Roundtable & Conference: Give and take

Sunny Gulf Coast Florida was the setting for this year’s Pit & Quarry Roundtable & Conference, which was held in Ft. Myers. Following are edited transcripts from the two roundtable sessions.

Participants – Session One
Moderator: Darren Constantino, Pit & Quarry
Rich Blake, Mellott Co.
Brian Bleakney, Titan America
Roland Boney, Vulcan Materials Co.
Greg Donecker, Kemper Equipment/EESSCO
Ron Earl, KPI-JCI and Astec Mobile Screens
Tod Eberle, Polydeck Screen Corp.
Dan Goethel, Rogers Group
Fred Gross, FLS Minerals
Warren Hawkridge, Hinkle Contracting
Mike Heenan, Ogletree Deakins
Jeff Heinemann, Sandvik
Scott Killough, JWS – Div. Of Command Alkon
Melissa Magestro, Association of Equipment Manufacturers
Troy McDonald, Earthsource Inc.
David Nus, Volvo Construction Equipment
Corey Poppe, Superior Industries
Chris Upp, Conco Quarries

CONSTANTINO: Tell us some of the challenges you’ll be facing in 2014 and your reasons, if any, for optimism. Manufacturers in the room, do you expect sales increases to the aggregate sector in the near future? Are you already seeing it? Producers, is demand on the rise in your area? Is the oil-and-gas boom helping you, whether that is through the manufacture of frac sand or the supply of aggregates for drill pads and related infrastructure?

UPP: I’d say as a producer, our challenges for next year are going to be primarily focused around product mixes or product balance. What we’re seeing is with the limited highway funding that’s available in our state, a lot of the projects are maintenance project. In a normal construction project, you’ll sell a lot of base material. Well, now we’re going to be forced to make a lot of small fraction chips that are going to be used in overlaying work, and then we’re going to be left with large piles of fines and base rock and material that’s not going to be moving. So inventory management will continue to be a top priority for next year. In terms of where we’re at market-wise year-to-year, we’ve had probably our worst year this year through the whole recession. So I’m cautiously optimistic that we’ve hit the bottom and we’re on the way up, but it’s going to be moderate gains at best – two to three percent.

HEINEMANN: Chris used the term “cautiously optimistic.” I would use that same term. We’ve had a decent year. Some of the producers missed the replacement cycle in the 2006/2007 time frame. They’ve had to do some replacements, some upgrades of equipment because they missed it earlier. Some of their equipment was getting pretty dated. We are seeing an uptick in business with the frac sand and we are getting a significant number of calls from producers wanting a review of their existing plant and equipment to see what they can do to operate more fuel-efficient equipment. So “cautiously optimistic” is a good term.

HAWKRIDGE: With the natural gas boom, we’re seeing a decline in coal. In Kentucky, we saw a lot of stone into coal mining areas for road maintenance and things like that. But now, quarries we have that service coal mining areas are extremely down. We are seeing some increases in other areas, so year-over-year we’re flat and probably going to be flat again next year. But while the decline in coal has a huge impact on us, we’re fortunate that we’re geographically spread across the state enough that the gains we’re seeing in other markets are offsetting the lack of coal.

NUS: The demand we see at Volvo is really from regional hot spots around the country – not a general trend. But the oil and gas boom has been very nice for us. The frac sand producers, especially minerals guys, have had a pretty good last few years.

GROSS: We’re more optimistic at FLSmidth because we haven’t had a large presence in the aggregates market. It’s been a mining-focused company and we’re starting to put our products that were originally designed for mining into aggregate market, so we have nowhere to go but up. We’ve been focusing on that for the last year and seen a significant increase in sales to the aggregate market, but it’s significant because we had minimal sales to begin with.

POPPE: At Superior, we are continuing to ride the wild frac sand wave. Just when you think it is over, you get orders for new plants and new loading facilities. Our backlog is very strong, almost as strong as it’s ever been in our history. Replacement parts are experiencing record months and we attribute a lot of that to frac sand. We’re positioned well in the upper Midwest. Our dealers in Minnesota, Wisconsin, the Dakotas and up into Canada are selling record product, and we’re smiling in the upper Midwest.

CONSTANTINO: How long do you see that continuing?

POPPE: Everybody keeps saying that it’s supposed to slow down, that product has caught up to demand, and we continue to see orders come in. It has slowed down, but people are still ordering into next year. So, if we’re talking into next year, the surfboard is still moving.

NUS: As a mobile equipment supplier, we see a lot more rental than purchases from our customers – general construction customers and even aggregates. People are being cautious before they make an investment and that’s still continuing today very much. People are trying to grow their business in a good way and replace older stuff, but they don’t want to make a long-term commitment if they can avoid it.

CONSTANTINO: Do you think a multi-year highway bill would help that?

NUS: Yes, absolutely.

EARL: For Kolberg-Pioneer/Johnson Crushers/Astec Mobile, the last couple of years have been record years for us. A lot of that has been with the oil and gas boom. Oil is still going strong. For us, tracked and portable equipment, and the rental market, are certainly an opportunity, but also a challenge from financing with our distribution. But we’re certainly enjoying a couple of good years and expect next year to be pretty solid.

EBERLE: Polydeck is cautiously optimistic, also. It seems the states that handle the budgets well, like Texas and Ohio, have done very well. It seems like the aggregate business has done very well in those states. The states that haven’t handled their budgets well don’t have the money to match federal funds, and they’re struggling. We sell product across the United States, so it has a leveling effect and we’re cautiously optimistic for next year.

BLAKE: We at Mellott Co. have had to redefine ourselves. In 2007, we were one of the companies that divested of our aggregates, our heritage and our ready-mix businesses. We then redeployed those assets into our distribution business and went from a regional mid-Atlantic size company, to an Eastern Seaboard company, to more of an international business. Much of our business today is based in different areas outside of the Continental United States, and we really looked at it as an opportunity to invest and expand into other markets, which has helped us. In 2008 and 2009, we were challenged with the economy, and you could use that as an excuse. But once we got into 2010 and ‘11 and ‘12, our ownership wouldn’t allow us to use that as an excuse. We had to really figure out how to manage ourselves moving forward towards growth, and we see an opportunity as the potential for further acquisitions for our organization. We feel that the buying cycle is ripe, but the challenge is trying to agree on what that number or what that price might look like. So we’re optimistic.

BONEY: I’m based in Florida where the residential fall was steep. Now we’re starting to see the curve going back the other way, and one of the large indicators that we track would be population growth. In Florida, population last year is back to 800 to 900 a day net moving back into the state. That’s significant. Now, the aggregate inventory that is out there has to be absorbed. In Fort Myers and Southwest Florida, some would say there was at least four to five years of inventory in this market that needed to be absorbed going back to 2008. The inventories are now one to maybe two years, and we’re seeing new home construction,. In the southeast corridor, there have been large infrastructure projects – Miami, Broward, Dade, that area. We’ve participated in, and benefited from, that. As you move north, you’re seeing growth in the double digits. Residentially, there is sustainable growth in Florida for the years to come.

GOETHEL: From a Mid-South perspective, we’re seeing highs and lows in different areas, and we operate in seven states. Certain areas of the country are benefiting from highway projects. Others are benefiting from residential and commercial upticks. Housing inventories have depleted in certain areas, so we’re seeing some elevated residential and commercial. I can’t really say that we see one area that has a combination of highway funding project work combined with that residential and commercial. So echoing what everyone else has said, we are also cautiously optimistic.

CONSTANTINO: Can the American public be sold on a gas-tax increase? Will Congress consider the idea, or do you believe politicians will seek another way of funding infrastructure? Are tolls the answer? Do you believe the federal government is prepared to revisit a long-term funding bill, or are those days gone? Will the states need to shoulder more of the burden?

POPPE: Can the American public be sold on it? Perhaps, but does that even matter anymore, I guess would be my statement. Are we able to push anything through?

BLEAKNEY: I believe too many people got hurt in the housing market, and the politicians like their votes. I think they’re going to vote for other sources of revenue. They might not call it a tax. They’ll call it something else.

McDONALD: I think the American people don’t trust the politicians. I don’t think it’s doable, especially with the 2014 elections coming up. I just don’t think it’s feasible. We have some states with balanced budgets and those states are doing well and finding ways to move the funding around. I think we’re all cautiously optimistic. It’s no secret the direction that this country is going in. We don’t have good leaders. We’re scared to death. I’m a producer and location is key. You may be a national company, and out in the Midwest, you’re doing well. That’s a location for you. But I’m down here in South Florida, and if I pick up some work on I-75, or what have you, and it’s within my range, I do really well. But I don’t trust the direction that we’re going and I don’t think the American people do either, until we get some good solid leaders.

HAWKRIDGE: Yes. I think the American people can be sold on a gas tax increase. It’s been 20 years since a gas tax increase and cars are getting better gas mileage these days. If there’s enough effort on education, than the public could be sold on it. I just don’t know that the politicians will do that, because they’re more concerned about who’s going to get the credit.

HEINEMANN: Public awareness is a big thing and that needs to happen before any of this gets pushed through. You’d probably have an easier time negotiating for the new football stadium in Atlanta than you’re going to have fixing the roads.

CONSTANTINO: At last year’s roundtable, a few producers reported some improvement in their relationship with the Mine Safety & Health Administration (MSHA). Is this a trend? Are things improving at the agency under Joe Main? Have you experienced more consistency among inspectors and among locations?

HEENAN: From what we see in our law office handling MSHA cases, maybe the number of citations are level, but I think we’re seeing fewer excessive penalties and citations. MSHA has switched from giving notice of pattern of violations to letting companies self-monitor. There are fewer special investigations, a lot fewer, and that’s good news and bad news, because special investigations are what lead to personal prosecution against individual managers and supervisors. The National Stone, Sand & Gravel Association (NSSGA) has done some good work trying to get the inconsistent interpretations in front of the agency, and I think that’s an important thing for associations to take on.

GOETHEL: From a Mid-South perspective, we are seeing inspections at levels that we’ve seen in prior years. Our citations are down slightly and the severity of those citations is also down. I would say that what we’re seeing from a local and regional level is a more open dialogue with MSHA while they’re on-site. There is more of a sense of a conversation, so to speak, in that when they are conducting the inspections, there is a two-way dialogue as to the appropriate course of action in the event that there may be something that might be defective or not up to the regulations. I believe there’s a little bit more openness and dialogue, as well, between the field offices. We’re starting to see in the field a higher level of consistency, where in past years, that may not have been the case. Last week, we actually had some inspectors show up to do a walk-and-talk. I hadn’t seen that for several years in the South, and I take that as a positive sign from the agency.

McDONALD: I’m a producer as well in South Florida. That was one of the programs that has always been in place. They just didn’t have anybody to do it – just one person for the whole state of Florida. Two years ago I had an inspector come in and I don’t know what his problem was, but he was in a bad mood and he wrote 10 citations in an hour and I contested every one of them. Over a year-and-a-half, I beat them all, but it’s just frustrating to know that somebody has that kind of animosity – to come in here and disrupt your operation like that. It’s very frustrating.

UPP: We’ve found they are more willing to listen to mitigating circumstances as it relates to the citations. So where they might look at something and say, “Well, you know, I might have to write this up.” When you disclose more information, generally the citation isn’t thrown out, but the severity is reduced and they’re more understanding. So you go from a $1,000 citation to something that’s reasonable. I haven’t seen too many inspectors that won’t find something, but I think as an industry, we’ve moved a long way from when the Mine Act was first put into place.

CONSTANTINO: Producers and manufacturers have told us their number one concern is finding and keeping qualified employees. What steps do you take to attract young people to your business? Will the Affordable Care Act change the way you operate? Will it affect your hiring and staff size?

HEENAN: I think the Affordable Care Act is a bit of a mystery. I wrote a column one time just to simplify it, but you can’t. The mechanism seems very difficult, and how all those moving parts are going to get put together and what it’s going to look like in the end is very hard to say.

BLAKE: The employee doesn’t realize the contribution his company makes to subsidize his insurance. We’ve had a 33 percent increase this year in healthcare costs. We have a very solid plan. The challenge we have in our area is that there are not a lot of providers that will compete for our business, so we’re limited in terms of which providers are out there.

BONEY: We’re back in a hiring mode, and it’s nice to have that issue to deal with. Our home office is always making sure how we competitive in the marketplace in regards to hiring. With the head count reduction we’ve had over the last three years in Florida, and we’ve lost a lot of folks, a lot of good people, that those of us left are just thankful that we have a company that is still standing behind those that are there. The decisions to cut were very tough.

HEINEMANN: Generally, we’re pushing our kids into college, a four-year college to get a degree to be a doctor or a lawyer, whatever. We’re not pushing them to trade schools. I think the schools are there to teach these skills to be a truck driver, an equipment operator. The money is not bad. They’re good jobs. It’s not a very sexy job, unfortunately. But that’s the reality of it.

EARL: We are very active in the high schools, trade schools and vocational schools. We sit on some boards, help subsidize some of the programs, getting the youth excited about our industry at the high school level.

POPPE: Four or five years ago we opened our own vocational school on campus to train welders and certified welders. So we invite lots of kids to come learn a lot quicker and start getting paid a lot sooner than they would by entering college directly out of high school. We have our own welding instructor and certified folks, lots of them, in fact, at our own internal school. And it’s been a success.

CONSTANTINO: Another ConExpo-Con/Agg is upon us. The show is a big expense for all of you – manufacturers and producers – in regards to money and personnel. Will you be making changes this time with your approach or your commitments to the show?

EBERLE: There is going to be a lot of technology. People are asking for it. The quality of the people we got to meet at the AGG1 show was really great, and AGG1 was a great venue, so I’m looking forward to ConExpo-Con/Agg.

POPPE: We are moving to the Platinum Lot, not necessarily by choice. We really liked our spot for the last three, four shows, but we’re now going to the Platinum Lot, same size booth. We did get a spot inside as well to kind of use that to remind people that, “hey, we are in the Platinum Lot,” and maybe escort them there as well.

MAGESTRO: The Platinum Lot is a new area that we’re using because we need to grow the show. We’ve had such an increase in size, and, even with that additional lot, we’ve sold out of space early on in our sales cycle. We knew that in order for the platinum lot to be successful and to get traffic there, it couldn’t just be sort of a peripheral exhibit area. It had to have significant presence and a good product group that would draw traffic. So, after a lot of discussion, it was decided to move the aggregate group and the asphalt group into that Platinum area.

Participants – Session Two
Moderator: Kevin Yanik, Pit & Quarry
Jason Adams, Continental Equipment Co.
Scott Alexander, Bedrock Resource Partners
Jeff Carlisle, Douglas Manufacturing
Jean Casey, Florida Rope & Supply
Dennis Coker, Natural Resource Partners
Steve Fair, W.S. Tyler
John Garrison, Terex MPS
Scott Lanker, Bedrock Resources LLC
Mark Musselman, Cemex
Rex Nealis, White Rock Quarries
Colin Oerton, VantaCore
George Reddin, FMI
Rick Robinson, Sandvik
David Thompson, Cemex
Russell Walton, BTI
Sean Weisiger, Conn-Weld
Steve Williams, Titan America

YANIK: One to 2 percent growth per year, if that, seems to be the new industry normal. Have you adapted to this new normal, and what are your expectations for 2014?

OERTON: We’re in three areas. One is in Louisiana where we’re a little more tied to residential. Another is in Tennessee, where there’s probably a little more related to large army bases next to us. We kind of see what’s going on with government spending there. Then, in Pennsylvania, we do a fair bit of work in the Utica [shale play]. We’re able to see three different areas, but why don’t I just focus on the first two? We’re certainly seeing a lot of our customers, which are the ready-mix customers in that area, becoming more positive. We’re seeing an increase in the economy. It’s not like it was two years ago where everybody was wondering where the bottom is. I think there are some positive signs in these areas. We’re seeing investment by some of our customers, which means they’re not as concerned about the market continuing to go south. People are probably cautiously optimistic.

COKER: I would say “cautiously optimistic” is a good phrase to use. I talk to producers all over the country and that’s what I’m hearing from different sections. I think a lot of producers feel like they’ve hit the bottom, but they’re starting to see some small incremental improvements. If you’re in Texas, you’ve seen a lot of energy and a lot of infrastructure. In California, they’re starting to see some improvements.

YANIK: How is the frac sand market currently?

COKER: There was a little bit of a gold rush mentality when prices were extremely high. Everybody jumped in, and you had a lot of people who got in late and are now commissioning plants or recently commissioned plants. A number were put on the backburner and weren’t brought into full development. So you’ve seen a pretty significant price decline for the different grades of sand. Your established producers are doing better than the recent entrants.

ALEXANDER: We have some properties with pretty extensive reserves, and at the time of acquiring them it was a hot commodity. Now, it’s lukewarm at best. I think there’s a lot of concern about what’s going to happen in terms of long-term demand. The fundamentals for the frac sand market are still strong. There was a big boom a few years ago and everybody got on the bandwagon. Now, it’s cooled off.

COKER: Your most efficient producers are going to be the ones that survive. I mean, if a price is really high, everybody can make money. But when prices come down, your efficient producers are going to be the ones that last.

REDDIN: Really, for the last 30 years when capital started being attracted [aggregates], the height of the investment preference hierarchy had aggregates at the top. Cement consolidated very quickly to where it was a couple handfuls of people by the 1980s, so we didn’t see much activity there. Aggregates were at the top. And [the industry] liked that because of the high barriers to entry. They liked the competitive structure, typically because of the high barriers to entry. We had few competitors in the market. It was a transportation-driven business, so it became logical that if I was on one side of town and you were on the other, and I had a major transportation advantage, that seemed good. [Aggregates] almost lent itself to absentee ownership, whereas the downstream uses were much more hands on. Aggregates have been in demand the whole time. But the demands to acquire have not diminished. It’s been difficult to find sellers to sell because they’re hanging on to the hope that the market heats up again and returns to the glory years.

YANIK: How about prices? Are they stable? Have they fallen?

WILLIAMS: We’re finally starting to see some improvement on pricing in 2013 in Florida. We have the expectation that pricing will continue to improve in 2014. We don’t think it will recover to the levels of 2005 or 2006 anytime in the near future, but we’re optimistic that we’re in a positive trend driven by specific areas within the state – mainly Miami and Orlando.

LANKER: I would echo that. As things were falling off there was quite a bit of cutthroat-type competition going on with volumes being unpredictable. People were trying to cut price just to get predictable volumes. Now that the market has stabilized a bit, we’re seeing prices coming back up to where they should be.

ALEXANDER: The industry has become more disciplined. You’re getting consolidation with other producers recognizing it’s very easy to cut price and reduce margins more than you want. But producers have recognized that reducing price isn’t the answer. If you look at the majors, they’ve been promoting price increases all along, and they’re kind of leading the pack. I think the producers have gotten a little smarter.

OERTON: One of the things we’ve done is continue to spend on capital because I think that can come back and bite you a little bit. We try to do it wisely. As we start to pull out of this, I think we’ll start to see the benefit of that. We all have to cut back on capital, but if you cut back too much, at some point it’s going to come back and bite you.

FAIR: We’re a manufacturer of vibrating screens. Since 2008, business in the vibrating screens area became slow but steady. However, our parts business increased dramatically as a result of that. We’ve had to hire two more service technicians to go out and service some of these machines that should be replaced. Recently, in the last six months, our quote activity has gone up, and when your quote activity goes up, normally your sales activity goes up. My technicians are saying that some of these machines are being held together by duct tape and spit. So we are really, really optimistic that business will increase.

GARRISON: We’ve seen kind of the same thing. We’ve had pretty solid growth the last few years, largely driven by new products and getting into some new markets. It’s kind of leveled off this year. We are seeing the same kind of thing where spares business is up; [the] capital side is kind of down. It’s taken longer to close projects; it’s taken longer to get capital purchases approved. I’m not really sure what’s going to happen going into next year. It’s probably going to be flat.

YANIK: You mentioned it’s taken longer for projects to near their completion. What factors are driving these delays?

GARRISON: Investing money is difficult for people to do right now because there is so much market uncertainty.

WEISIGER: Producers are looking a lot closer at plant efficiencies than what we saw in ‘06, ‘07. Now, producers are asking how efficient is the piece of equipment going to be, and what kind of gains they might get from spending the cap.

ADAMS: Being a distributor in the Midwest, we’re seeing the same thing on the frontlines, with margin erosion and production being down. The producers, especially private, are looking for payback and efficiencies. They’re looking for financing now. Before, the financing wasn’t as critical. In the publicly traded companies, it’s got to go up through higher levels to get approval – and it’s taking longer to get approval.

REDDIN: On the financing, are you finding that banks are an impediment to enabling the producer to purchase?

ADAMS: For some of our customers, yes. The banks aren’t as open as they used to be. It’s hard to get money for the producers. The manufacturers and some other lending companies out there have had to reach out and expand.

LANKER: As far as equipment expenditures – at least from our perspective – the uncertainty of the market is more of a factor than the actual downturn of the market. If it’s low but it’s predictable, or there’s a reasonable assurance that things are going to continue as they are or get better, then companies can plan and forecast volumes. Now that things are at least moving forward, albeit lower than what we all would like to see, at least there’s some expectation that we can forecast future volumes now with reasonable certainty.

YANIK: Let’s transition into transportation funding. What are your thoughts on the state of affairs in Washington, D.C., and how they’re affecting your businesses?

LANKER: I think we’re all operating in spite of the federal government rather than depending on it. Back in 2008, when there was supposedly this big stimulus, we saw very little or no impact whatsoever on our market. A large percentage of the projects that we supplied material to are not federally funded.

REDDIN: For many years in Washington, the two sides came together and figured something out. It was growth oriented. There was always more money to spend. Then in 2008 or so, the financial markets and the politics changed. With MAP-21, the federal dollars are $37.5 billion in 2013 and 37.8 billion in 2014, which is less than what it was a few years back. Now, take inflation and your healthcare, your labor, your operating materials and your operating costs, and those dollars are buying fewer miles of road paving or fewer bridges and, therefore, fewer tons of aggregate. I’d say we’ve never had a more uncertain time about the future of highway transportation funding.

YANIK: Any thoughts on alternative sources of funding, including increasing the gas tax?

ALEXANDER: If you go from one end of [Tennessee] to the other, there’s as much as a 60 to 65 cents-per-gallon difference in fuel. That tells me consumers in east Tennessee are going to buy fuel. And if you’re in west Tennessee you’re going to buy fuel. You just learn to deal with the price. So it seems there is a lot of opportunity to [do] a nickel to a dime increase. Consumers, at the end of the day, aren’t going to see it as being major. At the same time, there is no appetite for any politician to push through an additional tax, even though the voters may not feel it.

GARRISON: Nobody wants to assign their name to raising taxes, so there’s going to have to be some sort of other creative way – another usage tax or fees – to generate funds. Maybe it’s going to have to come from multiple sources. Tolls are an option in some states. People get used to paying tolls, but it’s also very expensive to put in tollbooths and that infrastructure. I think it’s going to take a multi-faceted approach to get the money we need.

YANIK: Let’s move on to employment. As producers, are you having trouble finding people to fill skilled positions?

NEALIS: At our operation it really hasn’t been an issue, but a lot of our customers that are adding equipment or ready-mix trucks are having issues finding drivers that can fill those positions and can pass the qualifications that are required. There are so many people who don’t want to get their hands dirty, so it’s more difficult.

THOMPSON: We have hired a few new people this past year. Some were ones we laid off a few years back. They’re happy to come to work. They were already trained, but we’re having a hard time finding people who actually want to do the work. They come into the operation and find they’re going to have to work and get dirty. They’re not there for long. The ones who are working out are the 40-plus-year-olds that have work ethic. It’s good to see some young new faces come into the business, but they’re a lot harder to find.

LANKER: We didn’t cut back very much when the downturn happened because we were fairly lean before. We just found ourselves with a lot of excess capacity when we cut hours back. Now that things have been picking up, we’ve seen the hours start to come back up.

YANIK: What impact is the Affordable Care Act having on your businesses?

CARLISLE: I’ve talked to our president and he locked himself in the office trying to figure it out. Because we’re a family-owned company, I don’t think it’s going to change us dramatically. We kind of understand how it’s going to affect us, but we don’t have enough answers for our employees. We have to send them to a website because we’re still trying to figure it out. It might be great; it might be the worst thing in the world.

THOMPSON: I work for a big, multi-national company, and the emphasis is on wellness right now. We are required to do a health assessment for every employee that has insurance and their spouse. We have an annual physical as part of our requirement to have the health insurance benefit. I think that’s a good thing because I’ve talked to the workforce and asked them how they felt. Some feel that it’s an invasion of privacy, but some say, “Thank you. I found something that was wrong with me and now we’re getting it taken care of.” In the long run, I think it’s going to be beneficial.

YANIK: Let’s shift to technology and some of the new developments coming onto the scene. What have you seen, or what do you expect to see at ConExpo-Con/Agg that will be a “wow” product?

LANKER: I would really like to see some forward thinking as far as natural gas applications and heavy equipment. I’m sure Caterpillar and everybody is probably working on it. This seems like a natural fit for everything that’s happening in our country now.

THOMPSON: The technology is there. There are fleets of buses for cities that are doing [natural gas] right now. I can’t see why that cannot be applied. I’ve yet to see a product– a haul truck or an excavator, for instance – that’s actually powered by natural gas, but I do know the technology is there.

ROBINSON: We’ve invested quite heavily in research and development with automation. Underground mining has driven most of it. When, and if, it hits surface operations, it’s probably a matter of time.

GARRISON: As far as crushing and screening, the industry that we’re in, there are not wildly innovative things. It’s more about billing and how to package better; how to make it produce more; be more efficient; how to make it operate safer; make it maintenance friendly.

ADAMS: From a distributor point of view, some of the automation and electronics showing up on the plants creates a challenge to keep our mechanics up to date with all of the manufacturer’s technology. There’s constant training and being interfaced with the customer to know what’s going on.

ROBINSON: Service, from a product standpoint, is something we want to do more of and get better at.

ALEXANDER: From a purchaser standpoint, I think [service] has been one of the benefits in the downturn. It’s forced suppliers to provide more service than they would have before because there’s fewer demand for the product. The customers out there want to be taken care of. Before, when times were busy, you might not have time to service an account properly. Now, you get plenty of service.

YANIK: Let’s stay along this equipment line but bring in a new topic: Chinese equipment. What impact is China having on your businesses?

WALTON: I think the influx of Chinese equipment is making you look at efficiencies you can improve to help keep your prices down and be more competitive. We promote product quality, obviously, and the product support and parts availability versus what you might get with Chinese products.

FAIR: We’ve got a customer in Mexico who buys our vibrating screens. They made a change last year and bought screens from the Chinese. They told us that it was a regrettable decision. The quality wasn’t there. But, most importantly, they told us the service wasn’t there.

WEISIGER: In some of the other mining segments you’ve got a lot more foreign and eastern ownership, Indian and Chinese, and when they have ownership in mines here, they will use Chinese equipment more than we’ve seen in the aggregate market. That’s what they’re comfortable with.

GARRISON: The Chinese equipment for crushing and screens has been around for a while. It comes back down to how long do you want to run this piece of equipment? How much can you afford downtime if you can’t get parts or a service technician? You do see dealers popping up in the states using Chinese equipment, but it’s mostly out of a necessity. Where we see more of the Chinese-built equipment and people more readily accepting it is in Latin America, in Mexico, and Central and South America.

YANIK: Let’s shift gears to MSHA now. Has anybody seen improvements in MSHA relations?

THOMPSON: I would say yes. Now, can we say MSHA’s getting easier or we’re evolving? Because four or five years ago – and I’m sure all of you in the business will agree with me – they were hitting us pretty hard after a few mine tragedies. We got a lot of citations that were borderline or actually bogus, as I like to call them. But I can honestly tell you that I feel they’ve been [better] the past couple of years. Then again, we have reeducated ourselves about how to defend ourselves.

LANKER: There’s a big disconnect between MSHA citations and actual safety practices in the industry. There are things you do to satisfy MSHA but have no bearing on actual safety concerns, and there’s things you do in response to actual safety concerns that MSHA really has no bearing on. The other big [thing] we’ve experienced is there has been [fewer] issues with MSHA. I think it’s because of us as an industry getting smarter and knowing how to prevent citations. Has it made us any safer? I doubt it. But we know how to deal with them.

OERTON: One of the comments I’ve heard from a couple of our guys is it’s evolved over the years. At one point, MSHA used to be there to try to help find issues and deal with them. I think [inspectors] found this frustrating. As opposed to trying to work and help make an operation safer, they’ve gone to the other extreme.

THOMPSON: There are a few inspectors I have a lot of respect for who will give you very good suggestions. If they see something that’s maybe in a gray area for compliance, they will say we need to fix that. That new of set of eyes is very valuable, and some of those guys have been in the business a long time. I appreciate when they come in and do that. But, again, it’s frustrating when you have an inspector that writes bogus citations [for things] that in no way, shape or form are going to hurt somebody.