What’s ahead?

By |  December 14, 2012

What can we expect for the aggregates industry in 2013? Assuming both sides in Washington are able to compromise and avoid the fiscal cliff (a big assumption, I know), the year ahead looks to be a gradual move in the right direction.

In the fall, Hurricane Sandy wreaked havoc in the eastern United States, and the rebuilding process will be a jump start to construction work and employment in New York, New Jersey and other hard-hit areas. Bloomberg News says reconstruction work and hiring related to the superstorm could range from $140 billion to $240 billion and increase U.S. economic growth by 0.5 percent. The report says most of the reconstruction will begin in early 2013, and the economic benefits from housing construction will take place over several years.

For the nation as a whole, the American Road and Transportation Builders Association projects that the U.S. transportation construction infrastructure market is expected to show modest growth in 2013, increasing three percent from $126.5 billion to $130.3 billion.

Helping it along will be the first full year under the new highway bill — MAP-21. And aggregate producers in certain parts of the country are benefiting from the rise of the natural gas industry. Sand needed for the fracking process is in demand and increasing profits for some producers. But the deposits are in limited areas, mostly Illinois, Wisconsin and Minnesota. The boon is also helping producers where the fracking takes place, as there‚Äôs a need for drill pads, service roads and other infrastructure related to the process.

Of course, unforeseen events could derail projected construction growth. Further financial problems in Europe could have a negative impact on the global economy. In Canada, residential housing starts are expected to be slightly down in 2013, after a stronger-than-expected 2012. A possible merger of Vulcan Materials and Martin Marietta Materials could also impact the aggregates market. The Wall Street Journal reports that Martin Marietta is likely to make a friendly offer for Vulcan Materials after its failed attempt at a hostile takeover.

But, overall, the road ahead is likely to continue to be a slow rise as we move further from the Great Recession.

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