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Midwest Minerals Inc. specializes and thrives in the operation of portable plants, an area that many aggregate producers are not eager to tackle, according

NEAL LORENZI

Midwest Minerals Inc. specializes and thrives in the operation of portable plants, an area that many aggregate producers are not eager to tackle, according to President and CEO Steve Sloan. Headquartered in Pittsburg, Kan., Midwest Minerals provides crushed limestone aggregates and agricultural lime throughout southeast Kansas, northeast Oklahoma and southwest Missouri. It is a portable operation (five plants, 17 quarry locations) that moves each plant two to three times per year.

Midwest Minerals has enjoyed a strong four-state presence since 1947. Crushed stone products ó used in road materials for county and state highway projects, coarse aggregate for ready-mixed concrete and asphalt plants ó are the company's bread and butter. The company also produces finely ground limestone for agricultural use. In fact, agricultural limestone was the main component of the business in the company's early days.

Midwest Minerals operates five portable crushing operations that are moved from one location to another. Demand for crushed- stone products is forecast for each location and aggregate is then crushed and inventoried. The company produces approximately 15 different product sizes in addition to agricultural lime.

ìWhat makes us unique is our portability,î Sloan says. ìIt's not the type of business that aggregate producers would line up to do. Many do not like being portable. You need the right people, equipment and skill set to succeed in the portable crushing business. Our people are specialists. We've been doing this since 1947, so we have people who are experienced in breaking down, transporting and setting up portable crushing units. The average distance we move a plant is 70 miles. We move them on average two to three times a year.

ìIt's tough work and very specialized. The key to being successful is minimizing downtime; our people can break down, move, set up and start crushing rock in six to seven business days. Most of this time is spent on physical plant movement.î

PORTABLE PLANT SETUP

At each individual site, Midwest Minerals produces anywhere from 100,000 to 350,000 tons of crushed stone before moving on. It has 15 sites in Kansas, one in southwest Missouri and one in northeast Oklahoma. The company has 110 employees and runs one shift (7 a.m. to 5 p.m.) Monday to Friday. Each plant has a superintendent ó a key employee who has a unique knowledge of that particular operation. As much as possible, the employees work close to home, at quarries they are familiar with.

A basic portable plant setup is comprised of a primary impactor that feeds a triple-deck screen; overs from the triple-deck screen are taken to a secondary crushing operation (in Midwest's case, mainly a cone crusher); material is taken to a second triple-deck screen then downsized. ìWhen you're portable, you don't have the luxury of setting up elaborate washing systems; we do very little washing of materials. We sometimes add more screening capacity to get material to acceptable levels for concrete stone,î Sloan notes.

To move equipment from site to site, Midwest Minerals uses three tractors with different sized trailers, each with different weight capacities. All crushing and screening equipment sits on a wheeled chassis. The company moves all its own equipment except for large shovels. Outside trucking companies are hired to move pit-loading instruments that are too large to handle.

Midwest Minerals operates on both leased and company-owned sites. Each of its 17 sites is different and permitted reserves vary from site to site. At times, the company must expand leases as they expire. ìWe negotiate many more leases than an aggregate producer that operates on just one site,î Sloan explains. ìWe sometimes deal with multiple leases at one location ó paying royalties on leases on ground that we currently operate, have operated in the past (now being used for water sources, stockpile areas as well as production sites) and will operate in the future. We try to think ahead and obtain reserves well in advance.î Many of its locations have more than 25 years left in reserves.

How does Midwest Minerals forecast demand for crushed stone at these various locations? ìThat's the trickiest part,î Sloan says. ìWe have to use historical sales volumes combined with an analysis of current volumes under contract, then build in a little pad of each product on top of that. It's not a perfect science. The goal is to be crushing somewhere all the time ó to spend as little time moving, transporting and setting up as possible. The more rock we crush drives our fixed costs lower. Again, our specialists are the key.î

These specialists, who reflect the longevity of many Midwest Minerals employees, include Jerry Piatt, manager of marketing and scale house operations (48 years with the company), Larry Vogel, manager of production operations and maintenance (40 years), Curt Brumbaugh, director of safety, health and environment (15 years) and John D. Clark, controller/director of corporate development (three years).

THE PRODUCT MIX

Throughout its 17 locations, Midwest Minerals produces limestone that features high-calcium content and very little silica. The product mix includes a state aggregate base, county aggregate base, various sized (mostly 1 inch and æ inch) state and commercial concrete stone, Ω chip material for asphalt producers, oversize base and clean lateral stone. In addition, the quarries produce RIP-RAP and manufactured sand for the states of Kansas, Missouri and Oklahoma along with various commercial entities.

Over the years, the company's product mix has evolved. The biggest change is represented by the aggregates it produces for asphalt, which come in many different sizes today. The reason: specifications have become more rigid, complex and technical for different asphalt applications. Midwest Minerals also is producing more manufactured sand. Another product is ice-control aggregate ó a small limestone chip that is applied to highways during icy and snowy conditions by state transportation departments, counties, cities and municipalities. It helps create traction, like putting sand on ice.

During the 1950s, some 50 percent of the product sold was agricultural lime. Today, agricultural lime represents less than 1% of total sales, the result of a major decrease in government subsidies. The company still mines high-calcium limestone, which is finely ground to create this agricultural lime. Farmers purchase it to apply on soil, which helps adjust pH levels. Midwest Minerals funds the soil tests for farmers; based on soil test results, the proper amount of agricultural lime is applied.

A DIVERSE MARKET

About 10 percent of Midwest Minerals' product is sold to municipalities. The rest goes to commercial contractors, highway contractors, ready-mixed concrete producers and asphalt contractors. Most of its product is sold within 50 miles; 99 percent is moved by truck.

ìIn small markets like this, you have a broad array of customers ó cities, counties, municipalities, townships, farmers, commercial contractors, highway contractors, ready-mixed plants and asphalt plants,î Sloan remarks. ìWe depend on all sectors to have a good year. State highway projects make up the largest volume. Most of the roads in this area are asphalt and a few major roads are concrete.î

According to Sloan, demand for state highway construction in Kansas is weak, however. ìWe're now in the final year of a 10-year comprehensive transportation program that is under-funded,î he explains. ìAt this year's legislative session, the legislators did not address highway needs. We're hoping they will next year.î

At this time, one of the key projects in the Pittsburg area is the construction of a four-lane road that will connect the area north to Kansas City, Mo., and south to Highway I-44. Construction so far has progressed 40 miles north of Pittsburg. The project may take 15 years to complete.

Sloan understands just how critical highway construction is to the aggregate business as well as the regional economy. Simply put, the southeastern Kansas area needs more four-lane highways. ìBeing an active member of our national and state aggregate producers associations (Sloan is chairman of NSSGA and past-chairman of the Kansas Aggregate Producers Association), one of my top priorities is to advance funding for highway construction,î he explains. ìSo I've been testifying before the legislature, promoting dedicated transportation funding. Also, at the federal level, it's important to have as many dedicated funding systems as possible, where taxpayers know money is going into transportation. I've been in contact with our senators and congressmen over the years, addressing this issue at the federal level.î

LEARNING THE BUSINESS

Sloan joined Midwest Minerals in 1995. ìMy father-in-law, George Nettels, was ó and still is ó the chairman,î he notes. ìAt that time, his president, Dick Atkinson, was planning to retire in three years.î Sloan had previously spent 12 years with Koch Industries, an integrated energy firm based in Wichita, Kan., in positions that ranged from marketing to futures trading. He began working with Nettels and Atkinson (an honorary life member of NSSGA), who mentored him for three years. During that time, Sloan worked in the field to learn all aspects of the aggregate business. He was named president in 1998.

Sloan believes his marketing background has served him well in the aggregates industry. ìAt Koch, I spent time marketing petroleum products early in my career,î he notes. ìI've always been in sales, dealing with the public in some way, shape or form. So I am customer-driven and strive to provide customers with good products and good service.î He follows that philosophy in directing the company's day-to-day operations.

Of course, there are challenges. Hiring and maintaining a skilled workforce is a major one facing Midwest Minerals. In fact, the amount of turnover in entry-level jobs is a problem. ìWhat we do is very hard outdoor work and we paint an honest picture to potential employees,î Sloan says. ìUnfortunately, capable, hard-working applicants are not as abundant as they used to be.î Midwest has a mandatory shutdown during the Christmas holidays, so employees can spend time with their families. The company also has a generous incentive compensation plan, in which 20 percent of corporate pre-tax profits are awarded to employees annually.

Keeping up with constantly evolving government regulations is another challenge. ìAs we go forward, regulations are stricter, compliance more difficult, the fine structure much richer and the overall liability to our business is greater,î he explains. ìDue to Sago and Crandall Canyon, the oversight of the mining industry is great at this time.î On the positive side, he sees Midwest Minerals as a partner of MSHA, in trying to maintain a safe, productive work environment.

On the environmental side, Midwest Minerals has an ongoing compliance program designed to meet air and water requirements in the state of Kansas. The company maintains several air and water permits and must go through a zoning approval process for many of its locations. The counties where Midwest operates have rigid, but fair, zoning laws.

ìWe concentrate on meeting air and water permit requirements and following through on reclamation,î he adds. ìThis is nothing new to us. In fact, the aggregate industry has a responsibility to citizens to operate within the guidelines of our permits because it is the community that allows us to operate.î Since the early 1990s, Midwest Minerals has worked with the Kansas Conservation Commission on a program to convert each quarry into a lake. None of its locations has been totally mined out yet, however.

LOOKING TO THE FUTURE

As for future expansion, Midwest Minerals will follow the path that has seen it grow in the custom crushing business ó serving contractors, government and large manufacturers that utilize crushed stone in their operations. The company has grown over the years mainly through the acquisition of competitors and will continue to look for similar opportunities.

ìThe portable plant concept is not a business concept,î Sloan concludes. ìIt's based on the markets that you serve. In our case, none of the markets we serve are large enough to sustain a stationary operation. So we have five portable plants, which move throughout our market area, that crush and inventory stone for 17 different quarries. To keep costs down, we move from place to place, crush rock, stockpile it, and then move on. It's not a strategy we've designed; it's one that is driven by the markets we serve.î

THE EARLY DAYS: A LOOK BACK

In 1947, John and Mary Stark moved to the Midwest from Camp Campbell, Tenn., where they operated a rock-crushing business for the U.S Army. The Starks were offered the chance to own their own business and relocate to an area southwest of Girard, Kan. Once there, they produced base rock and agricultural lime, a material used by local farmers to enhance crop growth, particularly for soybeans and corn.

During the late 1940s and through most of the 1950s, the U.S. government encouraged the use of agricultural lime to improve fertility of farmlands located in the so-called rain belt that includes Missouri, eastern Kansas, Iowa and eastern Oklahoma. Agricultural lime was the main product produced and sold in the early years; more recently, aggregates used in construction and road material have become the company's primary product as government subsidies for agricultural lime have decreased.

The Starks later expanded their business to include quarries in Farlington, Parsons and Mound Valley, Kan. Over the next several years, additional quarry locations were established as the company experienced rapid growth. Those locations included Jasper, Mo.; Miami, Okla.; and Coffeyville and Chetopa, Kan.

During the late 1960s, Midwest Minerals, which began as a sole proprietorship and later became a partnership of John and Mary Stark and George Nettels, incorporated with the current name of Midwest Minerals Inc. Nettels is now chairman of the board and his son-in-law, Steve Sloan, who came to Midwest in 1995, serves as president and CEO of the company. During the 1970s and 1980s, competitive operations were purchased, which provided the company with access to new markets. Midwest Minerals entered the ready-mixed concrete business in the mid-1980s; asphalt plant operations began in the late 1980s.