December 2002 AGGMAN Management

Predicting Opportunities for Growth

By influencing internal and external factors, the aggregates industry can continue to grow

By Scott Alexander

As pavements increasingly use graded aggregate, the industry faces a growing problem with excess base and fines.

We all know that our industry has enjoyed phenomenal growth over the past 20 years. Aggregate shipments have increased from 1.4 billion tons to over 3.0 billion tons, a 115-percent increase. And, despite an overall slowdown in the economy, the industry is still growing, albeit at a much slower pace.
Will we emerge from the recession and duplicate the historical growth from the last 20 years over the next 20 years? Economists think it’s highly unlikely, as do many industry experts — unless we approach how we do business a little differently.
In 2003, our industry is likely to experience modest growth rates similar to those of 2002.
What’s important to recognize, however, is that the phenomenal growth we experienced was largely driven by factors outside our industry, factors such as the technological and information revolution; and a shift in the fundamentals of the economy. These factors were outside of our influence of control — happy circumstances, as it were. I think we would all agree that times have changed, and in order to survive and thrive, we must be ready to change with them.
As we look to the immediate future, how do we adapt to this market environment and create growth opportunities? The future of our companies and our industry lie, in large extent, in the external factors we can influence, and in the internal factors we can control.

External Factors
External factors include highway funding, product demand, and environmental issues.

1. Highway Funding
No matter how you look at it, the fact is that money and votes count in politics, and road programs are definitely political. The message is: get involved. Participate in politics if you want to have a say in where local, state and federal road work will take place. Writing, emailing, face-to-face meetings, and financial contributions — both as a company and as an individual — are all effective ways to do this. The bottom line is that you need to voice your opinion and donate money to make sure that you are part of the decision-making process. Otherwise, you can be assured that you will never be a factor in the equation. At Rogers Group, Inc., we established our own political action committee for this very reason. It’s a cultural norm within our company, and we get tremendous participation throughout. I can tell you firsthand, it’s effective, and it makes a tremendous difference.

2. Product Demand
As developments in the paving arena continue to emphasize graded aggregate, we are faced with a growing problem of excess base and fines. We can influence this negative trend by working smarter to identify new markets for these products and improving upon existing markets. Deep base, bedding materials, manufactured sand, and fill products just scratch the surface for mitigating this concern.
What can we do to expand our markets and product usage? This is not a question for only our sales and marketing departments, it is a question to which everyone should be seeking answers. A review of the National Stone, Sand & Gravel Association’s Capstone entries is evidence that there are new uses for our products. It is incumbent upon us to find them.
Equally important is the need for us to work closely with the specifiers so that we may influence potential changes as well as effect a positive outcome relative to our concerns. Working at the local level with design engineers and with your state and national associations is critical, and our success in doing so will have a lot to do with our profitability as we go forward.

3. Environmental Issues
We are all aware of what effect the environmental arena has on the industry. Environmental groups continue to become more vocal, financially stronger, and politically astute.
Each day that goes by, the opportunity to get property zoned or permitted for mining becomes more difficult. What can we do about it? As mentioned previously, being active politically can make a difference, and is essential in almost every case.
But how we are operating our plants is also critically important. By having our house in order and being good stewards of the environment, we are far more likely to influence the zoning process in our favor and defend ourselves against the incursion by the environmentalists.

Internal Factors
In addition to these external factors, there are three internal factors that we have control over: profitability, people, and public relations. They are all inter-related, and they are all key to the success of our industry (see Figure 1).

Figure 1.

The premise is quite simple:

Profitability is what will determine our ability to grow;
People are what will determine our ability to succeed; and
Public relations is what will determine our right to exist.

By improving all three, we improve the future of the aggregates industry.

1. Profitability
There’s an old adage that goes, “It is in giving that we receive.” What holds true for our personal lives also holds true for the life of the corporation. By taking profits and investing them in our community and in the appearance of our plant and office locations, we reap the benefits of better public perception. This translates into fewer restrictions and greater profits. In addition, by investing profits in attractive compensation packages and comprehensive training programs, we attract top talent and grow employees who become strong industry and community leaders. This, in turn, increases our ability to create profits.

2. People
By hiring talented, creative people — the best people possible — we are able to achieve the greatest possible profitability. Outstanding employees generate the best decisions for operating the business, and they create the greatest impact in our communities in regards to public relations. These occur both for the same reason: excellent people create excellent results.

3. Public Relations
By improving public relations — improving how those in the community perceive our people and our business — we are better able to attract prospective employees. The more people we attract, the better our chances of finding excellent people to hire. Improving public relations also makes existing employees feel proud to be a part of the organization, one which is influential within the industry and in the community in which we operate.
With improved public relations comes a greater awareness by the public of the “business” of our industry and how we operate. Citizens gain a better understanding of the needs for our products and our ability to cohabitate in a positive manner. It’s this understanding which helps curtail costly, unneeded business restrictions and regulations. Consequently, this leads to greater profitability.

Attractive compensation packages and comprehensive training programs help attract top talent and develop industry and community leaders.

Planning for growth
The future of our industry lies in external factors which we can influence, and internal factors which are, to a large extent, within our control.
How we exercise our influence to improve highway funding, product demand, and environmental matters will be one key going forward. Be involved in the political process: be vocal, vote, and contribute wisely. Use your company’s resources to work alongside design engineers to broaden your markets and develop new product uses. Demonstrate your responsibility to the community by being a good environmental steward.
Equally important to the future is how we exercise control to improve profitability, people, and public relations. Manage your sales and production together, balance inventories, and make use of new technology. Recruit and develop the best talent — in every field. Be an active presence in your community so that people hope that their husband, wife, son, or daughter will be lucky enough to work for your company and in this industry.
By using our influence in the political, product demand, and environmental arenas, and by actively exercising our control over profits, people, and public relations, we will keep our business on a strong and steady growth track, ensuring the future of our companies and that of this great industry.

Scott Alexander is corporate vice president for Rogers Group, Inc. With more than 20 years of experience in the aggregates industry, his responsibilities include business development, sales, marketing, strategic planning, and safety.

December 2002 Management Predicting Opportunities for Growth State by State				Predicting Opportunities for Growth By influencing internal and external factors, the aggregates industry can continue to grow By Scott Alexander As pavements increasingly use graded aggregate, the industry faces a growing problem with excess base and fines. We all know that our industry has enjoyed phenomenal growth over the past 20 years. Aggregate shipments have increased from 1.4 billion tons to over 3.0 billion tons, a 115-percent increase. And, despite an overall slowdown in the economy, the industry is still growing, albeit at a much slower pace. Will we emerge from the recession and duplicate the historical growth from the last 20 years over the next 20 years? Economists think it’s highly unlikely, as do many industry experts — unless we approach how we do business a little differently. In 2003, our industry is likely to experience modest growth rates similar to those of 2002. What’s important to recognize, however, is that the phenomenal growth we experienced was largely driven by factors outside our industry, factors such as the technological and information revolution; and a shift in the fundamentals of the economy. These factors were outside of our influence of control — happy circumstances, as it were. I think we would all agree that times have changed, and in order to survive and thrive, we must be ready to change with them. As we look to the immediate future, how do we adapt to this market environment and create growth opportunities? The future of our companies and our industry lie, in large extent, in the external factors we can influence, and in the internal factors we can control. External Factors External factors include highway funding, product demand, and environmental issues. 1. Highway Funding No matter how you look at it, the fact is that money and votes count in politics, and road programs are definitely political. The message is: get involved. Participate in politics if you want to have a say in where local, state and federal road work will take place. Writing, emailing, face-to-face meetings, and financial contributions — both as a company and as an individual — are all effective ways to do this. The bottom line is that you need to voice your opinion and donate money to make sure that you are part of the decision-making process. Otherwise, you can be assured that you will never be a factor in the equation. At Rogers Group, Inc., we established our own political action committee for this very reason. It’s a cultural norm within our company, and we get tremendous participation throughout. I can tell you firsthand, it’s effective, and it makes a tremendous difference. 2. Product Demand As developments in the paving arena continue to emphasize graded aggregate, we are faced with a growing problem of excess base and fines. We can influence this negative trend by working smarter to identify new markets for these products and improving upon existing markets. Deep base, bedding materials, manufactured sand, and fill products just scratch the surface for mitigating this concern. What can we do to expand our markets and product usage? This is not a question for only our sales and marketing departments, it is a question to which everyone should be seeking answers. A review of the National Stone, Sand & Gravel Association’s Capstone entries is evidence that there are new uses for our products. It is incumbent upon us to find them. Equally important is the need for us to work closely with the specifiers so that we may influence potential changes as well as effect a positive outcome relative to our concerns. Working at the local level with design engineers and with your state and national associations is critical, and our success in doing so will have a lot to do with our profitability as we go forward. 3. Environmental Issues We are all aware of what effect the environmental arena has on the industry. Environmental groups continue to become more vocal, financially stronger, and politically astute. Each day that goes by, the opportunity to get property zoned or permitted for mining becomes more difficult. What can we do about it? As mentioned previously, being active politically can make a difference, and is essential in almost every case. But how we are operating our plants is also critically important. By having our house in order and being good stewards of the environment, we are far more likely to influence the zoning process in our favor and defend ourselves against the incursion by the environmentalists. Internal Factors In addition to these external factors, there are three internal factors that we have control over: profitability, people, and public relations. They are all inter-related, and they are all key to the success of our industry (see Figure 1). Figure 1. The premise is quite simple: Profitability is what will determine our ability to grow; People are what will determine our ability to succeed; and Public relations is what will determine our right to exist. By improving all three, we improve the future of the aggregates industry. 1. Profitability There’s an old adage that goes, “It is in giving that we receive.” What holds true for our personal lives also holds true for the life of the corporation. By taking profits and investing them in our community and in the appearance of our plant and office locations, we reap the benefits of better public perception. This translates into fewer restrictions and greater profits. In addition, by investing profits in attractive compensation packages and comprehensive training programs, we attract top talent and grow employees who become strong industry and community leaders. This, in turn, increases our ability to create profits. 2. People By hiring talented, creative people — the best people possible — we are able to achieve the greatest possible profitability. Outstanding employees generate the best decisions for operating the business, and they create the greatest impact in our communities in regards to public relations. These occur both for the same reason: excellent people create excellent results. 3. Public Relations By improving public relations — improving how those in the community perceive our people and our business — we are better able to attract prospective employees. The more people we attract, the better our chances of finding excellent people to hire. Improving public relations also makes existing employees feel proud to be a part of the organization, one which is influential within the industry and in the community in which we operate. With improved public relations comes a greater awareness by the public of the “business” of our industry and how we operate. Citizens gain a better understanding of the needs for our products and our ability to cohabitate in a positive manner. It’s this understanding which helps curtail costly, unneeded business restrictions and regulations. Consequently, this leads to greater profitability. Attractive compensation packages and comprehensive training programs help attract top talent and develop industry and community leaders. Planning for growth The future of our industry lies in external factors which we can influence, and internal factors which are, to a large extent, within our control. How we exercise our influence to improve highway funding, product demand, and environmental matters will be one key going forward. Be involved in the political process: be vocal, vote, and contribute wisely. Use your company’s resources to work alongside design engineers to broaden your markets and develop new product uses. Demonstrate your responsibility to the community by being a good environmental steward. Equally important to the future is how we exercise control to improve profitability, people, and public relations. Manage your sales and production together, balance inventories, and make use of new technology. Recruit and develop the best talent — in every field. Be an active presence in your community so that people hope that their husband, wife, son, or daughter will be lucky enough to work for your company and in this industry. By using our influence in the political, product demand, and environmental arenas, and by actively exercising our control over profits, people, and public relations, we will keep our business on a strong and steady growth track, ensuring the future of our companies and that of this great industry. Scott Alexander is corporate vice president for Rogers Group, Inc. With more than 20 years of experience in the aggregates industry, his responsibilities include business development, sales, marketing, strategic planning, and safety.