Inside the world of a Pennsylvania aggregate producer

By |  March 22, 2021
Bob Housel

Housel

Bob Housel learned a number of business lessons in his earliest years at Masters RMC from his grandfather, Richard S. Masters, who founded the family-owned ready-mixed concrete company 89 years ago in Pennsylvania.

One lesson Housel learned was the value of working together – even, at times, with companies that Masters RMC competed against.

“When I first went to work here in 1990, I wasn’t here three or four months when there was this push to create a regional association to promote ready-mix concrete,” says Housel, the third-generation president of Masters RMC, which he currently oversees alongside a sand and gravel operation, Red Oak Sand & Gravel. “I got in the car with my grandfather and went to this meeting.”

Housel quickly got involved with the leadership of the regional organization that was born out of that meeting. Later, that organization merged with another in southeast Pennsylvania, and an association to promote concrete across the whole state was established by the mid-1990s, Housel says.

“Ultimately, that group formed and merged with PACA (the Pennsylvania Aggregates & Concrete Association),” Housel says. “I’ve been involved ever since.”

Top 2021 priority

With the state of Pennsylvania categorizing the aggregate, cement and concrete industries as “life-sustaining” during 2020 lockdowns, Masters RMC’s Bob Housel says construction materials producers have a strong case to make that they’re essential to the way of life in the Keystone State. Photo: Bob Housel

With the state of Pennsylvania categorizing the aggregate, cement and concrete industries as “life-sustaining” during 2020 lockdowns, Masters RMC’s Bob Housel says construction materials producers have a strong case to make that they’re essential to the way of life in the Keystone State. Photo: Bob Housel

2021 marks the first of two years Housel serves PACA as chairman. And there is no shortage of industry issues he and other PACA leaders will combat, with a significant long-term funding shortfall at the Pennsylvania Department of Transportation (PennDOT) and continuing COVID-19 challenges rising to the top as hurdles that construction materials stakeholders must overcome.

“PennDOT funding is important because it goes across all markets, all geographies, all of Pennsylvania,” says Peter Vlahos, president of PACA.

According to PennDOT, Pennsylvania has the nation’s fifth-largest state-maintained road system and the third-largest state-maintained bridge system. PennDOT also notes on its website that Pennsylvania’s road system is comparable in size to those of New York, New Jersey and all of the New England states combined.

“Our industry is obviously heavily invested in PennDOT,” Housel says. “[The state] is one of the largest producers of crushed stone in the country, and our largest customer in Pennsylvania is the state of Pennsylvania.”

So, it stands to reason that Housel and like-minded business owners are looking for solutions – and a variety of them, perhaps – to keep projects afloat and business opportunities flowing within the Keystone State.

Lately, construction materials producers have had a few reasons to be concerned about the PennDOT program. PennDOT, for example, indicated in mid-December that it was putting project letting on hold. At the same time, PennDOT pulled a $330 million letting because of a cash flow issue.

Fortunately for the agency, it is receiving about $410 million of the $10 billion being directed to state Departments of Transportation across the U.S. through the end-of-2020 coronavirus relief package. So, that pulled $330 million letting, at least, will be made whole in 2021.

Still, long-term funding questions about the PennDOT program remain.

“DOT is not the exclusive customer,” Vlahos says, “but it’s a significant customer for our products.”

A rising threat

Peter Vlahos

Vlahos

Although advocating for additional PennDOT funding is job No. 1 at PACA, association leaders recognize that Pennsylvania’s construction materials producers face several other serious challenges – including regulatory mandates that pose systemic threats to businesses across the state.

As Vlahos describes, Gov. Tom Wolf (D-Pennsylvania) is driving a regulatory agenda through climate change initiatives that impact a number of industries. But with the state of Pennsylvania categorizing the aggregate, cement and concrete industries as “life-sustaining” during 2020 lockdowns, Housel says construction materials producers have a strong case to make that they’re essential to the way of life in Pennsylvania.

That “life-sustaining” label can go a long way for the industry, Housel says.

“Our industry tends to be under the public microscope despite the fact that we’re already a heavily regulated industry,” he says. “We produce product that our communities need to survive and thrive. We provide the bones of the critical infrastructure to the point where state and federal governments recognize us as an ‘essential critical’ industry. They recognize the importance of it, but at the same time there’s a big regulatory focus on reducing the ability of our industry to do its work.”

With PACA’s tagline being “Building and Connecting Communities,” association leaders agree they must raise awareness of the benefits that the producers of aggregate, concrete and cement continuously provide to communities.

“We build the roads and bridges, schools and homes,” Vlahos says. “There’s aggregate, concrete and cement in everything you can cast your eye on.”

Still, the most ardent climate change advocates are unlikely to take to that message. Wolf, for example, signed an executive order in 2019 directing the Pennsylvania Department of Environmental Protection to participate in the Regional Greenhouse Gas Initiative (RGGI). The RGGI, which is a cooperative effort to reduce greenhouse gas emissions with states in New England and the Mid-Atlantic, represents a threat to the construction materials industry.

“Effectively what it’s doing is, for all intents and purposes, is any coal-powered generation is going to be at a disadvantage,” Vlahos says. “It’s eliminating those coal-powered plants. There’s aggregate that goes into those facilities. For the scrubber [stone], that’s one market that will disappear by executive order.”

Additionally, costs will go up on construction materials producers who rely on electricity.

“Regulations come with a cost no matter where they are born,” Housel says. “Many people maybe don’t connect the dots, but the cement industry is the aggregate industry. At their root, cement companies are aggregate producers.”

Unfortunately, cement producers have a bull’s-eye on their backs at the moment.

“They use a lot of energy,” Housel says. “There’s an embedded carbon footprint that, I think, has unfairly been put on the cement industry. They’re trying to do things to reduce that, but cement is the glue that goes with the aggregates to manufacture the concrete and build the structures and all the things we need.”

In Housel’s view, concrete is the world’s most economical building product. Yet, regulators are targeting the industry producing that economical product.

“Next to water, concrete is the next most-used product in our world by weight,” Housel says. “So we’ve got to come along with an awareness program to let our public know – and our regulatory and legislative folks – about what we do and how important it is.”

Matters at hand

With a tagline of “Building and Connecting Communities,” Pennsylvania Aggregates & Concrete Association leaders agree they must raise awareness not only of the benefits of ready-mixed concrete but of aggregate and cement. Photo: Bob Housel

With a tagline of “Building and Connecting Communities,” Pennsylvania Aggregates & Concrete Association leaders agree they must raise awareness not only of the benefits of ready-mixed concrete but of aggregate and cement. Photo: Bob Housel

Other industry challenges persist in Pennsylvania besides climate change, highway funding and COVID-19. One that many producers continue to face – although the problem has improved slightly, Housel says – is hiring qualified people.

More specifically, finding CDL-qualified drivers is a top recruiting challenge.

“There has been a movement to increase driver training and qualifications,” Housel says. “There are some schools. In the short term, unemployment has gone up, so there are more people to choose from. But when the economy booms, there is a need for truck drivers. There’s going to be a demand there, and I’m hoping we can somehow come up with a way to create drivers who are coming into the workforce.”

General regulatory compliance weighs on Housel and others, as well.

“There a higher cost of compliance due to increased regulations,” Housel says. “It’s something we all face, and we need to stay ahead of those issues with the ‘letter’ agencies. There is a lot of public scrutiny on us, as an extractive industry, and there are some particular challenges we have as it pertains to that.”

Whatever solutions the industry pursues in Pennsylvania, Housel argues that the industry should do so together.”

“My grandfather taught me the value of working together with industry folks despite the fact that they might be competitors,” Housel says. “Work together to promote your products and all the issues that you face.”

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About the Author:

Kevin Yanik is editor-in-chief of Pit & Quarry. He can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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