Companies Too Big to Fail” Bankruptcies: What is the reality of all this? The secured creditors have two choices in bankruptcy: 1. A Major Secured Creditor who has the majority of the debt may elect to keep that company alive by providing additional interim capital based on cash flow statements filed by the DIP. (Debtor in Possession). With this, the Creditor secures the DIP’s accounts receivables going forward with this risk in the hope the market will change, and this company cash flows in order to continue in business so that at a date in the future, usually within a year, they can restructure the loan or sell the equipment at a higher price than in today’s market. MAJOR PROBLEM: By the time the lender is ready to pull the plug on the D.I.P. and retrieve this equipment, it’s too late. It has been run into the ground with engines, transmissions hydraulic pumps, tires etc either worn out, moved, or used as parts on another machine in order to keep it running. Our prior experiences with this was by the time a lender was ready to pick up their equipment that 80% of that equipment was inoperable or needed to get extensive repairs of up to $100,000.00 dollars yet that machine would not even sell for $115,000.00. The bank gambled on this and lost a large amount of money on the gamble. 2. The other alternative for the lenders would be to obtain the equipment and sell it at today’s value, or store it and hope in a year or so the market will go up and they can obtain a higher price for their equipment. My many years of experience in the industry have shown that in today’s downturn in the construction business, plus pricing at levels of the 1970’s, it would be impossible for a company to survive with most restructure plans in the market today due to the lack of business and low price level. The DIP must now go out into the market and take the majority of work at whatever the price in an attempt to make their cash flow so that the Banks continue their support. I have seen this fail on numerous occasions in Colorado and other parts of the country with other pump companies. It all boils down to survival. We must not allow “Companies Too Big To Fail” go out and steal jobs from solid companies by utilizing low ball pricing in order to hit their budgets. In addition to all of the above, companies usually cherry-pick their fleet and send back to the creditors the undesirable units and pumps that are no longer operational in order to get rid of that cost, plus maintenance. They then cherry-pick the branches that have the best chance to survive and close the others. After this fiasco and the downturn of our industry, each and every concrete pumping company must realize that they can no longer achieve the high level of utilization of a concrete pump. You must adjust the size of your fleet down based on a reduced market and use more realistic utilization numbers for your fleet. I believe in today’s market if you reduce your fleet down, your maximum use would be 28, 32, 36, 39-meter pumps: Max 60 to 100 hours per month. Larger pumps would be 40 to 60 hours per month, unless you have a large pump project that requires large booms daily. In addition, you must start charging an adequate yardage rate to cover the costs of repair of the machine, fuel and set aside cost for future repairs, motors, etc. in order to cover the cost of future repairs. I truly believe in a non-union average market. You cannot make money unless you charge pricing similar to the attached schedule for pricing pumping concrete. Size of Pump: Colorado BOOM SIZE METRO AREA MODEL SIZE PUMP PER HOUR PER YARD GROUT PUMP ----- 1 $97.00 $2.40 TRAILER ----- 1A $106.00 $2.40 PUTZ 28 92' 4 $117.00 $2.75 PUTZ 32 104' 5 $132.00 $2.75 PUTZ 36 117' 6 $147.00 $2.90 PUTZ 38 124' 6.5 $162.00 $2.90 PUTZ 42 137' 7.2 $177.00 $3.00 PUTZ 44 144' 7.7 $187.00 $3.00 PUTZ 47 155' 7.8 $199.00 $3.00 PUTZ 52 170' 8 $245.00 $3.25 PUTZ 58 189 9 $300.00 $3.50 PUTZ 61 198 10 $350.00 $4.00 SYSTEM ABOVE 50' Thank you. A Concerned Pumper! Richard O’Brien

That old saying is ringing in my ears "the bigger they are the harder they fall" it was never more true than it is today.

Richard, With all due respect, I believe that in order to realize a true and fair return on investment and be able to retire and replace our used equipment, I believe that the rates above are still 10-15% low. Although you did not include it above, I believe you agree, that these rates should also include time on job plus one hour at the pump rate for travel.

Thank you very nicely put into professional words of wisdom this would be very nice if we all could just work together to get are industry back on track work together and unfortunatley more pump companies are going to fall and drag the prices down with them we cant price fix but we could work together a little better

Should be all pumping companies path to moral profits.I agree %100,and just hope the unmoral companies would want the same as well. The holes that are dug need to be filled in,before everyone is pitching quarters for a spam sandwich...

  I couldn't help laughing when I read Mr. o'briens post.  Your pricing is almost identical to the pricing I have told our owner to aspire to if they want to make any semblance of money.  That being said here's a thought and please tell me if I'm wrong, its winter time and I have to much time to think.  Most generals/developers when they have a project sub contract out electrical, mechanical, redi-mix etc.  These people have a contract signed for that project which includes job performance clauses etc.  If as an industry we started getting contracts signed for projects would it help  eliminate the boom chaser salesmen.  It would put the onus back on the developer/contractor to start calling for quotes and actually committing to that one pump contractor for the duration of that particular project.  No more "this guy is cheaper" crap that spews out of their mouths.   If we used the acpa to come up with a standard contract, that included boom inspections, truck safeties and operator training policies also safety records and policies that a developer can request would this not help standardize our industry union or non-union and force us all to maintain a professional fleet of equipment and operators.  I can hear the gasps of horror right now. "Ican't beleive he used the hard C word "  As I said at the start if any of my thoughts are incorrect please tell me.  I am just as concerned for this industry as anyone else out there and trying to have some positive ideas instead of whining about it.

That could just makes things more complicated than they already are... I think their has been plenty of valuable opinions on this site that could compliment positive energy toward this so very important industry. Good buisiness has been a chief of topics for quite some time here. The top notch companies did'nt earn their reputation from prices,it was earned from the energy portrayed through the network circling of quality insurance that based a customers loyalty. A company that tries to make their phone ring due to prices will have plenty of struggle. In the construction industry, I have never witnessed a price war lead to excellence.

Snoball you are 100% rite!

Richard,

I want to thank you for telling the truth. I know how Dale Bone SR. took your men with no notice and started Bondage-Bone that is correct bondage. They took the indusry to new levels (lower than dirt) they took out good family buisness and did not care. Look what they did to Merli and his family they owned part of Bondage-Bone. When Steve Merli Sr. was part of the company he made them hold quality stantards. When they bought him out you see what went to good buisness! Remeber the bank that is helping them borrowed money from you and I. Are you not glad you are helping this endever.

 I am now making a living in another industry that has money and standards. do you belive the  pumping industry is running like the President we have in Office. Do you think Obama learned from Jack and Dale SR.

I love this industry and it is like our Country we need to get Beside our bed and pray that God will help us. That is correct you are hearing from a man that most to know as a wild man.