You know it’s all right, it’s okay.

I’ll live to see another day.

— Bee Gees, 1977

The margins are slim and the competition is fierce, but producers who survived the economic downturn see slivers of hope on the horizon.

The Brothers Gibb may not have been the most eloquent of songwriters, but many respondents to the 2010-2011 Aggregates Manager Forecast Survey seemed to be singing their tune as they reflected on 2010 business conditions and contemplated the 2011 market. Overall responses seemed more hopeful than in recent years, however, many producers answered an open-ended question about their plans for 2011 with phrases such as “staying alive,” “surviving,” and “returning to profitability.”

It’s no wonder. At this time last year, more than 70 percent of producers reported decreased production. While that percentage was cut in half during 2010, year-over-year drops in demand have taken their toll. In response, aggregates managers have focused on the three C’s: cost containment, customer service, and competitive pricing.

The good news is that on the heels of a tough 2009, producer expectations for 2010 were fairly accurate. A total of 1.6 percent reported an excellent year in 2010 (compared to a forecast of 2.5 percent); 11.2 percent reported a very good year (compared to a forecast of 6.6 percent); 22.4 percent reported a good year (compared to a forecast of 27.4 percent); 38.4 percent reported a fair year (compared to a forecast of 42.6 percent); and 26.4 percent reported a poor year (compared to a forecast of 20.8 percent). Looking forward, approximately 10 percent of those who reported a poor year in 2010 expect to see better results next year.

Production predictions

Restrained expectations are the hallmark of producer responses in this year’s forecast. For the first time since the 2007 forecast, however, fewer than 20 percent of respondents called for a poor business climate — albeit slightly fewer. In 2011, 17.6 percent expect a poor year. This is a marked improvement over the last two years in particular, when 26.4 (2009) and 27.3 (2008) percent of respondents anticipated poor conditions. At the top end of the optimism quotient, 1.6 percent of respondents expect an excellent year, the same number that reported those types of results in 2010.

In terms of production, more than half of respondents — 52 percent — expect production to remain the same as during 2010. Nearly a third (32.8 percent) predict an increase in production, while less than half that number (15.2 percent) anticipate a decrease. Those who expect production to climb predict a 13.8-percent increase, while those who expect it to fall predict a 16.8-percent drop.

Large producers (those producing over 3 million tons per year) are the most confident about 2011 production quantities. More than 40 percent expect an increase, while less than 7 percent expect a decrease. Sand and gravel producers were the most likely to voice concerns about 2011 production trends, with 28.6 anticipating a decline in production quantities. That figure is double the percentage reported by crushed stone and sand and gravel producers (13.0 percent) and more than four times the prediction from crushed stone producers (6.3 percent).

The greatest disparities, however, were reported on a regional basis. The Northeast market is expected to be quite stable with more than three in four respondents expecting similar production trends. Respondents in the South were the most concerned, with one in four calling for decreased production quantities. That marks the third year of tough conditions in the South with more than 50 percent of respondents who reported decreased production in 2010 and nearly 73 percent of respondents who reported decreased production in 2009.

Personnel matters

As production fluctuated, so too did the number of miners working at aggregate plants throughout the United States. While just over half of respondents (51.2 percent) said their total work force stayed the same in 2010, 36 percent said they shrunk their payroll, with an average reduction of 20.1 percent of staff. For the 12.8 percent who grew their personnel size, the average increase was 11.3 percent of staff.

“One of the biggest challenges that faces our organization in 2011 will be to retain qualified employees,” one respondent said. “The slow economy has reduced aggregate demand which, in turn, produces longer layoffs.”

By job responsibility, the two staff categories most likely to grow were service and maintenance personnel and hourly labor. Interestingly enough, at sites that downsized, the two categories most often targeted for reductions in force were hourly labor and equipment operators.

Looking at operations based on size, large operations were much more likely to lay off a small percentage of staff, while smaller operations were more likely to have drastic layoffs of 30 percent or more. For those who expanded, large operations tended to hire in small numbers, while smaller operations again experienced widespread hiring trends.

Industry challenges

For the fourth year in a row, competition for sales was most commonly listed as the major challenge for respondents. A total of 33.6 percent listed it as a major problem, with an additional 48.8 percent who labeled it as a minor problem.