AggBeat

June 2008

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by , Senior Editor

Volvo, Cat to raise equipment prices 5 percent

Equipment manufacturers Volvo Construction Equipment and Caterpillar plans to raise the price of their machines and components up to 5 percent globally, citing record global demand for commodities that has led to sharp increases in the cost base for heavy equipment manufacturers.

Volvo hasn’t cited an exact date for the price increase. Cat is planning the majority of its price adjustment to become effective as of July, adding that mid-year pricing action is “unusual but sometimes necessary.” Cat says that “additional pricing action may occur later in 2008,” and notes that it hasn’t taken this type of pricing action mid-year since 2005.

Restricted supply and burgeoning demand for steel, especially in China, has led to the cost of iron ore rising by more than 70 percent on the worldwide markets, according to Volvo. This has ultimately resulted in a sharp increase in the price of steel, and consequently, in the production costs of manufacturers of construction equipment, Volvo notes. To offset some of the impact of these rises, the manufacturer says it needs to raise prices. 

“Manufacturers of heavy construction equipment are being particularly hard hit by the current record prices of commodities, such as steel, oil, iron ore, and rubber,” said Scott Hall, executive vice president of Volvo Construction Equipment, in a written statement from Volvo.

“With no sign of commodity prices cooling in the foreseeable future, it has become unavoidable that these costs be offset in the form of a price increase.”

EPA, Corps establish new rule for wetlands mitigation

The U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency announced a new wetlands compensatory mitigation rule (www.epa.gov/wetlandsmitigation) on March 31 that consolidates existing regulations and guidance to establish equivalent standards for all types of mitigation under the Clean Water Act Section 404 regulatory program, the National Stone, Sand & Gravel Association (NSSGA) reports in its eDigest & Washington Watch e-newsletter. The final rule was published in the Federal Register on April 10 and goes into effect 60 days later.

The new rule provides a single set of regulations for compensatory mitigation instead of the several separate guidance documents that have been used. The rule establishes equivalent sets of standards based on better science, increased public participation, and innovative market-based tools, according to NSSGA. For a downloadable PDF of the final rule, go to www.epa.gov/owow/wetlands/pdf/wetlands_mitigation
_final_rule_4_10_08.pdf.

The aggregates industry organization says the most significant change required is that projects provided by all three compensation mechanisms (i.e., permittee-responsible mitigation, mitigation banks, and in-lieu fee mitigation) must have mitigation plans which include the same 12 fundamental components: objectives, site selection criteria, site protection instruments, baseline information, credit determination methodology, a mitigation work plan, a maintenance plan, ecological performance standards, monitoring requirements, a long-term management plan, an adaptive management plan, and financial assurances.

The rule also establishes a preferred hierarchy for mitigation options, with mitigation bank credits as the preferred method, followed by in-lieu fee program credits and permittee-responsible mitigation. Permittee-responsible mitigation also has three further possible circumstances — watershed approach, onsite and in-kind, and off-site/out-of-kind.

Oklahoma team takes top honors in Construction Challenge

Students from Perry High School in Perry, Okla., won the inaugural Construction Challenge held in Las Vegas during this year’s ConExpo-Con/Agg. The team — composed of Amy Bieberdorf, Kelsey Cave, Evan Williams, Cassandra Bratcher, Daniel Cross, Dakota Johnson, and Trevor Kukuk — competed against 50 other teams throughout the country to get the title.

They built multiple pieces of “construction equipment,” debated another team on infrastructure issues, and created a unique, interactive educational product that helps to get the word out about careers in the construction industry. Each team member won a $2,000 scholarship and a computer. The competition took place for three days, March 11-13, during ConExpo-Con/Agg. Students competed in the following three “challenges:” Infrastructure Dialogue, Equipment and Careers, and Road Warriors.

“We learned time management and problem-solving skills, and we logged lots of hours after school to get ready,” said team member Kelsey Cave in a press release. Team member Evan Williams added, “Lots of hard work paid off.”

Jeff Zagar, the team’s manager and a technical education teacher, notes that each team member spent an average 112 hours in preparation time for the Las Vegas event.

Seven other teams won titles and prizes. The overall third-place team, which was also the only all-girls team in the competition, also won first place in two of the three challenges.

The Construction Challenge was developed by the Association of Equipment Manufacturers (AEM) in partnership with Destination ImagiNation Inc. to engage the interest of teens in careers in the industry through a hands-on, educational experience.

The construction industry will create more than 1 million new jobs by 2012, but there are not currently enough skilled workers to fill the jobs, according to AEM. The Construction Challenge provides an opportunity for students, teachers, parents, and community leaders to learn more about the industry and it’s need for skilled employees to deal with infrastructure problems of crumbling bridges, overcrowded roadways, and aging water and wastewater systems, AEM notes.

“The response that these students have gotten at the covention is better than we dreamed when we started this project 17 months ago,” said Al Cervero, AEM senior vice president, in a written statement in March. “Not only were attendees checking out the challenges, they were talking about the need to increase awareness of the industry and the great jobs that are available. They were stunned by the creativity and knowledge on display…by all of the teams.”

EPA recognizes producer with 2008 Energy Star

The U.S. Environmental Protection Agency (EPA) has awarded California Portland Cement Co. (CPC) a 2008 Energy Star Sustained Excellence Award in recognition of its continued leadership in protecting the environment through energy efficiency. CPC’s accomplishments were recognized at an awards ceremony in Washington, D.C. on April 1, 2008.

CPC, an Energy Star partner since 1996, will be honored for its long-term commitment to energy efficiency. In 2007, CPC continued its energy reduction trend by cutting energy intensity by 2.5 percent from 2006 levels for a savings of nearly 363 trillion BTU. This savings reduced CO2 emissions by 34,366 metric tons, which is the equivalent of providing electricity to 4,644 American homes. 

The 2008 Sustained Excellence Awards are given to a select group of organizations that have exhibited outstanding leadership year after year. These winners have reduced greenhouse gas emissions by setting and achieving aggressive goals, employing innovative approaches, and showing others what can be achieved through energy efficiency.

These awards recognize ongoing leadership across the Energy Star program including energy-efficient products; services; new homes; and buildings in the commercial, industrial, and public sectors. Award winners are selected from more than 9,000 organizations that participate in the Energy Star program. 

Mergers & Acquisitions

The California Portland Cement Co., a subsidiary of Taiheiyo Cement USA Inc., acquired Silver State Materials, LLC  from Audax Group on April 2. Silver State produces and sells ready-mixed concrete and sand and gravel products in the southern Nevada market. The financial terms of the transaction were not disclosed.

On April 14, Martin Marietta Materials Inc. acquired six quarry operations located in Georgia and Tennessee, from Vulcan Materials Co. for an estimated $192 million. The acquisition will enable Martin Marietta to strengthen its position in Georgia and Tennessee by increasing its annual production by 30 percent. Post acquisition, these six acquired quarries will be included in Martin Marietta Materials’ Southeast Group. This divestiture was a required condition of the U.S. Department of Justice’s clearance for Vulcan’s acquisition of Florida Rock Industries, Inc.

—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.