An exclusive Aggregates Manager survey shows that even as the economic crisis came to a head, a sustained slump in residential construction had hit producers.

by Therese Dunphy, Editor-in-Chief

A perfect storm of economic ills hit the aggregates industry hard throughout 2008. What began with a three-year slump in the residential construction market expanded to include a financial credit collapse and deep cuts to state and local infrastructure spending. Add to that mix a year-long recession, a worldwide economic crisis, and a steep surge in unemployment and the result was one of the toughest years in decades for aggregates managers.

The feedback from this year’s survey is the least optimistic reported since Aggregates Managers began conducting its exclusive forecast surveys in 2004. Just under 22 percent, described 2008 business conditions as “poor.” By comparison, 10.5 percent of producers reported such results in 2007 and less than 4 percent of producers opted for the least favorable category from 2004 until 2006. It should be noted that surveys were completed during mid to late September as the financial market crisis became the nation’s top news story.

At the opposite end of the spectrum, 2.3 percent of producers described 2008 results as excellent, a more than 10-percent drop from the 2006 high in this category of 12.9 percent. That number is a fraction of the five-year average of 8.9 percent of respondents who anticipated excellent business results.

Benchmarked against forecasts from respondents to the 2007-08 Aggregates Manager Forecast Survey, this year’s results came in under expectations, but that should come as little surprise. What is noteworthy is that 2008 actual results were much closer to respondent predictions than business results seen in broader markets. For example, 6 percent of 07-08 respondents anticipated an excellent year (a 4-percent overestimate); 20 percent expected a very good year (a 10-percent overestimate); 40 percent predicted a good year (a 10-percent overestimate); 25 percent planned for a fair year (an 11-percent underestimate); and 10 percent braced for a poor year (a 12-percent underestimate).

By primary product, aggregates managers working in sites that only produced sand & gravel were the most likely to report excellent results with 6.3 percent. Producers involved with both crushed stone and sand & gravel were the most likely to report poor results with 23.9 percent in this range.

By region, the North Central region noted the most positive statistics with 16.4 percent of producers categorizing the year as either excellent or very good, while those in the West region noted the most troubling results: a whopping 66.3 percent described the year as either fair or poor, the two lowest categories.

2009 expectations

Throughout the coming year, respondents expect essentially more of the same business results: 2.2 percent anticipate an excellent year; 8.0 percent say it will be a very good year; 28.3 percent predict it will be a good year; 41.5 percent believe it will be a fair year; and 20.1 percent say it will be a poor year.