Normalcy returns as the industry picks up where it left off

Yanik

The aggregate industry’s recovery continues, with most producers at least in a better position today versus where they were one year ago.

While an air of uncertainty remains, producers are operating in an environment that looks and feels more normal with each passing week.

Sure, aggregate demand was down for some producers in the first quarter, but many are experiencing pricing gains to offset dips in volumes.

The residential market remains red hot, with this category expected to drive added demand through at least this year. Public construction is driving opportunities, as well, with concerns about state Department of Transportation projects waning now that they’ve been somewhat stabilized and jobs are underway across the U.S.

Another sign of normalcy: Mergers and acquisitions are gaining momentum. M&A slowed dramatically last year, but activity is picking up this spring. A couple of sizable deals already went down in 2021, too, with Arcosa completing its acquisition of StonePoint Materials and Martin Marietta purchasing Tiller Corp. in addition to Lehigh Hanson’s West Region business. And, in the latest M&A development, Vulcan Materials shared that it is acquiring U.S. Concrete.

FMI’s George Reddin writes about M&A this month, noting that buyers are hungry for acquisitions. According to Reddin, buyers are armed with strong balance sheets and a “war chest” of cash that was accumulated during the pandemic.

The return of M&A precedes yet another sign of normalcy: the resumption of industry events. The magazine, for example, hosted the annual Pit & Quarry Roundtable & Conference June 2-3, bringing producers, manufacturers, dealers and other industry stakeholders together.

World of Concrete is underway this week, and the first in-person National Stone, Sand & Gravel Association event since the pandemic shut things down – the Executive Committee & Leadership Summit – is scheduled for June 13-15. MINExpo International (Sept. 13-15), a major trade show, also looks like a “go.”

The industry’s return to normalcy isn’t necessarily all positive, though. Hiring remains a major hurdle. Compounding the matter is that businesses everywhere are looking for people.

The sentiment I keep hearing inside our industry and out is that people are disincentivized to work. Enhanced unemployment benefits are keeping too many people on their couches, but there’s discussion now among some lawmakers of paying people bonuses to go back to work.

Another development on the industry’s road to recovery is the cost of goods. Although aggregate pricing is improving, the cost of equipment and parts with steel inputs will surely be rising – if they aren’t already. Steel prices are up significantly of late, and steel and lumber shortages are already impacting new construction.

Featured photo: P&Q Staff