New dynamics at play for aggregate producers

By |  February 12, 2019
Photo by Kevin Yanik

Labor is essential to the job, but because there’s a shortage of it just about everywhere, there’s a premium being placed on those who are available. Photo by Kevin Yanik

The demand for construction materials is there. NALC’s Dana Boyd sees it.

Unfortunately, new hurdles are popping up to slow the pace of construction in his market. One of the biggest slowdowns is happening downstream from his Indiana business. Construction projects are queued up, but key people such as engineers aren’t available to see these jobs through at the usual pace.

“We can’t physically get things through the process,” says Boyd, whose company is wedged between Indianapolis and Terre Haute, Indiana.

Simply getting materials to jobsites is another very real problem.

“We’ll lock down 30 to 40 trucks for one job, but we have a hard time finding the drivers to move it,” Boyd says. “We’ve got the materials sitting here in inventory, but how do I get it out?”

Labor is essential to the job, but because there’s a shortage of it just about everywhere, there’s a premium being placed on those who are available. As a result, wages are going up.

“You look at the builders, fabricators and iron workers – you can’t get your hands on them,” Boyd says.

As he describes, money absolutely still talks.

“The loyalty is gone,” Boyd says. “Head hunters are going nuts looking for people, particularly front-line managers who know how to move and shake.”

A supervisor shortage forces producers to consider adding controls or larger equipment to mitigate pain. In addition, producers continue to experience extended lead times on new machinery they require in house today.

“It’s getting worse,” Boyd says. “[Manufacturers] are trying to add production lines, but how do you get people trained?”

Used machinery is an option, but producers won’t necessarily find the bargains they did at auction years ago.

“I just went to an auction the other day for heavy equipment,” Boyd says. “A 10-year-old machine used to be worth 60 cents on the dollar. Now, it’s 75 to 80 cents as long as it’s maintained.”

Changing business landscape

These are a handful of the dynamics at play that are sneaking up on the industry – at least through the eyes of one producer. The dynamics are putting a wrench in the concept of “business as usual.”

“We’ve got to have labor and equipment to do our jobs,” Boyd says.

Despite barriers in these areas, Boyd maintains an optimistic view for the construction materials industry. As he sees it, the world will need aggregate as long as human life persists. But some new variables are injecting a bit of uneasiness into the business equation.

“It’s a good thing the market is growing,” Boyd says. “We’re kind of struggling to figure out where to invest and what’s most important.”

This article is tagged with , , , , and posted in Editors' Blog

Comments are closed