Rock Products - The Leading Voice of the Aggregate Industries.

Rock Products 120th Anniversary - Part 12


IN THIS SPECIAL YEAR-LONG SERIES CELEBRATING OUR 120TH YEAR PUBLISHING MILESTONE, ROCK PRODUCTS PRESENTS A HISTORY OF THE AGGREGATES INDUSTRY. 

In This Issue, We Cover The Years 2000-2009.

26 120YEARS 400As the new decade kicked off, the world had to get used to writing the current year starting with the number “2.” After dodging the Y2K bug, which received massive hype in the national media but turned out to be a bust, the 2000s saw some of the most dynamic changes the industry ever witnessed, and a lot of those changes made for challenges the industry is still working to overcome.

As 1999 became 2000, the industry witnessed a slew of mergers and business deals. Oglebay Norton acquired Michigan Limestone; Hanson Building Materials bought Jones Sand; Granite Construction acquired a stock interest in Wilder Construction; W. Kemble Ketcham picked up the ready mix and quarry operations of Devcon in the Virgin Islands; Oldcastle bought The Shelly Co.; Aggregates Industries bought four operations; Vulcan Materials bought Garves W. Yates & Sons; Kiewit Materials acquired Solana Concrete; and Martin Marietta added 3.3 million tpy of new capacity through several acquisitions. There would be many more acquistions throughout the decade.

In 2000, Graniterock celebrated its 100-year anniversary. In an article detailing those 100 years, company President and CEO Bruce Woolpert looked into the future and noted 10 things to come. Among his spot-on observations were the almost magical possibilities of the internet; the growth of California’s Hispanic population; significant improvements in transportation logistics; and low interest rates.

Also in 2000, it was announced that the National Aggregates Association (NAA) and National Stone Association (NSA) would merge, creating “a single association that represents an overwhelming proportion of the industry and speaks with a single voice.” Rock Products advocated strongly for the approval of the merger. NSA’s Joy Wilson became president and CEO of the new association, while NAA’s Charlie Hawkins became executive vice president and COO. The merged groups ultimately decided on the name National Stone, Sand and Gravel Association, which it remains to this day.

The year 2000 was a MINExpo year, and the show broke records, hosting 40,000 attendees with more than 650,000 sq. ft. of exhibit space. Still it was dwarfed by 1999’s ConExpo-Con/Agg, which expanded to more than 1.7 million sq. ft.

Caterpillar showcased a new version of its 988 loader at MINExpo. Conoco announced it was devoting enormous company resources to developing products for mining customers.

Exxon/Mobil focused its efforts on lubrication-management programs. Goodyear OTR exhibited a two-piece mine tire concept. Ingersoll-Rand focused on promoting its new crawler drills, while Komatsu unveiled its PC1800-6 hydraulic excavator. Nordberg showcased its XP primary gyratory crushers.

The presidency of George W. Bush began on Jan. 20, 2001, when he was inaugurated as the 43rd President of the United States of America. The oldest son of former president George H.W. Bush, George W. Bush was elected president in a hotly contested and still-disputed 2000 general election. Industry pundits welcomed the switch of leadership, hoping for a more secure business environment and less attention on regulation than the Clinton Administration, which did receive kudos for the passage of the Intermodal Surface Transportation Efficiency Act (ISTEA), which increased funding for infrastructure projects.

Environmental Issues

MDS00172Environmental issues continued to dominate the concerns of aggregates producers, as the popular catchphrase “Smart Growth” was denounced by industry advocates as just another way to say “No Growth” and prevent aggregates operations from expanding. In Washington, diesel and wetlands rules were under review as well as clean air and water legislation.

On Sept. 11, 2001, four coordinated terrorist attacks on the United States occurred. President Bush declared a Global War on Terrorism and, in October, ordered an invasion of Afghanistan to overthrow the Taliban, destroy Al-Qaeda, and to capture Osama bin Laden.

Aggregates operations found themselves under close watch by the government due to the explosives used – and often stored – at crushed stone operations. The War on Terror would also have reverberations at home as financial resources were diverted overseas for intelligence and military operations; and market dynamics tugged at the U.S. economy. In 2002, Bush proposed a $8.5 billion cut in highway spending.

In the wake of the Sept. 11 attacks, the 2002 ConExpo-Con/Agg show reported decreased attendance, as people shunned air travel and stayed home. Aggregates production also decreased in 2002 over 2001 levels. The 2005 show fared much better, with 124,300 attendees and 1.88 million sq. ft of exhibit space. Aggregates production was also on the rise in 2005.

Safety issues were addressed when NSSGA and MSHA signed a joint agreement to reduce injuries and illnesses in the aggregates industry. It marked the first time ever that MSHA and an industry association jointly agreed to adopt safety performance goals with objective measures.

Aggregates Operations

In the pages of Rock Products, aggregates operations around the country were profiled including Vulcan Materials’ Reliance Plant in California; Florida Rock’s Paulding Quarry in Florida; BLT Cos.’ new plant in Arizona; East Fairfield’s underground mine in Ohio; Oglebay Norton’s Calcite Quarry in Michigan; and Hanson Aggregates’ new mega-plant in Texas, just to name a few.

The Portland Cement Association (PCA) predicted that cement production would increase to record levels in 2005. “The underpinnings of U.S. economic growth are solid and will translate into 3.3 percent to 4 percent growth,” said PCA Chief Economist Ed Sullivan.

Equipment innovations discussed in the pages of Rock Products included a drilling and blasting series on proper preparation of blastholes; an assessment of U.S. rail conditions; expanding a plant through automation and wireless innovations; removing fuel contaminants; using a portable plant for specialty aggregates; and dredging in heavy clay conditions.

Issues being discussed included dealing with the tire and cement shortages; labor and employee relations; plant audits; ATF scrutiny post-9/11; and silica and dust issues.

In the December 2004 issue, Rock Products and NSSGA published an exclusive survey on critical trends in the aggregates industry. More than a third of respondents expected their production to increase 5 to 10 percent over the next three years. The number-one challenge producers said they faced was fines management.

After a two-year delay, extensions, much lobbying and a lot of arm-twisting, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) was signed into law by President Bush on Aug. 10, 2005. The $286.4 billion measure contained a host of provisions and earmarks intended to improve and maintain the surface transportation infrastructure, including the interstate highway system, transit systems, bicycling and pedestrian facilities, and freight rail operations. It fell far short of the more than $300 billion the industry had been seeking.

In an exclusive interview with Caterpillar’s Group President Gerald Shaheen, Rock Products asked what it would take to send the aggregates industry into a downward cycle. He noted, “I don’t know if the housing bubble will burst, but it will certainly align.” As history would eventually show, that housing bubble would burst and burst big, with a devastating impact on the industry.

In January 2006, 12 coal miners were killed at the Sago Mine in West Virginia. It was a disaster that would have reverberations into the aggregates industry as MSHA ramped up enforcement in response.

Sitting Pretty

At the start of 2007, the aggregates industry was sitting in a very pretty position. Aggregates production has been increasing for years, and producers were taking advantage of the boom by investing in new equipment, buying up land and operations, and laying out plans for new greenfield operations. In Rock Products annual forecast piece, “calm waters” were being predicted for aggregates operations.

In a mid-year interview with NSSGA Chairman Louis Griesmer of Springfield Underground, he stated that the industry’s challenges going forward would be focused on transportation funding, regulations and cultivating better relations with the local community. USGS announced that aggregates production had hit a new record high at more than 3 billion mt. It was the calm before the storm.

Along with the terrorist attacks of Sept. 11, 2001, the United States subprime mortgage crisis did more than anything else to dampen the economic prospects of the aggregates industry. The crisis was a nationwide banking emergency that coincided with a recession starting in December 2007 and lasting until June 2009 – and some say to the present day.

The crisis was triggered by a large decline in home prices after the collapse of a housing bubble leading to mortgage delinquencies and foreclosures and the devaluation of housing-related securities. Declines in residential investment preceded the recession and were followed by reductions in household spending and then business investment. Spending reductions were more significant in areas with a combination of high household debt and larger housing price declines.

With the economy in a free fall, crushed stone, sand and gravel production took a huge hit, with nationwide production falling more than 30 percent by the end of the decade from its 2006 record high.

In 2008, Barack Obama was elected the 44th President of the United States, and the first African American to hold the office. He inherited an economy in shambles and on Feb. 17, 2009, signed the American Recovery and Reinvestment Act of 2009, a $787 billion economic stimulus package aimed at helping the economy recover from the deepening worldwide recession. The act included increased federal spending for health care, infrastructure, education, various tax breaks and incentives, and direct assistance to individuals.

As 2009 came to a close there was a whiff of hope in the air. Martin Marietta Materials Chairman and CEO Stephen Zelnak said, “We believe there will be an increase in infrastructure-related projects as the effects of the federal economic stimulus work their way into the economy.”

Next Month: The 2010-present.

Crushed Stone Production: 2000-2009

Year

Production

Recycled

Imports

Exports

Apparent consumption

Unit value ($/t)

Unit value (98$/t)

2000

1,550,000,000

15,600,000

13,000,000

4,020,000

1,570,000,000

5.36

5.08

2001

1,590,000,000

16,400,000

13,500,000

4,370,000

1,620,000,000

5.57

5.12

2002

1,510,000,000

14,700,000

14,300,000

2,560,000

1,540,000,000

5.71

5.17

2003

1,530,000,000

17,100,000

15,300,000

1,010,000

1,560,000,000

5.93

5.25

2004

1,630,000,000

13,500,000

18,600,000

1,280,000

1,660,000,000

6.07

5.24

2005

1,700,000,000

14,400,000

21,000,000

1,260,000

1,730,000,000

7.29

6.09

2006

1,780,000,000

15,400,000

19,800,000

1,140,000

1,810,000,000

8.03

6.49

2007

1,650,000,000

20,100,000

19,500,000

1,020,000

1,690,000,000

8.58

6.75

2008

1,450,000,000

29,100,000

20,900,000

1,240,000

1,500,000,000

9.36

7.09

2009

1,160,000,000

28,500,000

12,200,000

1,260,000

1,200,000,000

9.72

7.38

2010

1,160,000,000

26,400,000

14,600,000

1,210,000

1,200,000,000

9.52

7.12


Construction Sand and Gravel Production: 2000-2009

Year

Production

Recycled

Imports

Exports

Apparent consumption

Unit value ($/t)

Unit value (98$/t)

2000

1,120,000,000

2,870,000

2,410,000

1,120,000,000

4.81

4.55

NA

2001

1,130,000,000

3,820,000

3,060,000

1,130,000,000

5.02

4.62

NA

2002

1,130,000,000

4,310,000

3,240,000

1,130,000,000

5.09

4.61

NA

2003

1,160,000,000

4,410,000

1,770,000

1,160,000,000

5.16

4.57

NA

2004

1,240,000,000

4,760,000

677,000

1,240,000,000

5.32

4.59

NA

2005

1,280,000,000

7,160,000

519,000

1,290,000,000

5.86

4.89

NA

2006

1,340,000,000

4,960,000

515,000

1,340,000,000

6.47

5.23

NA

2007

1,250,000,000

4,420,000

365,000

1,250,000,000

7.06

5.55

NA

2008

1,060,000,000

5,430,000

392,000

1,060,000,000

7.44

5.63

NA

2009

839,000,000

2,980,000

439,000

842,000,000

7.51

5.71

NA

2010

807,000,000

2,670,000

381,000

809,000,000

7.30

5.46

NA

Source: USGS