Staying Alive Forecast 2011
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.
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.
The issue was voiced most commonly among sand and gravel producers (85.6 percent called it a major or minor problem). A total of 86.4 percent of mid-sized producers (1.1-3 million tons per year) said it was a major or minor problem. The West (84.6 percent) and the North Central (86.2 percent) regions were the most likely to cite competition as a problem, while those in the West were more likely to call it a major problem.
In response, producers commonly reported lowering prices and taking lower — or non-existent — margins. “Jobs are bid very tightly to obtain work,” reported one respondent. “In some cases, larger competitors are literally giving material away free to obtain the dirt work and construction components.” Another noted: “The construction industry needs contractors to bid responsibly and stop working for cost. We are going to try to bid with some profit built into our bids.” A third observed, “You can only bid for profit. Break-even only wears out iron. The margins might have changed some, but you have to make a profit.”
As producers plan ahead, they should consider the advice given by this respondent: “Work smart. Use assets wisely.” Set those words to music, and producers will be singing the right tune for 2011. AM
Major Problems Facing Aggregates Managers
For the third year in a row, competition for sales continues to be the greatest challenge facing producers. The most significant change in operator challenges is underscored in the more than 7-percent increase in producers reporting problems retaining workers. This figure is closer to percentages reported in 2008 and earlier forecast studies.
Competition for sales — 33.6%
Aggregates availability/permitting — 12.8%
Retaining workers — 12%
Regulatory compliance — 11.2%
Regulatory fines — 12.8%
Water availability — 3.2%
Community relations — 4.8%
Safety — 4.8%
2010 Production Volumes vs. 2009 Production Volumes
Decrease — 35.2%
Increase — 34.4%
Stayed the same — 30.4%
Methodology, Objectives, and Sources
The objective of the 2010-11 Aggregates Manager Forecast Survey was to determine business, production volume, spending, and workforce trends. In November 2010, Aggregates Manager e-mailed questionnaires to a random selection of readers in the crushed stone and sand and gravel, crushed stone-only, and crushed gravel-only industries. A total of 125 useable surveys were completed.
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