Equipment buying trends upwards

No two plants are the same.

Will Pierce, vice president of engineering at Schurco Slurry, can certainly attest to this. Take a step inside his world of pumps and you’ll understand why.

“Your average sand plant making concrete sand, construction sand – if they have a pond on their property they usually have one or two pumps,” Pierce says. “A sand plant doing fines recovery – washing, cyclones, ultra-fines recovery – might have like five or six pumps.”

But plants producing frac sand? Those tend to require 20 to 25 pumps, Pierce says. And with the onslaught of frac sand plants starting up in the United States, production at Schurco Slurry is, not surprisingly, slammed.

“You’ve got a giant rush to produce in 2018, and then all of these new starts will be done and it’s operation and maintenance from that point,” Pierce says.

The frac sand boom is a welcome development for manufacturers like Schurco Slurry. While equipment demand among more traditional aggregate producers is not quite at frac sand levels, demand for equipment is at least steady, if not relatively high, compared with recent years.

“The general trend for aggregates around the country is an increase, and [demand] is steady, consistent and very well-planned,” Pierce says. “Our biggest customers are the biggest producers – Martin Marietta, Vulcan, [Lehigh] Hanson, CalPortland. They’re continuing to grow.”

Other equipment suppliers serving aggregate producers are feeling the effects of the industry’s growth this year, as well. Ask most manufacturers, and they’ll tell you 2018 has largely been positive for sales, and they’re largely optimistic about 2019, too.

“There’s a lot of optimism,” says Chris Nawalaniec, vice president of sales and marketing at Stedman Machine Co. “The state of the overall economy has people feeling pretty confident.”

No slowdown ahead

Fred Gross, director of sales and development at IRock, agrees industry confidence is up. Gross experienced the industry’s highs and lows across multiple decades, and he’s seen the extremes from different vantage points.

With a career that’s steered him through manufacturers like KPI-JCI & Astec Mobile Screens, Metso and Weir Minerals, Gross has been around when demand for equipment surges to tremendous heights.

Of course, Gross has also been through some of the industry’s darkest days – the last recession, for example – when brand-new crushing and screening plants, fresh off assembly lines, sat idle for months, if not years, before finding homes somewhere.

Fortunately, 2018 has been one of the industry’s best years in recent memory, and demand for new equipment is at a high level.

“I’ve been in the business 35-plus years,” Gross says. “Probably 20 years ago is when our country started to go over to the portable side. I have seen it stronger, but boy, I’ll tell you, demand hasn’t been like this in five to eight years.”

Don’t expect the market environment and the subsequent demand for equipment to change anytime soon. Manufacturers serving the aggregate industry expect demand to continue into 2019, and some see high demand continuing beyond next year.

“I’m sure we’re going to see continued growth,” says Matt Lepp, heavy industry drive specialist at Van der Graaf, a Canadian-based company that manufactures drum motors. “There are no signs to me of anything slowing down.”

Screen Machine Industries’ Jody Beasley, likewise, expects equipment demand to be as strong in 2019 as it has been in 2018.

“From everything I’ve read and from what I’ve heard in industry organizations and meetings, 2019 should be as good, if not a little better,” says Beasley, vice president of sales and marketing at Screen Machine. “We really don’t see a slowdown in the next couple of years.”

Gross does not expect a slowdown, either.

“In talking with my distributors and customers, it’s going to be strong for the next two to two and a half years,” he says.

Other buying dynamics

Demand for equipment is, of course, higher in some U.S. regions versus others.

“There are pockets,” Nawalaniec says. “Where you are makes a big difference. If there’s a big public works project or construction of buildings, those things all drive demand for aggregates.”

Some of the demand equipment suppliers experience is tied to mergers and acquisitions. After a mom-and-pop business is acquired, for example, producers like Vulcan Materials and Martin Marietta put their stamp on the plant.

“A lot of the mom-and-pops were saving every dollar they could for their production,” Pierce says.

The way aggregate producers are buying is also changing. Some are intent on leasing or renting equipment.

“We’re seeing a lot more of these guys wanting to lease equipment or rent it for a season and give it back,” says Bill Royce, regional sales manager at KPI-JCI & Astec Mobile Screens. “I think that’s going to be trending forward on equipment. We as OEMs are going to see that in the future.”

Beasley agrees.

“With the economy doing so well, that kicks up demand not only for sales but short-term rentals, long-term rentals, you name it,” he says.

According to Mark Krause, managing director of North America at McLanahan Corp., rentals and leases are up because producers and contractors have simply adapted to the just-in-time world. Viewpoints are much more short-term, he says. Renting and leasing allows customers to better keep up with modern technology.

Renting and leasing also requires less commitment.

“We’re all living in the Amazon world where I can wait ‘til the last minute to buy it,” Krause says. “And if I don’t have it, the next guy will. If I can’t get it fast enough, I’ll pay a little extra for it.”

Leasing equipment offers advantages to manufacturers and dealers, as well.

“We lease because it allows us to moves our assets around and it allows us to stay with current technology,” Krause says. “That was good confirmation of this different mindset. People would hold onto equipment for 30 years. Now, it’s just a different mindset: quicker turnover of assets, quicker movement of assets.”

This is the new norm, Krause adds, and he expects it to stay this way for the next five to 10 years.

“It’s changing how we’re looking at our businesses,” he says.