Martin Marietta’s Nye Looks at 2011
- Published: Friday, 11 February 2011 13:41
"While a variety of factors make it difficult to form a complete perspective for 2011, there are a range of considerations informing our thinking at this time,” Nye said. “ A noteworthy consideration will be the rate at which states spend available stimulus funds for infrastructure projects in our key markets. At present, we operate under a Congressional continuingresolution that extended the Safe, Accountable, Flexible and Efficient Transportation Equity Act – A Legacy for Users (SAFETEA-LU) through March 4, 2011. While Congressional Democrats and Republicans broadly agree that investing in infrastructure is a key governmental priority, we believe another Congressional continuing resolution of SAFETEA-LU is likely for 2011. However, reauthorized infrastructure legislation at the federal and state levels could be accelerated as congress, the president and local authorities focus on infrastructure as an efficient means of jobs creation and investment in thefoundational backbone of America's economic growth.
"Our outlook for aggregates shipments is generally consistent with McGraw-Hill Construction's published view,” Nye said. “We expect that state spending on infrastructure should remain steady and 30 percent of ARRA infrastructure funds are expected to be spent in 2011. Thatsaid, uncertainty in long-term federal funding could negatively affect infrastructure spending. Taking a conservative posture, our outlook is based upon the expectation that the infrastructure end-use market will be flat to slightly down; we anticipate a modest 2011 volume recovery in the commercial component of our nonresidential end-use market. However, natural gas prices and the timing of lease commitments for oil and natural gas companies will be significant in the continuation of certain energy sector activity in 2011.
“Considering the notable aggregates shipments to the energy sector in 2010, we expect the rate of growth in the heavy industrial component of our nonresidential end-use market to moderate in 2011 compared with the double-digit growth rate in 2010,” Nye said. “Overall, we expect nonresidential end-use shipments to increase in the mid-single digit range in 2011 and the rate ofimprovement in the residential end-use market to grow while chemrock/rail shipments are expected to be stable in 2011. Cumulatively, we expect flat to a 3 percent improvement in overall aggregates volume in 2011.
"Volume increases in specific markets in 2010 are likely to lead to price increases, Nye concluded. “While these increases may not be uniform throughout our portfolio, we expect 2011 aggregates pricing will range from flat to a 2-percent increase. Aggregates production cost-per-ton in 2011 is expected to range from flat to a slight decrease compared with 2010. We expect the Specialty Products segment to contribute $50 million to $52 million in pretax earnings for 2011, as economic recovery drives industrial demand for magnesia-based chemicals products and continued demand for environmental applications is driven by the United States' focus on green technology and innovation.”