The Trickle Effect
Stimulus funds were intended to jumpstart public construction, but their impact appears to be over-promised and under-delivered. An Aggregates Manager survey shows widespread production decreases and layoffs despite federal initiatives.
By Therese Dunphy, Editor-in-Chief
A snapshot of the aggregates industry during 2009 would likely feature a site operating on shorter hours, with fewer workers, and larger stockpiles. In a market that prides itself on providing the essential building blocks of life, it is clear that life in the United States changed dramatically for many throughout last year. For example, Wells Fargo reports that employment in construction has fallen by 1.6 million jobs since December 2007. The U.S. Census Bureau notes that, at $715.2 billion, construction spending for the first nine months of 2009 is more than 12 percent below spending levels for the same period in 2008. And stimulus dollars, which were expected to buoy the construction market throughout 2009, trickled in with only an estimated 16 percent of the $26.7 billion having been paid to contractors and construction materials providers by December 2009.
Closing the door on 2009
Given the big economic picture, it comes as little surprise that 2009 was one of the most challenging in recent history for the aggregates industry. Respondents to last year’s survey anticipated a difficult year with only 2.2 percent forecasting an excellent year and 20.1 percent expecting a poor year in 2009. Both positive and negative actual results outpaced those expectations — 2.9 percent reported an excellent year and 27.3 percent reported a poor year.
Taken as a whole, 2009 business results were fairly bleak: two of three respondents to the 2009-10 Aggregates Manager Forecast Survey characterized 2009 business results as fair or poor. The Northeast region appears to be the hardest hit with 69.7 percent of respondents who categorized the year in that manner.
A few bright spots were to be found, however. Among sand & gravel producers, 10 percent reported annual business results as either excellent or very good. Small producers seemed to fare comparatively well. Approximately 14 percent of those producing less than 500,000 tons per year said they had an excellent or very good year. On a regional basis, Southern producers reported excellent or very good results in the highest percentages, with 12.5 percent who reflected well on 2009.
In terms of production levels, respondents who produced both crushed stone and sand & gravel fared best among core producers. Just over 9 percent of those respondents increased production, while 22.2 percent had stable production levels throughout 2009. Despite the 10 percent of sand & gravel producers who reported positive overall business results, the same group also noted the worst production results. Three in four sand & gravel respondents reported decreased production during 2009. The contrast seems to indicate that higher margins may have helped mitigate lower volumes.
Large producers — those producing over 3 million tons per year — were the most likely to report decreased tonnage. More than 84 percent of those respondents said they produced less aggregate in 2009 than during 2008.
Regionally, producers in the West faced a second challenging year. In 2008, 68.2 percent reported lower production levels than the previous year. That trend continued in 2009 with 76 percent who reported decreased production.
MORE FROM Articles
SUBSCRIBE & FOLLOW
- Vulcan shareholders reject board changes at annual meeting965 Views
- Former gravel quarry-turned-landfill transforms into nature reserve500 Views
- Americans consume 3 million pounds of minerals in a lifetime244 Views
- North Carolina grants Martin Marietta water quality certification for limestone quarry211 Views
- Excavators uncover ancient quarry in Jerusalem200 Views