With key portable plant investments behind them, some producers are asking deeper questions to suppliers regarding their next big capital expenditure. Photo by Kevin Yanik
As 2019 nears its end, aggregate producers continue to operate in a relatively healthy environment despite several headwinds that surfaced during the year.
Weather, for example, was a significant detractor early in the year for producers in certain regions. The National Oceanic & Atmospheric Administration (NOAA) reported that precipitation from January to August was the wettest on record for the Lower 48, and NOAA classified five of the first six months of the year as wet.
The conditions impacted producers to varying degrees, but a glimpse at the latest production figures from the U.S. Geological Survey shows that production of crushed stone, sand and gravel continues on an upward path.
Highway funding activity
One producer concern heading into the new year is the state of federal infrastructure funding.
A number of producers entered 2019 expecting an infrastructure bill to be the one opportunity Republicans and Democrats could come together on. Instead, the opportunity collapsed shortly after President Trump, House Speaker Nancy Pelosi (D-California) and Senate Minority Leader Chuck Schumer (D-New York) agreed to pursue a deal totaling $2 trillion.
So much for that.
With the presidential election looming in 2020, it’s doubtful the president, Pelosi and Schumer will pick up on their infrastructure discussions in the new year. If anything, the indication is that Democrats will continue their pursuit of impeachment, and that pursuit will undoubtedly put off any major legislation passage – infrastructure or anything else, for that matter – until at least 2021.
Until then, some producers can at least fall back on boosted support from their state. In the absence of a major federal bill, more states are putting the onus on themselves to provide additional funds for critical infrastructure projects.
Producer moods
While producers remain generally optimistic about the year ahead, more are becoming somewhat cautious about 2020.
Producer investments in equipment and technology, which were up sizably in 2018, tapered off a bit in 2019. Producers are still interested in purchasing new wares, but they expect to experience returns on their investments more expeditiously.
As one equipment supplier describes, producers are now asking more outward-looking questions before taking the leap with a capital expenditure.
Questions such as:
“What’s the life cycle cost of this machine?” says Greg Helfrich, national operations manager at Elrus Aggregate Systems. “What’s my 10-year cost of ownership and not my cost of purchase? What’s the projected downtime of this machine? How much time am I going to spend fixing?
“In this age, 25 cents a ton really means something,” Helfrich adds. “Ten cents a ton or a penny a ton mean something as margins are tighter.”
Patrick Moyer, general manager of process systems at Weir Minerals, has identified changes in the market, as well.
“So far this year it’s been a very cautious market with people holding onto their capital,” Moyer says. “I think there’s a couple of reasons: there was a great deal of buying going on last year, and a greater investment in infrastructure was anticipated.”
Portable plants in aggregate applications
While stationary plants are still prevalent in crushed stone, sand and gravel operations, portable crushing, screening and washing plants continue to make headway within the aggregate industry.
The transition is happening in North America and also on a global scale.
“It’s been an existing trend for the last 20 years,” says Markku Simula, president of the aggregates equipment business area at Metso. “Mobile crushing has been taking over the stationary plants. The real reason is that it offers a lot more flexibility to the customer – especially if you are a contractor or if you have a quarry. Then as a contractor or even at a quarry you can create a little bit more flexibility with mobile crushing and mobile screening.”
