Aggregate producers still in equipment buying mode

Growing. Thriving. Booming. Strong.

These are a few of the select words equipment manufacturers and dealers use to describe the current state of the aggregate industry. Judging from how aggregate producers approached equipment purchases this year, it’s easy to see why vendors feel good entering 2019.

A positive sign for the aggregate industry: More than half (54 percent) of the producers P&Q surveyed for this State of the Industry Report indicate they increased their capital expenditures in 2018. Most of the increases weren’t of the 2 or 3 percent variety, either.

Breaking down the data

In fact, 49 percent of producers upped their spend by at least 5 percent. And nearly one in four (22 percent) upped their spend by at least 10 percent.

These figures are very similar to last year’s P&Q stats. In 2017, nearly 63 percent of producers upped their capital spending, and nearly 46 percent increased their spend by at least 5 percent. Similarly, about one in four producers indicated a year ago that their capital spending jumped upward of 10 percent.

Producers are again interested in a variety of equipment and technology. More than half (52 percent) made significant investments this year in excavators and loaders, and almost half (45 percent) invested heavily in conveying and material handling equipment. Crushing and hydraulic breaking equipment was another area in which a high percentage (38 percent) of producers invested, drawing parallels to P&Q’s 2017 figures.

Last year, 51 percent of producers invested significantly in excavators and loaders, with 39 percent making significant investments in both conveying and material handling equipment and crushing and hydraulic breaking equipment.

Other categories in which producers made significant 2018 investments: haul trucks (24 percent), plant automation (21 percent), scales and weighing equipment (21 percent) and screening/screen media (21 percent).

A lower percentage (12 percent) invested in washing and classifying technology this year. In 2017, 20 percent of producers told P&Q they made significant investments in this category.

The same goes for portable plants, as 10 percent of producers made a significant portable plant investment in 2018. A year ago, 18 percent of producers told P&Q they invested significantly in a portable plant.

Interest in drones remains steady, as 10 percent of producers tell P&Q they invested significantly in the technology this year.

The year ahead

Based on P&Q data, capital expenditures are expected to be up once again in 2019. Still, those who plan to increase their spend are tapering it to an extent.

More than half (52 percent) of the producers P&Q surveyed expect to have bigger budgets to purchase equipment in 2019. Budgets will be flat for one in three (34 percent) producers, with about 14 percent reducing their equipment spend next year.

Thirty-five percent of producers plan to spend at least 5 percent more on equipment next year than they did in 2018. The 35 percent figure for 2019 represents a slight drop from 2018, but it’s still a positive indicator of how producers feel about the state of the construction materials market.

So, in which areas will producers devote their spend in the coming 12 months? As anticipated, producers plan to make significant investments in conveying and material handling equipment (51 percent), excavators and loaders (51 percent) and crushing and hydraulic breaking equipment (46 percent).

Producers will spend more moderately in screening and screen media (29 percent), haul trucks (24 percent) and plant automation (24 percent). Lower priorities are equipment related to scales and weighing (15 percent), washing and classifying (12 percent), drilling and blasting (5 percent) and drones (5 percent).

What manufacturers and dealers say

The equipment manufacturers and dealers who participated in P&Q’s State of the Industry Report survey concur that aggregate equipment sales are up this year. In fact, the majority (56 percent) report sales are up more than 10 percent.

The crushed stone and sand and gravel segments represent growth opportunities for these vendors, many of which are benefiting from increased demand for construction materials.

In addition, the majority of surveyed manufacturers and dealers are forecasting their 2019 aggregate equipment sales to be on the rise.