Oldcastle Materials CEO offers aggregate industry outlook

By |  March 30, 2018

Lake

Reforming infrastructure. Fixing the Highway Trust Fund. Addressing the workplace exams rule.

These are some of the areas on which Randy Lake, CEO of Oldcastle Materials, will focus his energy over the next 12 months as chairman of the National Stone, Sand & Gravel Association (NSSGA). Lake succeeded Dolese Bros. CEO Mark Helm at the NSSGA Annual Convention March 4-7 in Houston.

The construction materials firm Lake leads is currently present in 43 states and eight Canadian provinces, with about 22,600 employees across 1,200 locations. Oldcastle is a top North American producer of aggregate, asphalt, ready-mix concrete and cement.

Pit & Quarry connected with Lake ahead of the convention about his plans as NSSGA chairman, as well as key legislative and government affairs issues that should come to the forefront of the aggregate industry in 2018.

P&Q: What will be the focus of your tenure as NSSGA chairman?

Lake: This is an exciting time for our industry, and I am honored to have the opportunity to act as NSSGA chairman for 2018.

As an industry, I think it’s safe to say that we eagerly await news on an infrastructure plan from Congress. Thoughtfully responding to what is to come in a way that will boost our industry for the next decade is going to be critical, so this is certainly at the top of my mind.

Engaging in the infrastructure debate effectively will require NSSGA’s continued focus on legislative and regulatory advocacy to ensure the future strength of our industry. Advocacy remains job No. 1 for NSSGA, and we are going to further strengthen our association’s legislative and regulatory advocacy efforts to establish NSSGA as the advocacy leader in the construction materials sector. We all have a role to play in making this happen, and through the continuous building of relationships with elected officials and effectively engaging with them, we can ensure that the issues facing our industry remain at the top of their agenda.

P&Q: How would you describe the current outlook for the aggregate industry?

Lake: The outlook for our industry in the year ahead is positive, and we expect continued growth after a good 2017 with consumption at its highest in almost a decade.

According to Oldcastle’s 2018 North American Construction Forecast Report, construction is expected to grow almost 5 percent in 2018, a bit higher than in 2017. Gypsum products are expected to experience the largest price increase (6 to 7 percent) in 2018, followed by cement, aggregates and concrete, all in the 3 to 4 percent range.

According to Randy Lake, the industry has an opportunity in the years to come to strengthen its relationship with the Mine Safety & Health Administration. Photo courtesy of NSSGA

P&Q: The current administration has been in place for more than a year now. What would you like to see the administration and Congress do for the betterment of our industry?

Lake: An infrastructure investment package that includes long-term, robust revenue for the federal Highway Trust Fund should be a key area of focus.

After much anticipation in 2017, the president recently called for both parties to come together and for Congress to produce a bill that generates at least $1.5 trillion. Making an infrastructure package a reality is absolutely critical, and the sooner Congress acts the faster we can get to work as an industry.

P&Q: A number of states have taken on the responsibility of financing the rehabilitation of their own roads and bridges over the last couple of years. Are these actions good for the long-term health of the industry?

Lake: A serious, significant and sustainable investment in our roads, highways, bridges, airports and other infrastructure that will grow our economy, our industry and put people to work will have the most effective impact for our industry. This investment needs to occur at the federal, state and local levels.
Americans at both ends of the political spectrum agree that we need more investment in our nation’s ability to move people, goods and services across the country. How we pay for that investment and who pays for it is the sticking point.

A $1.5 trillion, 10-year infrastructure package investment with $200 billion in federal funding is what is proposed. This would be parceled out in grants to state and local governments that are expected to match investments with their own revenue, either in the form of taxes or private money. How the trillion-plus dollars adds up and is paid for remains somewhat abstract and subject to speculation.

The critical point for the aggregates industry is that Congress and the administration pass an infrastructure package that makes real investments in our nation’s infrastructure. The plan must contain a long-term, robust fix for the Highway Trust Fund. Our infrastructure needs are far greater than $1.5 trillion, so the enactment of a sustainable plan for federal transportation infrastructure investment would be a very positive development.

P&Q: What have been the most recent and relevant signals of change from the administration that could have a significant impact on the aggregate industry?

Lake: The current administration has suggested that a major element of its plan for infrastructure will be streamlining environmental reviews and permitting for projects. The biggest step the administration has taken in this regard to date is around regulatory reform, and they are in the process of repealing and replacing the onerous 2015 Waters of the U.S. rule.

This was also highlighted in the State of the Union with specific mention that any infrastructure bill must also streamline the permitting and approval process to no more than two years. This would have a significant, positive impact on the permitting process to expand or establish operations for our industry.

Another area where the administration is having a notable impact is with our primary regulator: the Mine Safety & Health Administration (MSHA). For example, the workplace exams rule, an onerous documentation process required for hazards and inspections, is under review. This rule is highly costly to our operations and yields modest improvement to working conditions.

Safety is and will remain a core value across our membership, and the argument is that managing the arduous paperwork associated with this rule diverts attention and resources away from actively managing safety. The new proposal being tabled reduces the number of items that need to be noted and is only necessary if a hazard is not promptly abated.

To put this in context, NSSGA estimates the alternative comes with a price tag of $25 million to small operators annually.

P&Q: What expectations do you have of David Zatezalo, the industry’s new assistant secretary of mine safety and health at MSHA? Do you see an opportunity for the aggregate industry to enhance its relationship with the agency?

Lake: A strong working relationship with Assistant Secretary Zatezalo and his team will be beneficial for our industry. Already, MSHA has shown a greater commitment to balancing regulation and industry concerns by taking a closer look at some of the legacy rules and policies.

In addition, Ed Elliott now serves as a senior advisor to him after a 30-year career in our industry. Ed understands safety and has already indicated that he wants to connect with operators and miners to improve overall safety and health.

In addition to focusing on the workplace exams rule and its significant impact on our industry, the association is pursuing legal action against the pattern of violations rule. It threatens to shut down operations with an excessive number of citations if they have not been finalized, which eliminates due process of law. We have had indications that MSHA is looking to find middle ground and settle the lawsuit.

In short, there is a renewed opportunity for the aggregates industry to enhance its relationship with the agency with Zatezalo coming in.

P&Q: Labor shortages and the ability to hire and retain key employees is a challenge across our industry. Where should we proactively focus our efforts in order to fill vacancies and support future growth?

Lake: NSSGA has been working to draw people into the industry through a dedicated website and jobs board at jobs.nssga.org. It is proving to be an effective tool for searching jobs, and the organization has put a robust social media effort behind this to attract potential employees to the site.

It is estimated that 79 percent of job seekers use social media to find a job, jumping to 86 percent for younger job hunters in the first decade of their careers. Additionally, if the opportunity arises NSSGA will support vocational programs that give high schoolers the skills to start long careers in stone, sand and gravel.

To share an experience that is gaining attention within my own company, we have started to target potential hires through a focused military recruitment initiative that encourages veterans to translate their skills to a job with us. It aims to increase the number of skilled workers applying for and filling complementary positions in offices, factories and manufacturing facilities across the country.

The campaign is an additional resource to the ongoing military recruitment efforts and seeks to drive internal awareness of our goal to recruit more veterans and the availability of resources to support those efforts. The tools used range across a spectrum from promoting a military skills translator to hard hat stickers, which have been very well received by our veterans.

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