Web Exclusive: P&Q Roundtable – Part 1

By |  December 10, 2010

Participants

Brian Barlow, BMG and BMG Green
Wilhelm Brau, Bridgestone Americas
David Chereb, David Chereb Group
Evan Clarke, Kleemann
Florian Festge, W.S. Tyler
John Garrison, Terex
Jeff Heinemann, Sandvik Mining and Construction
Tom Hingst, North American Limestone Corp.
Mike Johnson, KPI-JCI
Darin Matson, Rogers Group
Deborah Nicely, FLSmidth
Blaine Pressley, Volvo Construction Equipment
Brian Richesson, Pit & Quarry Magazine
Jody Richey, Orica
Ric Suzio, York Hill Trap Rock Quarry Co.
Josh Swank, Philippi-Hagenbuch
Megan Tanel, Association of Equipment Manufacturers
Hal Williford, Memphis Stone & Gravel Co.

 

RICHESSON: It’s a roundtable tradition to start with talk about economic conditions. In some parts of the country, producers are finally beginning to recover from the recent recession, and now there is talk we may be headed for another dip. How are things in your market and for your company?

NICELY: Obviously, we’ve all felt the recession in the aggregate industry. But internationally is where a lot of people are still having some success. In the U.S., the midwestern states seem to be holding their own. But it’s the East and West coasts that are extremely depressed as far as we are seeing. The mining industry, it’s coming back and there’s more activity than there has been the last year.

BRAU: We’re seeing a solid recovery in many segments of our business. The OEM equipment manufacturers are recovering very fast – the ports and waste segments and the mining. We see that aggregate and construction are still soft and will probably continue to be soft in the next couple of years. We don’t forecast a double dip, although we see that it’s probably going to be flat for the next couple of years, as it increases in the next two to four years.

SUZIO: We are actually seeing a little bit of a dip. We’re very fortunate where we had a backlog into the first half of this year. Things were down, but they were still flowing. Then come June, it was like somebody turned the water faucet off, and we’ve not seen the work the latter half of this year that we had last year. What’s a bigger concern for me is at this time last year I knew what I was going to be doing the following year. The work that I have to bid on, work secured for next year, is not at the level that we were at this year. It’s segmented and depends on the market, but in Connecticut we see a little bit of double dip.

NICELY: The producers who are buying some equipment, it’s very, very price competitive and putting a lot of pressure on margins for manufacturers. And a lot of manufacturers are making deals to move inventory more than anything.

SUZIO: That’s just the way all of us see our business going. It’s a trickle-down effect. The end user is buying more competitively than they ever did, and our margins are shrinking. Therefore, we go to all of our suppliers and all of our manufacturers for help. We can only do so much internally to cut costs. The next thing is you must become more of a competitive buyer, just like your customers are.

BARLOW: This is all being driven by the contractors and the amount of work they’re competing for. Most of them, when you look at their bids, they’re not making any money in the way of a profit on a project. They’re just trying to keep busy. You start from that level and work your way up through the chain, and everybody is feeling that pressure.

PRESSLEY: We’re seeing a very slow trend upwards. The inventory levels have decreased for used equipment. With that said, we’re seeing a larger wholesale backlog. We see a very slow, gradual trend. It’s still a wait-and-see mode, for us and everyone.

MATSON: Our volumes have been flat over the prior year. I felt like we were at the bottom. Next year is a concern for us. You work off backlog. The opportunities aren’t there to replenish backlog. We’re looking at – I wouldn’t say a double dip, but we’re not optimistic. We’re probably going to be more flat than down. The good side, the upside to that is we’ve been in this situation now for a few years. We’ve cut our cost structure. We’ve done everything that companies do to survive. And we’re strong, a lot stronger for that because of it. So even though it’s going to be a down year, we feel like we can weather the storm very well. I’m just not seeing the returns that some people are forecasting that next year we’re going to do real well. I’m pretty pessimistic about next year.

WILLIFORD: I’m from a smaller producer. We’re in the contracting side too, and we’ve been real flat the last 12 months as an aggregate producer. We’ve seen a little bit of an uptick from contracting, and some of that was stimulus and the states finally let a few more projects than what we’ve had in the past couple of years. It’s been a slight increase. We’re concerned about next year too. The states aren’t going to feel comfortable enough to keep putting money out there in projects. So much reason we’re flat is the commercial and residential market is taking a big hit, and all of the aggregate producers are basically in survival mode now.

HEINEMANN: We are seeing a little bit of an increase in machinery sales. You get the normal spill off of the inventories from what the dealers have. We’re starting to gradually fill that pipeline. The pipeline was much smaller than what it was before. I think the availability of good used equipment has also diminished significantly. As the business did turn down, most of the producers tried to get by with what they had, maintain it, keep it going. You can only do that for so long, and then it comes to a point where you need it. You need to pick up a new piece to keep things going. That’s what we see. There’s not been a huge increase in sales. The Midwest pretty much seems to be even keel over time. The rest of the U.S. for us has actually been slow or very much down. We also cover Canada. The Eastern Seaboard and Canada are actually quite buoyant. There are a lot of hydroelectric projects going on. That tends to stay quite busy. The other thing in observation and talking how long is this recovery going to take, we’re looking at next year being relatively flat and maybe into 2012. One of the indicators is housing and that’s a good starting point. Every time I take off and land at an airport, I look out the window and see acres and acres of already developed property. The trees are gone. It’s flat. The roads are in. The utilities are in. All they have to do is build houses. When this does come back, all of that land needs to be used before we start developing again. When you look at when it’s going to recover, there is this huge gap. We have to get through that gap first and things will take off again where we’re starting to develop land. We’re developing new subdivisions. All of this is already developed. There are just no houses there. There’s no quick recovery.

NICELY: Unfortunately, they’re saying the housing market is in for the long haul. It’s going to be seven years before it comes back to where it was. So we now have to look to road construction instead.

SUZIO: There’s such a large inventory in any market you go to for commercial, residential. There’s just that inventory of buildings. It needs to be used up and filled up before any new can come.

CLARKE: From our industry, from our perspective, the quarry industry is soft, but the contractors’ end is still very long. We’ve had a very good year. Definitely next year is a big concern, what’s going to happen, if the money’s going to come through. But for sure this year we got a lot more than what we predicted.

GARRISON: We’re kind of in the same boat. We had a good year this year, but it was largely due to a couple of big projects. Now the trick is to show growth for next year. We’re forecasting flat or minimal growth. The growth is certainly not going to come from the U.S. market. As the U.S. market’s going to be soft for a while, you need to start looking out in Latin America and other markets where there is infrastructure spending going on. The North American market next year for us we’re definitely forecasting flat.

SWANK: For us, the aggregate side has been slow, last year and the end of this year as well. In the last two or three months we started seeing an increase in Appalachian regions as well as the mid-Atlantic, which we were surprised about. We didn’t expect that. We project next year to be flat, not up anymore than this year. However, in other industries, we are seeing movement, mainly landfills and fly ash. Mining really came back this year in a much larger way than we expected throughout North America, Canada, as well as the U.S. But international growth will continue to recur. That’s where we’re looking at for the next couple of years to assist us.

PRESSLEY: Internationally speaking we are doing very well. I have to agree with the consensus that we don’t project a big trend next year. Although, again, we are seeing – and I’m speaking generally in all segments, all industries – a slow, positive trend in North America.

BARLOW: The international market obviously has the growth – the Canadian market, Latin American market and several others. Are producers of any size starting to look at their investments into expanding into the international market knowing that this market is going to be flat?

MATSON: That’s not really in our growth model, to step outside the U.S. markets. We’re a regional player. We’re going to make acquisitions that are probably more [connected to] our existing region. You’re not going to see us jumping across states and across international lines. It’s just not in our strategic plan. If the right opportunity comes along, we may take it.

NICELY: Has everyone been able to maintain their employee force?

CLARKE: Yes. We’ve maintained it and we’ve employed more people worldwide and the U.S. market as well. We’ll continue to do that.

SUZIO: We’ve been able to sustain and we’ve had some retirements that we didn’t replace. We’re looking at people part time versus full time now. The problem that goes along with that, we’ve managed to sustain the level of employment without sustaining the level of work. But we have quality employees that are trained and you want to retain. We find a lot of times we’re using them for landscaping work and running for parts or whatever just to keep them to get their hours. It’s a double-edge sword. Yes, we’ve maintained it, but there haven’t been the jobs – the job really hasn’t been there for them. We’ve created it and kept them on because it’s easier to retain them than try to rehire and train them later on.

HEINEMANN: We had a discussion earlier about big jobs and how competitive it is. One challenge we have is some of the jobs come along, we bid jobs, and we get it and all of a sudden we say we’re going to need some equipment and it’s not planned. We have to plan out for engines and pumps and motors. There are a few manufacturers that make all of that, and there are many that don’t. We have to go to another vendor for that. Some of those deliveries are way out there. So 20 to 30 weeks is not that uncommon. The ability to react, the pricing of steel, a lot of that has not changed. So contract bids a job, at a low level to get it, and they go to the vendor and say, I need a piece of equipment but I can only pay X price. It’s a difficult scenario. It’s going to take some time. Many vendors stop making product or cut their forecast in half. They didn’t buy as much steel or whatever from their vendors. The correction in time for that is not a few weeks. It’s many months.

TANEL: That’s a huge point, what we’re hearing from our membership as well, that it’s the companies that have the diversified products that seem to keep running. They rely on one product or another, and those that are already established in China and Asia. Many times Asia was fronting for the whole company to keep them going. At least the positive then, they still had the manufacturing in process and going so it’s not like a start and stop. It’s something we’ve heard from some of our other members that while they’re in the position of calling back employees they’re having some challenges because the employees are enjoying the package and the plan that they have off of work. So getting that trained person back in, that skilled person back in has been a little bit of a challenge too. From the tire side and the engine side and components, what we’re hearing is they’re pretty busy right now. And they have a pretty big backlog. When you make that decision to start picking up, it’s going to be waylaid X number of months.

PRESSLEY: We’ve had great growth. I’ll call it a growth spurt in international regions, not in North America. We’ve had to crank our supplies back up to meet the demands in other regions. We’ve gone through a lot of those pains, but we’re making it. The good thing about it is with those other regions bringing in the business right now our supply team is going to start back up quicker. Hopefully when we do recover, we’ll be able to buy equipment quicker here.

SUZIO: Manufacturers, have you been able to attribute a percentage of the growth to EPA and environmental standards? Have you seen an uptick in your business because of that?

SWANK: The only two regions or aspects we’ve seen an increase in business due to EPA regulations, one, being fly ash. The TVA disaster has contributed a lot to regulations, and power plants have to maintain their fly ash. They have to transport it, and that’s some uptick there. Second, is fugitive and airborne dust with water tanks, more so out West, but the air quality standards have gotten tighter in mining. Therefore, more water tanks are needed and have to be operated more often.

PRESSLEY: To comment on your question, generally speaking industrywide, we haven’t seen [that].

CLARKE: I would say exactly the same. The big challenge for all manufacturers is the cost increase in the engines.

HEINEMANN: I would say no as well.

RICHESSON: Just to follow up from what Darin and Rick said about concerns for next year, is there anything you have planned to address those concerns, or is it the experience you gained in the survival mode you’re in right now? You’re just relying on that experience or do you have plans to go forward under these tough conditions?

MATSON: George [Reddin of FMI Corp.] was saying you get to a point where this is the new norm. How are you going to grow? You can only do so much organic growth. We’re looking at acquisitions to hold on to grow our bottom line. That’s one of the ways to combat it. The other is to continue to look to manufacturers to help us out with technology, new advancements to continue to lower our costs. That’s how we plan to combat it.

HINGST: We opened our business during the recession; it just kind of happened that way. We stuck our toe in the water and the bottom dropped out, so it was steam on. We operate the only way we know how, with a tight belt during recession times, so we continue to do that.

SUZIO: We plan on being very involved with our national associations to get a fully funded highway bill, to get more involved in the government affairs aspect of things. We all know Washington is broke right now in more than one way. We need a highway-funding bill, and we need a way to fund it. That’s going to put people back to work. When they go back to work, they spend money. When they spend money, everybody benefits. There’s only so much we can do. We’re a small company in Connecticut. We want to beat the bushes as much as we can and let Washington know we want to put people back to work. Our industry is suffering much higher on the unemployment rate than other industries in the national average. Typically people in construction spend money. When times are good, you look through the employees’ parking lots and there are new toys. On the weekend, the RV shows up or the trailer behind the pickup with the boat. Right now they’re driving beaters and junkers. Nobody has new toys. If you want to get this economy going, they have to start spending money in our industry. The other nice part is at the end of the day they have a tangible asset that they need, whether it be a road, a train station, a bridge or school. The government owns it. It’s not just money spent on medical data upgrades for offices that it was nice to give six people a job, but it put eight people out of work when it’s computerized versus a regular file.

FESTGE: I have a question to the producers. Watching the economic crisis over the last two years, I find it exciting to watch the car commercials. The car commercials changed completely. It used to be about horsepower. It used to be about how well the cars perform and what kind of torque they have. It seems now everybody is talking, not about how much torque the car has, but how fuel-efficient it is. My question to the aggregate producers is: Is the same trend there in aggregate that the perspective on cost and cost of running an operation are changing? Is it maybe that today the write-off period of a new piece of equipment is not as important anymore than that cost per ton that equipment can actually deliver? Or is the perception or the method of buying equipment today the same as it was two or three years ago?

MATSON: I know fuel is – fuel efficacy for the work it performs is a big determination, more so than it was, say, four years ago. It’s just a result of high fuel prices that really made us start to look at that. It is definitely weighted more heavily.

FESTGE: Not only referring to the fuel prices but the cost per ton. Sometimes we find that our customers, the price – the purchase price, the price tag of the equipment is more important than ultimately what does it save me down the road, not what kind of return can I get on my ton by maybe investing into a higher technology. Those sometimes are the roadblocks for us as equipment manufacturers, to get higher degrees of technology into the customer because the price tag scares everybody away. Is that changing?

MATSON: We want the lowest-priced product that’s going to lower our cost the most. We want the best of both worlds. It is a consideration, especially in today’s environment. The low-cost producer wins. That’s our goal and probably everybody’s goal. A lot of times with new technology we don’t have the history to tell us. We’re relying on the manufacturer to tell us that we’re going to lower your cost 10 cents a ton. OK. How do we know that’s just not …

FESTGE: Questionable.

MATSON: Yeah. There’s no history. In our industry, we tend to rely a lot on history and experience. We’re not as evolved as we would like to be as some of the other mining groups. We buy a lot on experience. When you have a manufacturer telling you that they can do one thing, we tend to be a little hesitant to believe them. That’s a downfall, a shortcoming of our thought process.

WILLIFORD: It is a new mindset out there now, at least with our company. We’ve invested here in the last 12 months in a new software system and doing a lot more data collection instead of trusting what the manufacturer’s telling us. We’re trying to see what our costs are for that piece of equipment a little closer. Back in mid 2004, ’05 and ’06, we were just trying to keep our head above water, keep material supplies to our customer. All of our focus was on production. It didn’t matter as much how many hours that you were running or how many pieces of equipment you had. But now everybody has backed up completely and said we don’t need this much equipment. All of us probably geared our operations to be able to produce what we needed to for those years in ’05 and ’06. The market is so much smaller now. We’ve kind of backed up and punted, and we’re looking at those things closer as far as what type of equipment we’re using and what the actual cost is. One of the biggest factors for us as producers is the fuel costs. That is one that goes right to the bottom line.

BRAU: At Bridgestone we understand those issues, and we’re working on creating software programs that we give the customers, like Rogers Group, in which they can see the progress of the performance of the tire. It’s important for us for the customer to see the benefit of our product, and not only that but it helps us too to see how we can better our products in different areas. As a manufacturer we’re working diligently to bring down your cost.

HEINEMANN: Regarding costs, we get phone calls every day in working with producers on how can we reduce costs? In a lot of the product, unless you go through complete redesigns, which you’re not going to do every year, you’re limited on how much you can lower that cost, at least fuel consumption or productivity. What we’ve done is we’ve taken a different look at it and taken a step further. We have an instrument in education, a session that we do called Quarry Academy. It takes every piece of the process and basically ties it together. We actually start with the customer and work our way backwards with this process. We look at what does the producer want to make and what does the quality have to be, and production, X amount of tons per hour, the screening portion of it, the impression portion of it, the load and haul portion, drilling, blasting. It all ties together. So each one of those pieces along the way, we can actually, in fact, reduce the costs because we have control of that. And that’s key.

PRESSLEY: Volvo has always considered fuel consumption a paramount part. Some other things we’re doing and I’d like to ask a question too. We’re really focusing on telematics so we can enable the customer to see exactly what the machine is doing fuel consumption-wise and many other parameters. Are you utilizing the telematics offerings manufacturers are offering to you, how you can manage your fleets from the computer screen and see the actual performance?

WILLIFORD: Due to the last three years, we haven’t purchased a lot of the equipment. We do have some of the equipment that has that technology. We’re taking baby steps in that direction. What we’re looking at more is trying to utilize what pieces of equipment we have. Instead of having two or three backup wheel leaders in operation, we’re having fewer and trying to make sure that we’re pulling the best maintenance on those pieces of equipment as possible so we can get the maximum utilization out of that piece of equipment, which is a different attitude that we’ve had.

PRESSLEY: We’re really pushing that telematics end of the products because it enables the buyer to see so much about the machine, not only service points, but alarms – the actual fuel consumption, utilization of the machine. We’re trying to provide the buyers with that software basically as part of the purchase of the machine so you see what those costs are on the product. That’s one of the things we’re trying to help you guys improve.

RICHESSON: Do you expect a near half-trillion dollar, multi-year, highway-funding bill to be passed by the end of 2010, or is it time to pursue alternative options?

BRAU: Obviously infrastructure is extremely important for us. And for us to keep up with the global market, if we don’t invest in our infrastructure we’ll be falling behind.

WILLIFORD: We feel there’s a six-to-nine-month window after the November elections to basically get a highway bill passed. On a personal note, meeting with my congressman in Memphis last week, he said he doesn’t believe that there’s going to be anymore six-year bills in the future. There will be more two- and four-year bills.

SUZIO: Everyone’s in a wait-and-see mode. There are a few disturbing things for me. One of them is with all of these candidates running on no new taxes, and Tea Party candidates saying there’s too much spending and “when I get there I’m not spending unless it’s a necessity.” Their definition of necessity and ours might be a little different.
The other interesting thing is it was just introduced about a highway and infrastructure banking fund and taking it out of the trust fund and running it through an infrastructure bank. They’re reinventing the wheel, and that’s not going to be done very quickly if they’re trying to come up with a new way to do it.
Several states have put on pushes. You can go to parts of the country and there have been billboards put up saying, “Stuck in truck traffic, it’s Congress’ fault”; “Our bridges are unsafe, call your congressman.” There’s a lot of that going on at the state and national association level. I don’t know how far it’s getting or what good it’s coming to.
There’s been talk of continuing resolutions in Connecticut. That kills us. The way our DOT is structured they will not release a project unless it’s fully funded. The last time we had CRs, Connecticut didn’t release any work for 18 months. I don’t believe that’s the only state that has that formula. It needs to be addressed quickly.
What we’re hearing from our associations and representatives it’s not as much on the forefront of their plate as it should be. Part of the problem too is your average American is very, very upset by it. They’re frustrated. We did a focus group in Connecticut where we sat people all in a room and had the hidden camera and the mirror and all. There was one guy pounding on the table upset about it [saying] “I waste so much of my day in traffic getting to and from work. It makes my family life suffer. I don’t get to see my kids.” He was angry and he said, “I would be in favor of a higher gas tax if I could trust that the money was going to get spent on what it was supposed to be spent on.” If it went into highway funding, the average user realizes the benefit. The problem is there is no trust in government right now, and they feel any money that goes to Washington goes into a general fund to be spent however they see fit. And a lot of the frustration is they don’t feel that Washington represents their home districts anymore. It’s a mess.

NICELY: One of the other things that’s very upsetting is Obama comes out and offers another $50 billion for infrastructure, but there is 70 percent of the stimulus money from last year that was earmarked specifically for construction and highway repair that is still unspent. What can we do to release that 70 percent of those funds that are sitting there? The states are hamstrung in that they have to put up part of the money to get the federal funding. Maybe we need to address that. The state budgets are bankrupt. If they can’t invest in the infrastructure, those funds aren’t going to be forthcoming. The money is there. If we can pull it out and get it to feed down through, we would all be better off.

SUZIO: The other thing is they need to come up with a definition of what infrastructure is. The early scenario I gave you are of medical buildings that are getting stimulus money to put their files into computers. To me this was not infrastructure. In the long run, it’s putting people out of work. The jobs they’ve created, some of the studies that have been done on the funding that’s going to California, $180 million to create four or five jobs and the jobs pay $100,000. Where does the rest of this money go? It’s just frustrating. They need to come out with a clean bill that says, “This is what we’re going to do. We’re going to invest in our kids by building new schools, and we’re going to invest in our quality of life and environment by getting new roads and getting some of the trucks off the road by having dedicated truck lanes or light rail or cargo on the rails.”

CHEREB: Is it time to reduce the emphasis of looking to Washington for infrastructure and increase the emphasis of looking at state and local? It’s messier because you have 50 states and lots of local. But it looks pretty dysfunctional trying to get Washington fixed in the short run. In the local region people know they have a problem, whether it’s traffic jams or other. Maybe the issue should go back to states as an organization instead of hoping that one place, Washington, is going to fix it.

MATSON: It boils down to funding. Most everybody you talk to agrees, whether it be your neighbor or somebody in the industry, that we need some improvement in our infrastructure. Until we get a state senator or a federal congressman, somebody in the government to step up and are willing to take that charge and say, “Look, we can fund this with a gas-tax increase,” we’re going to face this every three years or every year. They’ll talk to you off the record about it that they support it, but ask them to go ahead and carry that through. They know it’s a poison pill.

HEINEMANN: There’s no question that it’s not popular to talk about raising taxes. There is a lot of public that agree that we have to do something, the guy with the traffic jam. Unfortunately, it takes bridges collapsing and everything else for anybody to really grasp it. What most of the public don’t understand is the deterioration we have on some of the roads right now. If we don’t maintain it now, if we wait two years, there is no maintenance left. You have to replace it. That’s great for jobs. We have great projects. If we think we have a funding problem now, what is it going to be like in two years? It’s not getting any better. It’s not like wine. That’s a real problem.

NICELY: In Milwaukee they all of a sudden had to do an emergency shutdown on the overpasses to repair it and replace it. That was great and was taken care of, but it took the funding from another project that was planned. Now that project can’t happen because there was an emergency road repair that had to be done. It comes back to that there’s not enough funding out there.

WILLIFORD: Part of the question here is alternative options. On the federal level here in Tennessee, they’ve put together a task force and study groups and they look at all these different options. It always comes back to an immediate increase in user fees. You can talk to your local politicians on the state level and you can talk to your federal politicians, and they all understand the problem. They all agree, but there is a public perception: They don’t want to increase the user fees or the gas tax. But I go to the pump, you go to the pump, it changes 10 cents all the time. We could put a new five-year bill [in where the gas tax would] go up 2 cents a year and no one would ever know it.

NICELY: Nowadays there’s a vote going on and the populus is saying we will pay for what makes sense and will get the economy going and provide jobs. We’re not going to pay for things that are just social programs or wasteful spending. [The politicians are] still not hearing them. Maybe in the future when we elect some new people that will change.

SUZIO: They’re looking at history. Historically whenever there’s been a gas tax passed, the incoming party was no longer the incoming party after the gas tax. Anytime we’ve had a gas tax passed in this country, people have paid attention who voted for it and unfortunately not returned them to Washington.

HINGST: What’s even sadder is you’ve got politics going on that with the transportation bill, some party is going to be able to hang a number on there for jobs, and no one is going to let anybody do that right now.

TANEL: The challenge is we’re sitting around this table and thinking the vast majority cares. You’re dealing with people that on the nightly news, they’re learning about Lindsay Lohan. They don’t care. That’s a huge disconnect in what we all think and want in this room versus what everyone else wants. The sad part is it might take a little bit of that shock marketing. You don’t want to be promoting a bridge has fallen, but that’s what’s going to get people’s attention.
You add the fighting between Democrats and Republicans and what’s really of importance, the highway bill, which should be a bipartisan issue, and it’s getting lost as well. There’s not going to be much that happens unless we do sort of a multi approach where it is state and federal and everyone here is acting on their own as well as with their associations.
AEM just launched an “I Make America” campaign. Mike Rowe of “Dirty Jobs” fame was there launching the program with us. Mike Rowe is going to connect with some of those people that don’t understand what’s going on with the highway bill, that might fight the taxes. They need to hear this quote, unquote celebrity tell them this is good for them.
This “I Make America” campaign is focusing on what our industries do to make America. It’s taking it beyond the roads. Now it’s saying what your company’s doing in your city, in your town, in your community, reaching out, grass roots, going to the coffee houses down the street to say, “I’m only here because of that company up the street.” Or going to the hotels, going to the restaurants, going to the schools [to say], “We’re only here with our kids because Mom and Dad work over here.”
Until we put Republican, Democratic things aside and get down to the people, we’re not going to get anywhere. If we don’t have a multiyear highway bill, we’re dead in the water.

BARLOW: Part of why it’s not going to move forward is because the average person out there knows any kind of bill this size going through Congress is going to be absolutely loaded with special interest money. They know that we may be coming out with a $60 billion program, but by the time it gets to be passed, it’s now $110 billion and we still have that image of the bridge to nowhere, funding a bridge to nowhere. So we’ve got a lot of politics to work through to get a clean bill. I don’t know if we can get a clean bill. Have you seen a clean bill come through?

SUZIO: No.

BARLOW: I haven’t either in Congress in I don’t know how long. I’m not sure what the answer is to change that other than keep changing Congress.

WILLIFORD: Just another issue that our industry has to fight against is the perception – and it happened to me this past week – a gentleman that was a past state representative said, “I guess y’all’s business is booming since you got all this stimulus work out there.” The perception is it all went into infrastructure when we all know it was somewhere between 4 and 10 percent.

BARLOW: It was a small amount.

SUZIO: We lobbied hard for the first infrastructure bill. We were told by our representatives, “Don’t come back. We’ve taken care of you now.” No, A, you really haven’t. And, B, we’ll see how it plays out. The concept out there now, not just folks on the street but in Washington, is, “We did for you already. We’ve given you your stimulus money. Imagine how worse things would have been if we didn’t, not that they’re better now, but they would have been even worse.”

HEINEMANN: One thing we can do is as many times as possible talk to the people we work with, talk to our customers, talk to our neighbors to get them to understand. To me it is a bit of a smoking mirror. Because you’re right, they’re saying, “OK, now we’ve taken care of you. Look, we’ve got the nice signs up.” It’s like they’re trying to convince the public we’ve gotten this stimulus money and it’s actually doing something when, in fact, it is not. It’s up to us as an industry to try to convey that message.

SUZIO: In Connecticut, not just the signs with the little tiger logo on them, they put money into signs for tourist attractions off the road. That was how some of the stimulus money got spent. It was the easiest project for them to monitor due to the reporting requirements that Washington put on the money. Now, there’s all these beautiful brown signs for this vineyard over there that’s become a tourist attraction. For this museum that’s open two days a week, it now has a big brown and white sign. Again, it’s not going in my eyes where I thought it was going to go. The money is not being spent on long-term, solid projects.

RICHESSON: Is a multiyear highway bill as important to your company as everyone is saying, or are other concerns having more of an effect on your bottom line?

PRESSLEY: The confidence level is zero right now. We certainly consider it very important, as I’m sure everyone does. Without that true belief in the public side, we don’t have a lot of hope for it. What we look at as a desperate need for the economic upturn is a long-term building solution. It’s fair to say we didn’t see a lot of new equipment sold as a result of the last bill obviously, put some machines back to work, things like that. And we had some part sales increase, but it didn’t really increase our sales as a whole for equipment. It’s got to be a long-term solution that people believe in or we’re going to be right back where we’re at now.

WILLIFORD: Speaking from a state association, being involved with it, it’s paramount to have a multiyear bill for the DOTs. You’ve got to know the money is coming down the pipelines to build large projects and keep their program afloat.

MATSON: It absolutely is important to our company, absolutely.

RICHESSON: MSHA may cite a producer to modify a piece of equipment to make it safer. However, suppliers are often hesitant to recommend modifications and may even void a warranty. Suppliers, is there an opportunity here for you to work with MSHA to help producers? And for producers, has this happened to you, and how have you handled the situation?

BRAU: We work very close with MSHA today, and we are helping them, educating them on tire usage and also working with our customers.

NICELY: MSHA seems to be honing in on the mobile equipment right now and making a lot of special requests and requirements. We are aware of it, and we’re trying to analyze what part of that equation, what role we can play and what we feel is the responsibility of the producer. We’re definitely MSHA involved. We have a couple of individuals in our company who are trained to give MSHA training to our employees and to keep them certified. So that when we go out to the quarries, we’re able to come on site without any problems or questions for the producers. Right now one of the hot things seems to be the requirement on the mobile equipment.

PRESSLEY: Speaking of mobile equipment, we’ve definitely been affected by some of the requests from MSHA. We’ve been working very closely with AEM to work as directly with MSHA as possible. So far it’s been a very good relationship. The key is communication between manufacturers, producers, MSHA and just clarity of exactly what the regulations are and how they’re to be carried out.

TANEL: AEM is working with MSHA on the guidelines in light of the current standards. There’s a reason we have these standards, and that’s part of the challenge. The MSHA guidelines for their people who are out in the field are fairly loosely written or followed. So our goal is to push them to follow the current standards that are in place.

HEINEMANN: We get a significant number of calls from MSHA to ask different questions. One of the challenges we have is the interpretation of it sometimes is very loose. In many cases we’re finding the MSHA people really don’t have a real grasp on what they’re supposed to do. As a company, safety is always first. Safety bulletins, and we certainly go by the model, do no harm. That’s not an issue, but at times just getting them to understand the regulations is a challenge.

WILLIFORD: Dealing with MSHA now is like trying to hit a moving target. The interpretation is – they’re changing constantly and it depends on what region you’re in and what MSHA representative you’re dealing with. You get a totally different interpretation. There have been standards that we’ve all been going by for years. And now they’re being totally interpreted differently from one inspector to the next.

PRESSLEY: When these things happen, we’re not sure if we’re supposed to react because we don’t know the clarity of the regulation. A lot of times this goes into a long drawn-out discussion just because the clarity is not there. It’s not that we delay on purpose. We just don’t want to do something that may be changed three months down the road.

SWANK: I don’t know a manufacturing industry that isn’t extremely concerned about safety and doesn’t have that at the top of their list. Everyone is as well as the producers. We want to have safe work environments. We want to provide safe equipment. We’re all on the same page there. Through the inconsistent way that violations are being written up, nobody knows what route to go down. If MSHA, from a governing level, not from the individual mining inspector level, were to come and say, “This is the new standard. This is what we want you to do.” Great. Who couldn’t engineer something to work around that if there is a consistent regulation and consistent rule to follow? That’s probably our biggest frustration. It really does have to do with what region and what inspector happens to be looking at the piece of equipment that day.

MATSON: There are inconsistencies across the U.S. Just in our region, the biggest inconsistency is on what they’re enforcing and what they aren’t. The National Stone, Sand & Gravel Association formed a technical task force committee. I’m a member of that committee. MSHA has agreed to give us an audience, and we’ve met twice so far on these types of issues – what is driving MSHA’s behavior to write what they’re writing, trying to get them to give us something we can take back to the manufacturers. Is it ideal? Maybe not, but at least we know what they’re focused on. NSSGA has heard the producers and the suppliers and has put together this task force and gotten MSHA to meet with us. We’re making headway. As with any other government agency, it takes time. And they’re looking at us and saying, “What are you really driving at?” It’s a trust thing. They’re afraid to commit to making statements on, “This is what we want.”

BARLOW: Everybody in this room that’s related to manufacturing is a premium manufacturer that follows the rules, trying to interpret the rules and move forward with MSHA. But you now have a wave of Chinese and other Asian equipment starting to come into this country. You’re going to have a choice because Con-Expo is absolutely loaded with manufacturers with big space from Asian countries. There is a cost advantage, no doubt about it. But how do you weigh out the whole safety aspect and whether this type of equipment is going to fit the MSHA requirements versus buying, or at least exploring, from these premium manufacturers?

MATSON: We won’t buy anything that won’t pass MSHA standards. Simple as that. We’re not going to lower our standards just because of price.

SUZIO: I agree. In the long run, it’s not going to save you any money. The unknown variable is how much can it cost you. We tend to stick with the more mainstream, modernized, reputable manufacturers.

BARLOW: If you go to Latin America, the Chinese have taken over major sections of the equipment market because there are not those requirements.

WILLIFORD: When they come in here, nobody is going to jump out just because of price and buy that product until you’ve got some history.

BARLOW: It’s interesting you say that, because I work across mining equipment and lighting equipment. I have seen that go the opposite way with a lot of other equipment coming in from China and other Asian countries. There are customers out there that see it as a short-term issue, especially in the market today. I can save X amount of money if this thing only lasts me three years. It fits my business plan today. I would agree with you that probably most producers stand back. I am amazed at the progress that a lot of foreign companies have made with producers – not just producers but with contractors that have taken it on.

MATSON: Originally you asked the question based on safety?

BARLOW: Yes, based on safety.

RICHESSON: Will ConExpo-Con/Agg 2011 help jump-start the aggregate industry? A question for both producers and suppliers.

SWANK: I don’t think any trade show itself will jump-start the industry. The trade show is not the one producing aggregate or equipment. However, it will be a good barometer for both producers and manufacturers to see what the feelings are around the country and the different regions and to see what is going on. It is a good forum for people to get together and discuss. Through that means, ConExpo is very good every three years it happens, but there’s maybe a little more importance this year. From our perspective, our company, we have MINExpo and we have ConExpo. MINExpo last time was great. A month later the bottom dropped out. The difference between what the feelings of the people and attendees of the show at MINExpo compared to just 30 days after that, we’ve never seen anything like it as a company. We’re hoping that at ConExpo we start to see more confidence from producers and customers and potential customers while there. From that perspective, I don’t think the show itself will jump-start the country, but hopefully it will show the confidence is coming back.

HEINEMANN: I agree as well. I don’t think the show is going to jump-start it. It is a bellwether of things to come. We take a close look at who the attendees are and percentage of the attendees. We’re taking a look at, with the equipment we have, what we can provide the consumer, producers. We’re going to have a lot of new equipment there, but we’re also going to talk a great deal in our booth, talking about cost and value our company provides to the producer. We are not going to stuff the booth with equipment. We’re going to stuff the booth with ideas to control costs.

NICELY: So are the manufacturers saying that there might not be a lot of new equipment and product that’s going to be introduced at this show? Are the producers looking for a lot of new equipment and technology at this show?

MATSON: We’re looking for technology. We’re looking for anything that the suppliers can do for us to lower our costs. We pretty much know what equipment is out there. We’re looking for how to lower cost. That’s the value. That’s why we send people to these shows. Looking at iron’s nice, but we want that interface with the suppliers to tell us what can you do for us? What can you do to lower our costs?

PRESSLEY: We look at that show as our place to show innovation, new product, new innovation within that product. That’s our chance to show it and to show our customer what we have to lower their costs, increase efficiency, productivity. We don’t expect it’s going to jump-start the economy. If we get a chance to show the innovation that we’re coming out with and products, if the economy picks up, it’s a heck of a stimulator for that afterwards. We’re not treating it any different than we have before. We’re putting the same emphasis. We know the customer wants to see what’s out there, and that’s what we’re there for.

SWANK: About technology, any company that isn’t moving forward is moving behind. We’ve taken the last two-year period to be innovative and coming up with new products and fine-tuning the ones we have. We’re looking at ConExpo to show that technology. Volvo does a very nice job at displaying the new technology they have at each three-year period at the ConExpo show. We have done that as a company as well. Producers are looking for that, and they don’t want to see the same thing they saw three years ago. The industry, even though it’s gotten smaller, it hasn’t gotten stale. They’re looking to manufacturers to help them do their jobs more efficiently.

WILLIFORD: It was somewhat of a reward if you took a larger number of people from your companies to the ConExpo show. That philosophy is changing. Now you’re taking more the key managers who are involved in making decisions about what type of equipment or your processes. We will definitely send people out there. It might not be as large a number. We will send them because it’s like going to any of your industry associations meetings; you always pick up some new ideas and new technology that you can put to use in your operations.

SUZIO: There are so many of the association meetings happening out there that we will send people who are involved in the committees or different parts of the association. We’ll probably be at the same status we usually are, but we’re a small company sending a couple people. You do look at it as for certain individuals that go in and get something out of it and go to the different seminars or different educational programs. And it’s good to have all of that in one spot where you can go and kill three birds with one stone. You can go to the educational seminars. You can attend the association events, and you can kick the tires on the equipment. It’s a good forum for that.

GARRISON: We definitely view this show as very important. You’re not only showing new technology, but this year people are going to be sending more of the decision makers. It’s not going to be a family vacation. It’s not going to be “You did a good job this year so we’re going to send 40 people.” The people who are going to be there are going to be the decision makers. From my standpoint, it’s even more important this year to put new products out there and get feedback from those customers. Those are the key decision makers. It’s not going to be as many people that are turning it into a bit of a vacation. You’re going to have really important people from the producers there.

RICHESSON: From the suppliers, in terms of the number of pieces of equipment that you’ll send, is that going to be consistent from years past or will that be lessened in some cases?

HEINEMANN: I wouldn’t say it’s going to be significantly less. The only equipment we’re going to have there is new product that has not been on the market before. We are going to focus less on the equipment and more on the technology and cost production, better production.

SWANK: We’re keeping the booth size the same, but we do not bring equipment. We have more of an aesthetic display. We’re changing up how we’re doing our booth space this year. We’re having more interactive elements and educational elements for people to interact with while there, trying to engage them.

PRESSLEY: Definitely no less emphasis. We’re going to come with a little different approach. Equipment may vary. The emphasis may be other places.

TANEL: Maybe the only big difference would be the Construction Challenge that takes place at ConExpo-Con/Agg this time is presented by Volvo. They’re the major sponsor at that event. It’s where we bring willingly 500 high school students to Las Vegas to compete in challenges related to the industry. To do it in 2008 it was a little bit in response to work-force development and what’s happening, what does the future work force mean or look like for this industry? How do we change the perception of what this industry is? We did some surveying of kids and they said that construction is dumb and dirty. After going through this Construction Challenge process with Destination Imagination their ideas completely changed. We’ve been able to track some of these kids that were in high school in 2008 and have now gone on to college. They said their experience completely altered their future plans, as far as what they were going to do in life. And they did then elect to go into studies related to something – a career within this industry. It was a really hard program to bring back only because everyone’s budgets are so cut. It’s one of these things, if we’re not investing in the future work force, then when we need them, it’s too late and we can’t get them back in. Volvo made a major investment to make sure that program does continue. It will be, again, one of those things that differentiates this show from some others. There are things we’re doing for the industry to keep it strong or bring it back up to where it needs to be.

RICHESSON: Megan, is what you’ve heard so far from producers and suppliers here in this room pretty consistent with what you [have] heard?

TANEL: Spot on. We did focus groups at the last event, 2008, and have producers and contractors on tape saying, “I don’t want to walk in a booth and talk to a model. I want to talk to someone who knows what they’re talking about.” Hearing the manufacturers saying that they’re going to bring people who know what they’re talking about is exactly what the attendees want. We’re bringing decision makers and people who need to know about this stuff. Happily, manufacturers are coming through. It’s still an event. This is still a customer event for them and huge addition to their budget. So they have to have that customer event mentality. That’s what we’ve heard. Overall the industry is about 10 percent down, as far as people in the industry, and we’ll probably see that same in ConExpo-Con/Agg, and it’s the decision makers coming.

RICHESSON: Suppliers, what innovations do you see coming in the near future that would help producers with cost savings, production efficiencies and safety? Producers, what technologies would you like to see introduced?

NICELY: We’re introducing what’s called plug and play. It reduces the overall wiring in a plant where you can now do a single plug in all of your control boxes, your junction boxes to your control center. We have been talking with producers and have found it has made things more efficient. And also it will allow for the development of Internet control where you can control your plant from anywhere, any location on your laptop, so that Internet automation is also coming. Then the last thing is some of the new infrared technology that will monitor wear on bearings and components. The liner configurations right now have the liner wear technology – that’s going to be carried forward to other areas of the machines that allow for the tracking of wear and problems before it becomes a real issue of breakdown.

HEINEMANN: We’re doing a lot more with telematics. For example, on drilling equipment with a contract producer who has multiple quarries, we can set it up where it will capture the production data at each site, along with the health and wellbeing of the machine. This goes along with the safety aspect as well. You can do all the training you want on safety, but it’s really up to the individuals. I have seen people who have gone through hours and hours of safety training and not be safe. There’s a fair amount of research and development being done with equipment when there’s no operator. The operator literally might sit in a control room with joystick controls.

SWANK: We’ve been focusing a lot of our R and D time on rear-eject technology, for both articulated and refrigerated trucks. A couple of things we’re trying to achieve that we talked about today, safety as well as productivity. The safety aspect is the truck box doesn’t raise, so you don’t have the potential of hitting power lines or a bridge or your load-out facility if there’s a canopy. You’re keeping the center of gravity of the truck very low, and then you can dump and take off. You don’t have to wait for the box to come back down to get reloaded. That’s the safety aspect. From a productivity standpoint, you’re decreasing your cycle time. With fewer pieces of equipment, fewer labor hours, you get the same amount of work done. We’ve now implemented this in aggregate, steel mills, landfills, and general construction, road construction. But previously it hadn’t been done in refrigerated trucks. It’s just been articulated. We’ve done a dual-end dump and rear-eject truck body for different scenarios on rigid-frame trucks.

PRESSLEY: Several things we’re focusing on, number one is fuel consumption. It’s always been a high priority for us. A lot of our R and D time and innovation of products is on fuel consumption. It’s all about that and costs, operating costs for the owner. And also uptime or machine availability, we certainly focused on making that better for the consumer. So one of the things we’re using, telematics, getting an idea of how their machines are operating and also give them alerts immediately to any problems that may be occurring. Our major focus going forward, at least for the immediate future, will be on those cost savings. A lot of innovations that we’re working on, some you’ll be seeing at ConExpo, but it’s really all about the cost. We do have simulators, and we’re trying to make that more of a training tool than anything where companies come in and train their people utilizing simulator products.

FESTGE: We’re trying to increase the profits our producers are trying to achieve by adding more value to their product. We are introducing new pelletizing technology where we can take the fines in the past that have been waste and we can pelletize these fines in order to sell it as an added product. We’re very successfully doing this in mining right now, and we’re very excited about the first results we’re seeing in aggregate. The second thing is trying to increase the profits by clean new material. We’re introducing a new washing technology by which we can actually physically turn waste into sellable profit or increase the value or the quality of the product by making it cleaner than the washing technologies that are predominately used today. And the third thing is we’re trying to make sure that the equipment runs more according to the application that it’s actually processing. So with digital imaging we’re looking at the particles as the producers are making them. And from those reels that we get, by looking at the form, by looking at the size distribution of those particles, we can actually tell the equipment how to change and modify settings so they can run more efficient and can reduce costs per ton.

BRAU: We’re trying to come out with new rubber compounds that will help us improve safety and performance. We are involved in new tire construction techniques with improved materials that we’re coming out with, trying to improve the performance for every tire we make.

PRESSLEY: Just to mention one specific feature that we just came out with that is aimed at the iron industry. It’s called the OptiShift; it’s a wheel loader. It’s a system when the person goes into the pile and backs up and then pulls in to load the truck, he no longer has to use the brakes. It utilizes the technology called reverse by braking. When he backs up from that pile and he shifts from reverse to forward, for example, the machine automatically does the braking for you. It brakes the machine to a certain point and then shifts it into gear automatically. This saves a lot on wear and tear on the components and especially fuel consumption. It’s something we’re really happy about. It’s out on the market now.

MATSON: As a producer, very seldom do we have one location that has just one brand of equipment. Telematics is great, but when you have Komatsu, Volvo, all these different communication systems, our managers are not going to go to your websites and read four or five different websites. We put Qualcomm boxes on every piece of equipment that we have. We’re trying to get away from relying on using manufacturers’. Nothing against you, but there is propaganda in what you tell us. We want the real data. The way we would capture that data in the past is somebody would write down how many hours they ran the machine. We want that coming directly from the machine. We want hard data coming from the machine without any human interface. So we put a common box amongst all our machines. We’ve got dual systems in place now where we’ve got your telematics plus our Qualcomm boxes reporting sometimes the same information, but it gets it in a format where we can use it in our system. You ask what does the producer want; what we want is you guys to get together and give us a common reporting system in your equipment. I know that crosses all kinds of proprietary issues, but that’s what we want. If you have confidence in what your machines are doing, that you can truly look at all costs, then let me see that data. Let me put that data directly into my system and measure against it. That’s what we’re trying to do. Your systems aren’t adding near the value they could because we’re not using all the functionality of it.

PRESSLEY: There is work going on in that direction. There is work going on to commonize the way it reports.

MATSON: All the producers, we all have different operating systems. That makes it that much more difficult. I’m not an IT person. I’m sure there is somebody out there who will figure it out.

HINGST: Being a small company spending millions of dollars on something and somebody telling us it’s going to do something, we’re putting our livelihood on that. We have asked some of the manufacturers to put those guarantees in writing – that it’s going to do what they said.

RICHESSON: Producers and suppliers have always told us that one of their top concerns is finding quality employees. Has a slowdown in the jobs market made this any easier?

NICELY: We’re finding a pool of talent available to us that hasn’t been there before, unfortunately due to layoffs by other companies. But a lot of these individuals are going to the agencies where you can get contracts, people on contract for short term. Many times we will hire someone for six months through a contract. And if the economy picks up and they’re a valuable employee, we’ll hire them full time. If they don’t work out, we move on to the next individual. But the availability right now of that pool of individuals and the talent seems a lot higher than usual for us. It’s taking less time to fill positions.

PRESSLEY: We’re seeing a lot easier pickup of talent.

BRAU: The quality of talent out there now is a lot bigger for a small number of jobs that are available.

SUZIO: Unfortunately we haven’t been looking. The pool might be out there, but we haven’t interviewed or done any hiring because there isn’t a need on our end. We’re doing what we can just to keep the people we have busy. We haven’t really looked into the quality of applicants as much. It’s hard to put on new people when the people you have aren’t getting the hours they’ve been getting.

WILLIFORD: Instead of hiring people, we’re letting go of people who are very talented and who have experience – just due to the cutbacks due to the economy.

SUZIO: From talking to other producers too a lot of them kept the key and important skilled people. The people they might not have thought as highly of or might not have been as productive were the first ones to go.

NICELY: Does anybody fear that once the economy does pick up that the good talent, the employees they’re trying to retain, may jump ship or move on?

SUZIO: I don’t. We’re in a unique situation being family owned. We have some second-generation employees. We have a lot of loyalty. That is not one of my fears. I would hope they would look back and say, “When times were tough, they still provided for us and our families.” My concern would be if things pick up, going out there into that pool and picking the best quality when everybody is looking at the same time. But I would welcome that problem sooner than later.

FESTGE: One thing that we would love to see is if there were some kind of programs that are more catered to our industry in terms of apprenticeship programs. We spoke so much today about MSHA, but at the end of the day MSHA is putting so much emphasis on trying to prevent consequences of people doing stupid things or things they shouldn’t be doing. It’s important that we lay the emphasis on teaching people to do things right so we don’t have to keep trying to prevent all these accidents. Many times we have to start pretty much from scratch. We have to train the operator from the very beginning. It would be nice if there was an apprenticeship over and beyond the electrician that would be catered to what you need to learn if you want to assemble equipment. I can imagine the same thing for the producers. What do you need to know and what training program should you go through to safely and efficiently work in an aggregate operation or in a mine? Those are the things I would be looking for from MSHA and OSHA to start investing the money in not writing us up, but start investing the money in training people on making sure they’re safe.

SUZIO: In Connecticut we’re very fortunate. We have a group collaboration of the International Operating Engineers, the management side of our state association and also the Department of Labor that has gotten into a very strong and very good apprenticeship program, both for heavy diesel and equipment mechanics, as well as operators. It’s a full-encompassing program. They get a CDL. They get the new miner training. They get the OSHA training, the confined space training, their hazmat training. They put them through all that. It’s a hard program to get into. They have to fill out an application, have to take an aptitude test. There is minority outreach as part of it. It’s a strong helmets-to-hardhats emphasis to put some veterans into it. I would encourage anyone looking for information to check out their website. The training facility is excellent. They have some old equipment, and they have a lot of the new simulators out there. We’ve been fortunate. We’ve hired a plant maintenance engineer that came out of that program and is doing great. We have two mechanics who are in the program. It’s one of the few times you’re going to have organized labor, management and the Department of Labor all on the same page. It’s done through Local 478, the Operating Engineers apprenticeship training school.

CLARKE: We’ve seen a need for that as well across the board. We’ve had to put a major apprenticeship program in all our factories to try and bring the right people in and keep them longer. We want people who start young and stay with the company. It’s our responsibility both as manufacturers and producers to step forward and get the right people. There is a good pool of people at the moment, but sometimes in our certain areas it’s very specialized and very difficult to pick the right people from that group.

BARLOW: I’m curious whether the automotive industry and all the turnover there – a big percentage are highly trained – are you seeing any of them available to you these days?

SUZIO: Growing up in this industry, my father, who has since passed, but always preached to us, that one of the problems with us gaining employees was the lack of farms in this country. Most of the skilled, best employees who we have had came off of farms. They’re not afraid of the hours. They’re not afraid of work. They’re not afraid of working outside. They know if they don’t feel good, they still have to come to work. They’re safety conscious because they don’t want an injury, because if you’re hurt, you can’t feed the pigs. My father always said that one of the things this country is lacking is the work ethic that was raised on the farm.

HEINEMANN: With the new generation right now is such an heir of entitlement. They come in and tomorrow they want to be a CEO. That’s something as employers we need to set the right expectations as we bring on people. That’s a scary, scary thing. We see it and we have lot of that generation coming on board. And I appreciate that they want to learn and are excited about advancing, but we all have succession issues. We have a lot of people who have had more birthdays than some of us and fill those gaps.

BARLOW: Are you saying there won’t be enough people to pay our Social Security? I recently hired two college grads. We’re based in Fort Wayne, Indiana. They’re both out of Indiana, maybe that makes a difference, maybe it doesn’t. I was really impressed with these two. They have learned a lot. They have worked hard. They’ve come to us with solutions. While I’m pretty much on your side saying that this generation is lost, kind of, I’m glad to see at least two that I’ve hired who have come out this way. I’m hoping my own kids, as they’re getting out of college, will be that way as well. Who knows, if it’s not electronic, I don’t know.

MATSON: Talking about labor issues. I’m sitting here asking for you to give us more technology. We don’t have the work force currently to work on it. I’m speaking more specifically toward the mechanics. You almost have to have a Ph.D. today to understand that. We’re an industry that’s historically had a lot of shade-tree mechanics. They’re great just technically. They can focus, but when you introduce all the requirements of the engines coming out and emission issues and low tolerance and high tolerance and hydraulic systems, it blows these guys’ minds. We’re having a real hard time finding and keeping high-quality mechanics. The ones who are out there, the dealerships are snatching them up. We can’t afford to pay those rates, and we can’t afford to give them the training that the manufacturers, the OEMs can give them. It’s just not available out there. Some of the mechanics, if they come to work for us, we could match their pay, but we don’t have the expertise to get them that ongoing training that the OEMs can give them. Down the road, as we work through a lot of our older equipment and add more newer equipment and this newer technology, it’s going to be an issue.

TANEL: You need the training done not manufacturer specific but more generalized. Going toward the issue with the telematics, you need it to be more of a standardized process. The same thing with the trainings. We’ve heard from manufacturers in the past that they need operator training. But then when push comes to shove and you bring a budget out, we’d rather spend more money on public policy, cut the operator training on the budget right now and focus on policy and standards. Maybe it’s another go around with more generalized programs that need to be put in place. Price point, it’s easy enough for you to afford to send your current people in something that crosses the manufacturers so they’re in support of it as well.

MATSON: We have to change our mindset of what a mechanic is today. It’s not the shade-tree mechanic. It’s more of a technician. That’s something internally we’re struggling with. We have to raise our expectation on what we’re hiring.

HEINEMANN: One of the things that we’re just in the process of doing to help the situation is regardless of the mechanic skill set, pretty much everybody now can get on a computer and look through a training session. What we’re doing is we’re trying to develop these online training sessions where they get on and go through a battery of training. They can sit down and look at it on a computer. When it gets done, they have to take a test. It’s set up so a buddy can’t look over the shoulder and say, A, C, whatever. It’s pretty specific. If they miss a question, it goes back to that section and goes through it again. Because training is great. But if it’s not retained, it’s a waste of a couple of hours. That’s one thing we’re trying to do because not everybody can get on an airplane and fly halfway across the country for training. And it’s expensive for the manufacturers to set up multiple training sessions. We’re trying to develop things that are very easy, very efficient and economical for the producers to get their folks trained. As manufacturers, we recognize there is a huge gap in training.

RICHESSON: Just the whole theme of companies doing a lot with less now. North American Limestone is an operation that has a lot of different things going on. Tom, maybe you can talk about how you are able to do so much with such a small work force.

HINGST: We kind of have to. There’s nine employees, getting ready to have three operations online, multi states. We’ve used the business model of contract crushing at the quarries. That explains the nine employees. When we first start a business, you’re everything. There’s not a help desk. You’re it. Call yourself IT department, all that stuff. If you’ve got a problem, figure it out. Going back to specialized, we don’t have that luxury of hiring those kind of folks right now.

BARLOW: When you started hiring for your nine people, were you looking for certain skills, obviously when you’re running a contract crushing operation, so those people know what they’re doing on those jobs, or were they people you had to actually train?

HINGST: The nine people go all the way from running the scales, to management with certain skill sets. And one of the things we provide those folks is ownership. We’re not talking about options or anything like that. If they’ve got some skin, we let them in the game.

BARLOW: That’s motivation.

HINGST: It helps retain your people too. That’s a big deal for us to be able to offer that to folks.

BARLOW: That is, especially for the people taking the risk.

HINGST: Exactly. The economy is falling out, [we] opened a new quarry, and we’re growing. So unlike a lot of people who are sitting tight, we have to grow our business. We’re so small we have to grow.

BARLOW: You have no cost-cutting options.

HINGST: No. The contract crusher aspect helps us immensely. It’s a good business model for our little company.

BARLOW: Interesting.

WILLIFORD: Along the same lines, our company, we have always done our own stripping and reclamation work. And depending on how competitive the market is there, we’re kind of contracting that out now, looking at outsourcing because it’s such a competitive market.

HINGST: Going back to the contract crushing, it’s a partnership we have with those folks. There’s a contract and all that stuff, but the people we make that link with, there’s partnership there.

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