Assessing the aggregate industry as 2022 nears finish line

In its latest quarterly report on aggregates, the U.S. Geological Survey says aggregate production was up 3 percent in the third quarter. Photo: P&Q Staff

Confident despite uncertainty.

That’s a fair characterization of how aggregate producers nationwide feel at this moment in time.

Yes, times are tough. But producers further adapted their operations in 2022 to overcome a series of dynamics that took hold of their businesses this year and over the prior two.

Many of these dynamics – inflation, rising interest rates and supply chain slowdowns – will carry into 2023. But looking back on 2022 as a whole, producers once again exhibited the tremendous grit that’s sustained them through a trying three-year stretch.

“Overall, the aggregate industry was strong in 2022,” says Ron Earl, group vice president of sales and marketing at Astec Industries. “With aggregate pricing appreciating in many regions and increased consumption, producers have been able to mitigate supply chain headwinds, labor shortages and inflation.”

Of course, those weren’t the only serious challenges producers faced this year.

“The war in Ukraine, the continuation of COVID through most of the year and supply chain issues have created challenges for producers,” Earl says. “However, with a new focus on long-term planning, they are overcoming these obstacles.”

Josh Leftwich, president and CEO of the Texas Aggregates & Concrete Association (TACA), offers a similar assessment of today’s materials producers.

“Like most industries across the country, TACA members had no choice but to manage a handful of unforeseen events, including surging fuel prices, rampant inflation and the many complex issues brought on by the pandemic,” Leftwich says. “COVID, for example, pushed the industry to become more efficient and automated, and to meet these challenges with innovation.

“Throughout, the industry was and is steadfastly committed to delivering the quality and quantity of materials demanded by Texas’ unquenchable growth.”

Robert Dugan, president and CEO of the California Construction & Industrial Materials Association, agrees the industry performed well in 2022. But any discussion of this year – or last year, for that matter – cannot be had without acknowledging the impacts of COVID, he says.

“The essential nature of our industry during COVID was a strong stabilizing factor,” Dugan says. “Having the state and national administrations use infrastructure to prop up the backbone of the economy has been a strong driver for our industry. While we all thought that COVID restrictions would end in 2021, obviously [they] did not.”

What the numbers say

Surging fuel prices caused serious pain for operators everywhere this year. Photo: P&Q Staff

Still, aggregate producers once again did their thing in 2022: they produced.

In terms of quantity, U.S. Geological Survey (USGS) data for the first half of 2022 backs up the claim that aggregate production is up over 2021. Although aggregate production in the second quarter this year was on par with last year’s second quarter, production was up 4 percent in the first quarter.

Aggregate production was also up in the third quarter, supporting the resounding sentiment that demand remains healthy. But whether production keeps on its current trajectory is anyone’s guess.

“While production continues at a strong pace entering into the fourth quarter of 2022, we can see the softening of the economy on our road ahead, which has already started to hit private markets,” Dugan says. “Despite increasing inflation and interest rates, as well as anticipated reductions in private construction, we anticipate that 2022 will end slightly better than 2021. But 2023 is in question.”

Fortunately, a variety of construction projects – both private and public – fueled aggregate consumption throughout 2022.

“Our market seems to be pretty busy,” says Clay Albright, vice president at Kentucky-based Caldwell Stone Co. “Private construction has kept up over the last several years, and we hope this trend continues. I have mostly heard from peers in the industry across the country – and in Kentucky – that they are as busy as we are.”

Randy Breaux, president of Motion, has a similar view of the 2022 market.

“The aggregate industry has exhibited solid growth this year – up double-digits over 2021,” he says. “While no specific events or developments stood out, the industry experienced growth resulting from the economy’s overall health through the year’s first three quarters.”

L&H Industrial’s Patrick Weaver says a newer dynamic was a contributing factor in the industry’s growth.

“With the percentage of growth in the industry driven by a ‘product now’ mentality, I would characterize 2022 as exciting and challenging,” says Weaver, product line manager of mineral processing at L&H Industrial. “With both aggressive expansion and consolidation across the industry, it created interesting challenges from the supply side. Additionally, these challenges helped spawned creative solutions in the industry to solve the market’s needs.”

Managing editor Jack Kopanski contributed to this article.