When equipment purchasing might pick up

While aggregate production may be a bit down this year, top producers remain profitable by keeping a watchful eye on their spending. Photo: P&Q Staff

Although many aggregate producers tightened up their 2020 spending due to the economic downturn, some are now revisiting capex projects that were put on hold in the spring. 

Mark Krause, managing director of North America at McLanahan Corp., is among those on the equipment supply side seeing a shift in approach to capex.

“We’ve seen a resurgence in some of those big projects,” Krause says. “They’re saying we’re going to go now because we anticipate 2021 is going to be a really good year.”

Martin Sprocket & Gear’s Steve Cook is seeing similar activity on his end.

“We saw a lot of capex projects that were a fairly long way through the process put on hold,” says Cook, general manager of the idler and pulley division at Martin Sprocket & Gear, during a mid-August interview. “We’re told a lot of them are put on hold toward the end of 2020 or early 2021, but we have seen in the last month a pickup in some of those.”

According to Krause, some of the third-quarter momentum around capex stems from record producer performances in the second quarter. Demand for crushed stone remains very strong, he says, and while production may be somewhat down, producers are getting creative to ensure they’re still making money in 2020.

“As an industry, we should still feel pretty good,” Krause says. “We’re all doing OK. We’d like to do better, but we’re doing OK.”

Consider, too, that it’s not like producer spending went completely by the wayside this year. Producers are still spending money, Krause says, but in a different way.

“I call it component spending,” he says. “[It’s] single-piece purchases, upgrades rather than a repair. We’re not seeing those large systems. The greenfield [projects] or a complete new plant to replace the plant that’s old or outdated and doesn’t provide the tonnage – [that] has been tabled.”

Producer insights

Equipment suppliers should know more in the weeks to come when producers gain some clarity on 2021. Wingra Stone’s Travis Wise explains why.

“There’s a few things we’re talking about, including a loader,” says Wise, vice president at Wingra Stone. “But I think we are going to push that off to 2021 to make sure 2021 isn’t a dud. We might know a little more this fall as far as what’s coming up with the later DOT (Department of Transportation) lettings. Most are for next year. If we get a few of those, we might reevaluate.”

Clay Albright, vice president of Caldwell Stone Co., is taking a similar approach to spending at his operation.

“We’re being responsible but haven’t necessarily had a freeze,” says Albright, whose company purchased its first brand-new loader since 1999 back in March. “If you need a part, you can’t not get it because you need to save a couple bucks. But I’m not going to go out and get anything we don’t need.”

Buying used

Used equipment has been in demand through the pandemic, though. Ritchie Bros.’ IronPlanet, an online marketplace, is experiencing its busiest summer to date. Buyers and sellers are getting more comfortable doing transactions online, the company says, and they like the option of shopping for used equipment in the global marketplace.

“Overall, we have seen great demand and solid pricing in 2020 across most equipment categories,” says Doug Olive, senior vice president of pricing and valuations at Ritchie Bros., who offered additional insights on 2020 equipment purchasing in an exclusive interview with Pit & Quarry. “It’s obviously been a very different year because of COVID-19, but we have been able to quickly adapt with online-only auctions and have seen bidder registrations increase 49 percent in the first half of the year.”

According to Olive, Ritchie Bros. is seeing significant price increases on conveyors, jaw crushers and cone crushers in 2020.