Road to Recovery: The view from Virginia

Luck Stone had a pair of record sales days in the month of June, illustrating that the Virginia market remains strong. Photo: P&Q Staff

Record-low interest rates. Major infrastructure projects. Robust data center construction.

These are a few reasons why Charlie Windle maintains a glass-half-full outlook for the rest of the year at Luck Stone, the nation’s largest family-owned and -operated crushed stone, sand and gravel producer. Considering the economic uncertainty brought on earlier this year, Windle has some newfound clarity on the months ahead that elevates his confidence about the remainder of 2020.

In northern Virginia, at least, any uncertainty swirling may be pushed out to next year, he says.

“We’re certainly preparing for an uncertain environment,” says Windle, vice president of the Northern Region at Luck Stone. “Current sales remain strong, but for our associates that’s even a little bit confusing. They’re experiencing record sales days, paired with a conservative approach to projects, overtime and overall preparation for what may happen next year.”

Plowing ahead while also pausing

While Luck Stone pushed back a primary plant relocation at one site and delayed operationalizing a greenfield south of Richmond, Virginia, the company moved forward this year on a base reclaim plant at its Bull Run Plant in Chantilly, Virginia.

“It’s going to help us better balance the market and take care of our customers,” Windle says. “We’re pretty excited about that.”

Moving forward on some projects while pausing on others is par for the course within the aggregate industry this year. Still, in a year unlike any other, Luck Stone is finding reasons to remain optimistic. Two days in June illustrate as much.

“Looking at our daily sales, in the month of June we actually had a couple of record days companywide and within our region,” Windle says. “The Virginia market is still pretty strong. When you consider that, it gives you some sense of optimism.”

Additionally, low interest rates are feeding opportunities in residential construction for Luck Stone, Windle adds.

“We had a number of projects that were canceled when COVID began, and they’ve all started back up,” he says.

Unique market opportunity

Also, some Luck Stone locations are positioned well and continue to serve opportunities in Loudoun County’s “Data Center Alley,” where building construction has been ongoing for about a dozen years, Windle says. The construction of data centers may carry on for another decade or longer.

“Data centers are big concrete buildings,” says Windle, adding that about 70 percent of the world’s internet traffic is directed through Loudoun County. “They look like giant warehouses. Some are dressed up to look a little bit nicer than that, and our customers tend to want to get them underway very quickly.”

These facilities have a high demand for stone, Windle adds, and from a technology perspective, there currently isn’t an alternative to store data in smaller places.

“These are very large structures that are built to last,” Windle says. “There’s a lot of security around them. They don’t include giant parking lots like we have with other projects, but overall they’ve been positive for the northern Virginia region and are starting to expand throughout the state.”

Retail & office construction

Windle

Although data center construction presents a continued opportunity for aggregate producers in northern Virginia, nonresidential demand from retail and office centers has slowed or halted, as it has just about everywhere.

“That may not come back as people have widely adopted shopping on the internet,” Windle says. “People aren’t going to stores as often. I don’t think we’ll see as many retail shops or centers as we had in the past.”

As for offices, Windle expects the buildings already under construction to be finished. But he wonders if or when the next office projects will enter the pipeline.

“Companies are figuring out the best way – or how – we’re going to do work in the future, and whether or not we need these same kind of office buildings,” Windle says. “I don’t think we’re really seeing the ramifications of what’s happened yet. Current projects are going to have to continue, but the next projects are certainly uncertain.”

The infrastructure market

Demand from infrastructure projects should fare better in Virginia, though, where the gas tax jumped 5 cents to 21.2 cents per gallon at the start of July. The state gas tax will jump another five cents in July 2021, and a regional gas tax of 7.6 cents per gallon that was previously implemented in parts of the state is now in effect statewide.

“Most of the Southeast (U.S.) is in a good spot from what I hear,” Windle says. “Certainly, those in New England and on the West Coast are seeing a different picture. So we’re really glad to be here in the Southeast where the picture seems to be brighter.”

The infrastructure market continues to drive aggregate demand at Luck Stone, too.

“We have very large infrastructure projects, especially in northern Virginia,” Windle says. “If you’ve ever driven through northern Virginia, the area of [Interstate] 66 is a big congestion area. One of the largest infrastructure projects in the U.S. is going on there right now, and there’s a lot of work on [Interstate] 95 just south of the [Washington] D.C. area.”