Clever as I may think I am, I'm constantly amazed at my ability to not see the writing on the wall. Case in point: I've maintained, even going so far
Clever as I may think I am, I'm constantly amazed at my ability to not see the writing on the wall.
Case in point: I've maintained, even going so far as to profess this insight to my bosses, that once this recession ends, the aggregate industry will return to business as usual. My rationale was that this recession represents a very deep downturn in the business cycle, but not a fundamental change in how the business is done ó nothing similar to what the Internet has done to the newspaper industry.
Then I talked with Mark Krause. He's a long-time industry veteran who's spent most of his years on the crusher manufacturing side, but now calls Lafarge home. He's also one of those people who brings so much to a conversation that there's a gaping trade deficit between us. Of course, he pointed out a few things that unhinged my belief in the nature of the aggregate business-cycle beast.
He pointed out that the large, full-line crusher companies will have to reinvent how they do business to recapture aggregate buyers. A lasting effect of the recession will be more careful scrutiny of every dollar spent. And with cheaper crusher alternatives on the market, the big-name companies are not likely to win a price war or get by on technical expertise; they will need to add services or production guarantees. Processing plant rentals may become a stronger niche by mirroring the program or fleet car model seen in the auto industry.
In India, he says, one crusher manufacturer is experimenting with leasing a crusher that comes with an operator and charges by the crushed ton.
I recently met with an aggregate industry financier. He told me that the 2007 production numbers and property values (for those looking to sell) are not and will not be the norm. The 2008 numbers, he says, are the new baseline.
Maybe another sustained period of year-over-year growth will bring back some old behaviors. But, I suspect that at least for the near term, we are looking at an industry that will be a good deal more cautious with its spending ó or certainly, more analytical in justifying its spending.
Questions or comments?