April 1, 2008
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by Tina Grady Barbaccia, Senior Editor
APAC’s Arkhola Division Drives Home Hope
Discussions at APAC’s Fort Smith, Ark.-based Arkhola division concerning ideas for a community service project led to the concept of advertising on the site’s ready-mixed drums to promote awareness for local non-profit organizations. Soon after, the “Arkhola Supplies Hope” campaign was launched.
To date, there are three trucks in service for this campaign with several more to come this year, says Park Estes, vice president of sales for Arkhola Sand & Gravel.
The division covered three of its concrete trucks with advertisements for the Susan G. Komen Foundation, the Morgan Nick Foundation, and the Ft. Smith Boys and Girls Club. Although advertising on ready-mixed drums is not a new idea, it has not been done without any cost to non-profit groups in this region, according to Oldcastle Materials. APAC is part of Oldcastle Materials.
The No. 1 priority of this campaign is to raise public awareness and funds for these organizations with traveling billboards, Estes says. However, as a secondary benefit to Arkhola, a positive image for the construction industry is being projected, he says.
“We have had calls to our office and employees stopped on the street being thanked for what we are doing with this campaign,” Estes says. “This — and the feedback from our customers — has given all the employees of Arkhola another reason to be proud to be a part of the Arkhola team. Any of us could find ourselves in need of the services of the organizations, and it’s our hope that the ‘Arkhola Supplies Hope’ campaign will help sustain them and their noble causes to meet the needs of all.”
Vulcan Expects Home Construction Decline, Rising Sales for Infrastructure
Vulcan said it expects the broad use of aggregates in construction and the multiyear nature of highway and infrastructure projects to help offset continued weakness in residential construction and softening in certain categories of private non-residential construction, Vulcan CEO Don James said in the company’s 2007 full-year operating report it publicly released on Feb. 13.
“Leading indicators such as contract awards for highways and non-residential construction in Vulcan-served markets continue to grow and lead other U.S. markets,” James said. “Some of this increased spending is being offset by higher costs for construction inputs including steel and energy-related costs such as liquid asphalt and diesel fuel.”
The sharp downturn in residential construction activity was only partially offset by increased levels of highway construction and non-residential construction, James said. “The pricing environment for aggregates remained favorable during 2007,” he pointed out. “The average selling price for aggregates increased 13 percent in 2007 despite a 9-percent decline in aggregates shipments.”
Study: Quarry Particle Emissions Do Not Pose Health Risks
A new study on the potential impact of crystalline silica associated with Granite Construction’s Rainbow, Calif.-based Liberty Quarry has determined that silica dust at the project site will not negatively impact the health of surrounding residents.
The study modeled the likely ambient levels of crystalline silica resulting from the activities of Liberty Quarry in comparison with actual measurements taken from nearby aggregate material facilities in California and found that in all cases, the levels remained well below strict state standards.
“The state of California has introduced a Reference Exposure Level (REL) for ambient exposure to silica that incorporates significant safety margins for known and suspected health effects,” said Patrick Hessel, Ph.D., who conducted the study with Epilung Consulting, Inc., according to a press release from Granite Construction. “The levels of dust projected to arise from the proposed quarry are significantly below this very low reference level.”
The study also notes that silica dust is a very common and naturally occurring mineral. Several other sources in the area, such as the Interstate 15 Freeway and residential developments, would produce more silica dust than the quarry.
To ensure the health and safety of area residents, Liberty Quarry has several mitigation measures in place to limit the amount of emissions that could be released into the atmosphere by the proposed project. These measures include a requirement that there be no visible dust within 100 feet of any equipment or beyond the property boundary line and several other measures specifically intended to reduce dust emissions such as enclosing equipment and conveyor belts.
“Ensuring the health and safety of our neighbors will always be a priority for Granite Construction,” said Gary Johnson, Granite Construction’s aggregate resource development manager, in the press release.
Illinois Coalition Launches Federal Outreach Program
The Transportation for Illinois Coalition (TFIC) is launching a new federal outreach program to refocus its efforts toward key staff and lawmakers both from and outside of Illinois that influence transportation issues.
In the past, TFIC has organized trips to Washington, D.C., to meet with the Illinois Congressional delegation to discuss transportation issues and receive information about the transportation activities at the Capitol. These D.C. trips will still take place, but the federal program will provide additional focus, says John Henriksen, executive director of the Illinois Association of Aggregate Producers (IAAP) and a member of TFIC’s coalition, in a written statement.
“To maximize our impact with the Illinois delegation, we are forming Congressional District Transportation Teams who will not only build on our past efforts but will, we believe, become even more effective by meeting with members of Congress from Illinois right in their home districts,” Henriksen notes in a written statement. “By using local and familiar constituents, we believe that our outreach to each member of the Illinois delegation will be better than ever, more responsive, and more informative for all concerned.”
The teams will be composed of representatives from labor, business, local political leaders, and other TFIC member organizations. Each Congressional District Transportation Team will be lead and supported by a volunteer district coordinator. Some of the activities the Congressional District Transportation Teams may choose to undertake are the following:
Meeting with a Congress member in their district;
Writing letters when needed and getting local letter writing efforts started when necessary;
Participating in town hall meetings both as people who ask questions and as authorities that the member can “invite” to answer transportation questions of constituents who come;
Inviting the member to tour sites of transportation-related businesses, workplaces, construction sites, etc.; and
As individuals further develop rapport with their own members of Congress, these relationships will present opportunities to attend political fundraisers.
Linatex Implements Merger Plan With Durex
Since acquiring Durex Products Inc. in October 2007, Linatex Corp. of America has been implementing a merger plan to ensure customers and employees experience minimal disruption. Both companies are continuing operations as normal while sales and operations merge.
“There is no rush to force the two companies together without proper, robust planning,” says Greg Caddle, president of Linatex Corp. of America, in a written statement. “We’ve seen too many organizations try to do this in the past with disastrous results. We really want to embrace the best of both companies and to ensure that our customer experience remains a priority.”
Caddle says one of Linatex’s major goals in 2008 is to focus on improving customer delivery. “Durex Products Inc. has adopted modern methodologies combined with a strong customer focus to continuously improve delivery performance,” he says in the statement. “This is something we want to preserve, strengthen, and adopt throughout our combined organizations.”
Vulcan, Lafarge Receive Stars of Excellence Award
The National Stone, Sand & Gravel Association (NSSGA) has recognized seven member operations in its National Stars of Excellence program for 2007. At Aggregates Manager press time, the seven winners, along with the Excellence in Community Relations Gold Award recipients, were slated to be recognized on March 12 during an awards breakfast at NSSGA’s annual convention in conjunction with ConExpo-Con/Agg in Las Vegas.
NSSGA President and CEO Joy Wilson says that “the awards are just a small way of recognizing their [the operations’] contributions to a sustainable America through the economy, environment, and quality of life.”
NSSGA Chairman of the Board Louis Griesemer, president and CEO of Springfield Underground in Springfield, Mo., notes that he “congratulate[s] each of these seven operations for their commitment to being outstanding corporate citizens in their communities.”
The following operations were given 2007 Stars of Excellence:
Three Stars — Presque Isle Quarry, Lafarge, Presque Isle, Mich.
Three Stars — Helena Quarry, Vulcan Materials Co., Helena, Ala.
Two Stars — Aberfoyle Main Pit, St. Mary’s Cement Group, CBM Aggregates, Toronto, Ontario, Canada.
Two Stars — Beck Street Quarry, Staker & Parsons Cos., Oldcastle Materials, Inc., Salt Lake City.
Two Stars — Brigham City North, Staker & Parsons Cos., Oldcastle Materials, Inc., Brigham City, Utah.
Two Stars — Conco Quarries, Conco Quarries, Willard, Mo.
Two Stars — Grove Stone & Sand Co., Hedrick Industries, Swannanoa, N.C.
MSHA Urged to Rescind Order Denying Safety Citation Consultation
The National Mining Association (NMA) says it is urging the Mine Safety and Health Administration (MSHA) to rescind a recently implemented policy that “all but denies” mine operators the ability to discuss mine safety citations with the government agency, which could result in allowing arbitrary or incorrectly applied safety decisions to stand.
The NMA says the new rule could result in disputes that have been amicably resolved in the past being subjected to “costly and protracted litigation.” The organization sent a letter on Feb. 6 to Richard Stickler, acting assistant secretary for mine safety and health, objecting to a Procedure Instruction Letter (PIL) issued on Feb. 4 by MSHA. The NMA says that the letter is both “bad public policy and unlawful.”
According to the NMA, the PIL directs MSHA district managers to deny all future requests and cancel any granted requests for a conference on a safety citation or order unless the violation involves an issue deemed to be an unwarrantable failure or involves a high negligence designation.
The NMA said in the letter that the conference procedure provides operators with an opportunity to “better understand MSHA’s views” and that the PIL is “directly contrary to the finding and purpose” of a rulemaking that was undertaken by MSHA last year to revise the conference procedure.
According to the NMA, MSHA found with this rulemaking that “the safety and health of miners is improved when, after an inspection, operators and miners or their representative are afforded an ample opportunity to discuss safety and health issues with a district manager.”
MSHA Revises Civil Penalties
The Mine Safety and Health Administration (MSHA) is revising its civil penalty assessment amounts to adjust for inflation. The Debt Collection Improvement Act of 1996 (DCIA) requires MSHA to adjust all civil penalties for inflation at least once every four years according to the formula specified in the Federal Civil Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act). The revised penalties apply to citations and orders issued on or after the effective date of this rule. This final rule became effective on March 10, 2008.
According to the final rule, the operator of any mine in which a violation of a mandatory health or safety standard occurs or who violates any other provision of the Mine Act will be assessed a civil penalty of not more than $70,000. Each occurrence of a violation of a mandatory safety or health standard may constitute a separate offense. The amount of the proposed civil penalty is based on the criteria in sections 105(b) and 110(i) of the Mine Act.
Any operator who fails to correct a violation for which a citation has been issued under Section 104(a) of the Mine Act within the period permitted for its correction may be assessed a civil penalty of not more than $7,500 for each day during which such failure or violation continues. Additionally, any miner who willfully violates the mandatory safety standards relating to smoking or the carrying of smoking materials, matches, or lighters shall be subject to a civil penalty of not more than $375 for each occurrence of such violation.
Mergers & Acquisitions
On Jan. 14, New Enterprise Stone & Lime Co. Inc. (New Enterprise) of Pennsylvania announced the acquisition of Stabler Companies Inc. (Stabler). Stabler operates as a vertically integrated supplier of construction materials, a highway contractor, and a supplier of construction-related safety services throughout the United States. The company employs approximately 1,200 personnel at the 16 aggregate and sand quarries that it operates in the eastern part of Pennsylvania. The acquisition price and key terms and conditions were not disclosed.
On Feb. 7, Votorantim Cimentos North America (i.e., St. Mary’s Cement, Inc.), a subsidiary of the Brazilian cement and concrete giant Votorantim Cimentos, acquired Chicago market-leading Prairie Material Sales (Prairie). Prairie generated revenues of about $450 million in 2007 and employs approximately 1,800 personnel in various Midwest markets. The acquired operations include 81 ready-mixed concrete plants in four states, 17 aggregate operations in two states, and related hauling assets. While under the Votorantim umbrella, Prairie will maintain its operating and existing management personnel. The acquisition is in line with Votorantim’s strategy of vertical integration in the North American market.
On Feb. 13, Carmeuse North America (Carmeuse), a wholly-owned subsidiary of Belgian-based Carmeuse Group, completed its acquisition of Oglebay Norton Company (Oglebay). The $36 per share offer by Carmeuse placed an approximate $520 million valuation on Oglebay’s equity, representing an implied enterprise value of approximately $640 million and an approximate 11.7x trailing 12-month EBITDA multiple (through September 2007) for the company. The combination of the businesses will create one of the leading lime producers in North America, as well as a leading supplier of other chemical limestone and industrial filler products.
—by Bill Watkins, managing director, National City Capital Markets. Watkins is a contributing editor and may be reached at 216-222-7134 or at William.Watkins@NationalCity.com.