Projecting aggregate demand in 2020

By |  April 13, 2020

The following transcripts were edited from two concurrent discussions Jan. 15 at the Pit & Quarry Roundtable & Conference. Both conversations were edited for brevity and clarity.

Rick Madara PQRT 2020

Rick Madara expects McLanahan Corp.’s aggregate equipment sales to be up this year. Photo: PamElla Lee Photography

Producers: What are your sales expectations for 2020? Tell us about the dynamics at play in your state or region that will drive or hinder demand. Do you expect a drastic shift in demand compared with 2019, or a continuation of last year’s demand? Equipment suppliers: What are your business expectations for 2020, and how are you forecasting equipment sales to the aggregate industry to be? What dynamics are most at play (i.e., tariffs, the political climate, weather), and what potential challenges do you foresee in 2020?

RICK MADARA (MCLANAHAN CORP.): We call on a lot of different industries. We see our numbers being down significantly for 2020. It has been so inflated over the last three years. It would be interesting for us to see what a normal year looks like. That’s what we’re predicting 2020 to be.

From an equipment standpoint, we see our [overall] sales being down. But from an aggregate industry standpoint, we see our equipment sales being up.

Tyler Trowbridge PQRT 2020

Trowbridge

TYLER TROWBRIDGE (BELT TECH): We’ve seen election years before, and there seems to be a bit of a trend of people waiting to see what happens. Hopefully, as we get closer, we’ll know better the way the election is going to go and people get a little bit more at ease with capital expenditures.

For Belt Tech the last couple of years, it’s been mostly flat. On the equipment side of our business, which we’re really new in, we will see growth. But it’s more based on investments we’ve made on infrastructure internally and people. Now that we’re covering the area better, we’ll see internal growth. But year in and year out, I see probably a flat year.

DAVID CISZCZON (POLYDECK): We start forecasting in August. I think [back then] I was much more concerned about a recession. I feel a lot less concerned today. 

We’re looking for modest growth this year. Election years are tricky, and we service all types – aggregate, mining, coal. You also have major trade shows (ConExpo-Con/Agg and MINExpo International) in the same year. That only happens every 12 years. So we’re expecting some type of boost from that.

It’s an interesting year, but overall we’re feeling more positive and looking for some modest growth this year.

Thomas Haun PQRT 2020

Haun

THOMAS HAUN (TURNER MINING GROUP): For those who don’t know our firm, we partner with producers. We act kind of like emissaries. 

What we’re seeing – and since we operate coast to coast – is pockets of explosiveness. If we’re talking the country as a whole, I think it’s modest growth. But there are some areas, especially on the coasts, that [we] are still out hunting for aggregate space. Where we are being pulled the most, I would say, is at the coasts. 

JEFF GRAY (TELSMITH): When we did our forecasting [last] fall, we looked back at the last four or five election cycles and didn’t see any relevant effects on the year in business. In fact, 2012 was one of the best years. So I think we kind of have a unique situation.

We have had a long bull market, but I think there are conversations around the election. I think there’s a little bit of recession prepping going on with the capital equipment side of the business. 

We didn’t see anything in the last cycles, but there hasn’t been a clear cut for president very early on. With most of the last four elections, you couldn’t say who was going to win early on.

Photo:

Reddin

GEORGE REDDIN (FMI CAPITAL ADVISORS): Speaking from a perspective of my clients who would be producers, but also users of their products (asphalt and concrete), it seems like the story was a function of [a few] things: Am I in the market where there’s population growth, so is there investment? Was I in a market that fared decently with weather? We had some really interesting stories the last two years on weather.

In 2018, especially the latter part of ‘18, the publicly-traded stocks were crippled dramatically. It started out bad in 2019. It finished really good in general, depending on where you are. 

I think the other thing that we’ve been nibbling on, but at the time has become a bigger issue, is the state funding. Am I in a state or states where I’ve got good funding?

In 2018, with the bad weather, we had a lot of good backlogs with contractors who were using materials going into the year – and that sustained. Then, we had really good weather and we had people needing the compact crushers. They just couldn’t keep up today with the demand, right? So that bodes well.

On the capital expenditure side, I will say the story that we have seen is [this]: The long view coming out of the recession was that [producers] had too much old stuff, so [they] modernized. Then, [they] got the wind behind me with the tax law change, but I would say most of my clients and prospective clients are planning to only do basically replacement capex this year as opposed to growth capex.

They did the growth capex in the prior years, and I think it will be a healthy capital expenditure, but it will look more like replacing stuff rather than new growth for the businesses.

Headshot: Alex Kanaris, Van der Graaf

Kanaris

ALEX KANARIS (VDG): I agree with David (Ciszczon). We’re looking at probably a modest growth in our business in equipment. For us, 2019 would be a bittersweet year because, yes, our business was down. But we had the opportunity to [enhance] our plant with more advanced equipment, more accurate parts and good practices. The result was we boosted our capacity approximately 22 to 23 percent. So that was good. 

Now, in terms of 2020: I realize, sometimes, when you are in an election year, things can turn in a different direction. But 2020 has very common factors as any other election year, because when the elections are very close between Democrats and Republicans, yes, we can step back and see who’s going to win. But I believe that the Republican administration is going to stay in power because we can see on the Democratic side of things that there is no energy in terms of the people voting. So we don’t think there’s going to be any detractor of growing the business. I think we’re going to keep going the way we’re going.


The following transcript was edited from a concurrent Pit & Quarry Roundtable & Conference discussion.

Rob Van Til PQRT 2020

River Aggregates’ Rob Van Til, right, expects to see strong growth within the state of Texas this year. Photo: PamElla Lee Photography

ROB VAN TIL (RIVER AGGREGATES): We service the Houston/Beaumont markets on the Gulf Coast of Texas, so we are really positive about 2020 and expect to see strong growth again in 2020. 

On the project side now, we are seeing a strong demand both on residential and commercial – plus a lot of industrial work. On the public side: As we look at 2020, in Texas we have Proposition 1 and Proposition 7, which were additional funding mechanisms that were put in place for highway funding. The positive about those is they really doubled us from about a $3.5 million-a-year highway program to about a $7 million-a-year highway program.

In addition to that, in our last legislative session, we passed a Senate Bill 7, which was a $2 billion flood infrastructure program that will go on throughout the entire state. So that, along with a lot of the matching programs, has me very optimistic on 2020 and moving forward.

KAREN HUBACZ-KILEY (BOND CONSTRUCTION CORP.): We are very optimistic, especially for the first half. Our governor, Charlie Baker, signed a $200 million road and bridges [bill] for Chapter 90 funds for fiscal year 2020. This goes to all of the towns in the commonwealth of Massachusetts.

Our weather turned exceptionally cold early, so a lot of that state work hasn’t been completed. So all of that will be a big push come spring once our winter finishes. We already know until at least June 30, there will be a big push to utilize that money. So $200 million for Massachusetts – for the towns – is a real big push for us and works exceptionally well as far as supplying things for the super state jobs.

Photo: Will Pierce

Pierce

WILL PIERCE (SCHURCO SLURRY): I’ll echo the sentiment regarding state funding. We see that nationally. There’s a jagged growth line as you go through the states, depending on what each statehouse is appropriating funding-wise, and then we see that mirrored in our equipment sales. We see high-growth in areas that are focused on this industry and promoting building and the capital projects that go with that. 

In the areas where it might be a little bit softer, all of these producers are still operating and producing, and they have equipment that they need to maintain and take care of.

One example is we had a long-term customer who just didn’t have a lot of money appropriated to them from their corporate office for big projects. They had a pump go down, and we had to work with them to do some type of financing to help move them along. As a manufacturer, we find ourselves in a position to work with producers who might be in softer areas. But everything is still moving forward. Nobody is stopping.

EVAN CLARKE (KLEEMANN): I think all of the manufacturers here [recognize] 2020 is a strong year for us with regards to the shows that are coming up. We have World of Concrete and ConExpo-Con/Agg. Any manufacturer loves to see who is coming. That, obviously, is a big improvement in prospective customers. 

For this year, a strong year is predicted – stronger than 2019, which was one of the best years ever.

Trent Carney PQRT 2020

Carney

TRENT CARNEY (ROGERS GROUP): Demand is strong, and we expect 2020 to be similar and slightly up from 2019. But one of the biggest challenges is labor and trying to find people who are interested in the industry.

Most of the kids just don’t even know about mining and construction. It’s not even on their radar. We’re trying to put up local programs to try to encourage that, just to try to get kids who maybe have an interest.

VINNIE ROCCO (AMCAST): To that point, I agree 100 percent. It’s extremely challenging to find people in the industry – on the producer side but on the equipment side, as well.

Amcast is an international company, but it is based in the United States in New York and [has] a division in Toronto. The state of New York, especially in the area where we’re incorporated, is not really geared toward the mining industry, so a challenge we’ve had is finding good people.

SHELDON SHEPHERD (TECWEIGH): One interesting point that’s been brought up about labor is finding people. The other part is retaining people.

As a manufacturer interfacing with producers, we definitely sympathize. We’ll have somebody trained up properly, and they move on to something else. Then you get new people and you may not have the time to train them appropriately. Then, the equipment’s not really being maintained very well, and it creates a whole level of frustration on both sides.

I see not only just finding people but retaining people as a challenge. 

ConExpo Roundtable

Turner

KEATON TURNER (TURNER MINING GROUP): Our issue isn’t finding people or even retaining people. Our issue is training. It’s hard to find 52-year-old Bobs that we can steal from somebody else and help train all these young people.

We get somewhere around 20 applicants a day just from our social media stuff. Our problem is filtering 18- to 24-year-old kids in who don’t have any experience in the industry. Who’s going to train them? It’s a challenge for us, it’s expensive and there’s a whole risk factor with young people who are not experienced.

STEPHENIE DAVIS (DAVIS INDUSTRIAL): We service the Southeast – industrial services, welding fabrication. It’s one thing to get people in the door and train them for two years, because there’s virtually zero trade schools – especially in Florida – that people can go to, learn and come with the skill set.

With the generation we’re bringing in today, they want to stay in a job for two or three years and then move on to the next thing. The guys that stuck around for 30, 40 years in one job just don’t exist anymore. So trying to get that camaraderie among their peers and keep them engaged and build that company culture is a real focus for us.

PAUL ROSS (DOUGLAS MANUFACTURING CO.): Necessity is the mother of invention. I think everybody would agree that finding good people and retaining them is difficult. The nature of the work that we do is changing. So we have to automate our manufacturing processes – not only just to keep relevant and survive financially, but to maintain relevance to the workforce.

I know a lot of companies focus on high school and college and trade school initiatives. We have begun mentoring materials for competitive robotics students. It seemed kind of weird at first, but it’s really cool. They are middle school teams. One of the teachers told me that when you engage children at a younger age, it’s just like sports: If they start playing when they’re 6 years old, they generally keep playing it through high school. That kind of plants that seed, because we need programmers, engineers and people who can work hard but think, as well.

JOHN GARRISON (SUPERIOR INDUSTRIES): 2020 is going to be kind of a weird year. You’re getting into an election year, so things will typically be down. Like Evan (Clarke) said, you’ve got two big shows. I think for any of us, ConExpo-Con/Agg is an opportunity to show off new products. We’ve got a lot of new products coming out. 

ConExpo Roundtable

Garcia

As far as an outlook for 2020: I think some markets have dried up. We had some exceptional projects in 2019 that maybe won’t be replicated, but there’s a lot of new projects that will be coming in the market for us. We’ll see some growth there.

KEVIN GARCIA (TRIMBLE): This year, we are starting to see a lot of task assistant-type solutions where we’re asking our operators to do less. We’re automating things that everyone knows about, we’re [seeing] self-driving cars, and we’re not that far from seeing that in this industry, regulations aside.

We’re able to connect far more than we were even two years ago, and some of that is for the labor shortage. Can you do more with less people? Can I manage three or four different sites? You do it from a computer now. I don’t have to be physically on site like I used to. That stuff has really come to the market.


Comments are closed