Editor’s notebook: ‘Gangbusters’ construction, a labor shortage solution and more

ConExpo-Con/Agg 2020 ended four weeks ago, meaning many of us have been confined to our homes for a rather long stretch.

While the impact of the coronavirus on the U.S. economy is quite clear at this time, the aggregate industry finds itself in a much more palatable situation relative to other industries that are hurting.

Aggregate producers, along with their customers and vendors, are not immune to some of the economic impact, of course. But operations, by and large, continue to crush rock while suppliers make necessary adjustments to support their customers.

Construction activity

Two sources used the word “gangbusters” this week to describe some of the activity they’re hearing about within the markets they serve at this stage. The sentiments were largely in reference to state Department of Transportation (DOT) projects, which a number of road contractors have ramped up lately because of a lack of road traffic.

In the Southwest, for example, KPI-JCI & Astec Mobile Screens’ Bill Royce says road contractors are shifting work from night shifts to day shifts.

“Guys are excited about that,” says Royce, regional sales manager for the Southwest of Astec’s AggReCon Group. “That’s one of the biggest changes.”

Such shifts are taking place in metropolitan areas within states like Arizona, California and Utah, he says.

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The Editor’s View: Aggregate industry survey and forecast

Kevin Yanik, Pit & Quarry‘s editor-in-chief discusses responses to the magazine’s ongoing survey and contributor David Chereb’s industry forecast.

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Addressing the people shortage

With roughly 17 million Americans filing for unemployment over the last three weeks, an opportunity is here for producers to put people back to work and address the labor shortage that’s plagued the industry for years.

One of Royce’s customers in the Southwest, for example, put up a billboard to recruit new hires. The logic behind the approach is that there must be affected people out there looking to change fields. So why not look to construction, whose companies can offer good wages, 401(k)s and other competitive benefits?

“Smart companies are saying, ‘Look, this is our chance to get this next generation,’” Royce says. “There has to be a guy out there saying, ‘I can do better.’ It doesn’t matter if he’s working in a restaurant. If he’s got the right attitude and a clean record, bring him in.’”

On the supply side, Davis Industrial’s Stephenie Davis shared how her Florida-based company is ramping up hiring to keep up with new demand.

“We have been able to navigate these uncertain times without any layoffs,” says Davis, whose company offers conveyor components and services. “In fact, we’ve hired additional personnel during the last few weeks to keep up with the demand.”

The supply chain

We heard early on in the pandemic about an uptick in wear part sales due to concerns of a worst-case scenario development. Suppliers, including Amcast’s Vinnie Rocco, continued to share that feedback about parts sales this week.

“It’s like the toilet paper effect,” says Rocco, executive vice president of operations at Amcast. “People were concerned they wouldn’t be able to get their parts. We had an influx of orders coming in the first couple of weeks. They increased quite a bit, just for the fact that people were also unsure what was going to be coming. They wanted parts on the ground before the potential of a national shutdown.”

I asked Rocco if he felt like the pandemic might change the number of wear parts customers inventory going forward. Prior to the Great Recession, producers stocked more parts than they do now. But a shift gradually happened, and many producers now operate with a just-in-time ordering mindset when it comes to parts.

Might the industry shift back?

“That’s a good question,” Rocco says. “I don’t know if it will go back to the way it was before the housing crash. But I could imagine it might be somewhere in-between. If people are putting a set of wear parts in their crusher at that time, maybe they’ll keep an extra set on the ground or two more extra sets.

“I think a lot of things are going to change as a result of what we’re going through,” Rocco adds.

The way we interact

One such change might be in how people within the industry meet with one another. This goes for those working within a single company, but also those interacting across companies.

Consider your own company and how you’re interacting with colleagues these days. Are you video conferencing a few times a week? Are you utilizing GoToMeeting, Microsoft Teams, Zoom or other virtual meeting platforms like never before? Are you still working at a high level despite the remote interactivity?

My guess is most people would say yes.

“Amcast is not alone in relying on Microsoft [Teams] or GoToMeeting,” Rocco says. “We find that we’re meeting more on a companywide level at 3 o’clock. We catch up every day. You’d think, ‘What can you talk about from Monday to Tuesday to Wednesday?’ But there are always things that come up.”

Could the use of video conferencing become more prevalent in the procurement process? Rocco, for one, sees a potential opportunity there.

“It’s hard to line those meetings up and hard to get there,” he says. “What you’re doing in those meetings is expressing what your company does and seeing the pain points that you have.”

Still, Rocco recognizes the aggregate industry is one that covets face-to-face interaction. Many of us are missing that at the moment, and Rocco doesn’t see that part of industry communications changing.

“Face-to-face interaction in our business will continue to be essential,” Rocco says. “I don’t really see any way around it. You have to get mud on your boots and walk the plant to understand where your customer’s challenges are. That’s hard to do via video conference or telephone.”

Royce couldn’t agree more.

“I don’t think there’s going to be a massive fundamental shift,” he says. “People are embracing technology, but our industry is about tribal knowledge and relationships. Yeah, we want to provide the best crusher-screener, but it’s how we take care of that customer.”

Tools that give vendors remote access to plants are arguably coming in handy more than ever. But those tools aren’t necessarily there to replace that in-person service.

“The tools are there to enhance support,” Royce says.

And the industry – even beyond this pandemic – will be about relationships, he adds.

“People still want to engage,” Royce says. “We are social creatures. We want that connection. You go to [ConExpo-Con/Agg] and you want to see guys. We always want to reconnect.”

Something to watch

Have you noticed the low price of gas lately? And when was the last time you actually filled your gas tank?

It’s probably been three or four weeks since I visited a pump, and most of us aren’t complaining personally about the cost going down so dramatically.

But there are unfortunate ramifications for some state DOTs whose gas tax-dependent revenues are down because of a lack of daily commuting through the ongoing pandemic.

An industry consultant raised this issue in a conversation this week, and the Highway Materials Group, which is made up of a number of related industry associations and organizations, wrote a letter to congressional leaders April 9 asking them to address a significant revenue shortfall facing state DOTs.

As the Highway Materials Group writes: “While you and your colleagues continue to discuss various federal relief and economic packages our country desperately needs, we write to express our strong support granting the immediate use of $49.95 billion in flexible federal funding to offset the significant revenues shortfalls facing state Department of Transportation budgets.”

The longer Americans stay at home, the more revenue state DOTs will lose. This makes passage of a significant infrastructure stimulus – one in the $1 trillion or $2 trillion range – even more critical.

A major producer in Florida I connected with this week feels the same way about an infrastructure stimulus. As the producer described, Florida’s aggregate industry relies on two key drivers: tourism and construction.

Florida’s tourism has undoubtedly taken a hit, as families aren’t flocking to Disney World and other vacation destinations like they otherwise would. So Florida’s tollways aren’t trafficked like they typically are, and that’s a significant revenue loss for the state.

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