Rock Products Presents the 2017 Quarry and Aggregates (Q&A) Forum: Industry Thought Leaders Open Up On Where We Are Going and How We Will Get There.
By Mark S. Kuhar and Josephine Smith
This month we present the first Rock Products Quarry and Aggregates (Q&A) Forum. This new feature focuses on the opinions of industry thought leaders from the manufacturing sector. Look for several additional Q&A Forum features to appear in the future, focusing on aggregates producers and distributors. – Ed.
So how’s business? What is your take on the national economy and also on the construction economy? Is business better today than last year?
KARL WEISS, CATERPILLAR: In general, business is much stronger this year than it was in 2016. Certain markets around the globe are stronger than others, and we are seeing growth in regions such as Asia. From a U.S. market perspective, we are also seeing growth, specifically in industries related to oil and gas, and the quarry and aggregates industry sector as well. Customers have consistently reported a steady increase in demand for crushed stone, feeding residential, industrial and infrastructure projects, and sand also continues to be a hot market. We’ve seen customer production levels increase and additional property acquired to expand their operations this year. It is exhilarating to see business is coming back, and regardless of industry or whether our machines are building neighborhoods, hospitals or roadways, it is humbling to know that globally we are providing solutions to help our customers build a better world.
MARK KRAUSE, MCLANAHAN CORP.: Business is very strong right now with frac sand and aggregates leading the way. The frac sand bubble of West Texas was unexpected but very welcome. In a little less than a year, the West Texas region will go from zero tons of annual production to over 25 million tons of production. For now it is about speed to market and larger operations. Our process knowledge and strength in frac sand for many years has positioned us well. In addition, we have seen the aggregate industry show real signs of optimism. After the election, we saw optimism based upon the idea of a large Infrastructure program. Even though that enthusiasm has tapered off, general business climate of local economies growing and good earnings reports from companies has led to some green fields opening up and expansion of other existing facilities. I live in Tennessee where we passed a much-needed gas tax that will help to fund projects in this fast-growing part of the country. In areas of some rapid population growth and states where a gas tax increase occurred we are seeing the results of renewed interest and early equipment purchases to be operational for 2018.
GARY POMPO, BKT: Business is good, up from last year and looking positive. The national economy is doing well and things are moving. Some areas that were shut down are opening back up, such as steel mills, mines, quarries. This is great for growth and when these come back on line, they need to get equipment up and running. All areas are seeing hot spots, the south has always got something going on and the central states are up because of demands to reopen closed facilities. The thing we are seeing the most, is lack of good work force, finding people to fill positions. Everywhere we go, it’s the same question: “Do you know anyone that is looking for work?”
PAUL ROSS, KESPRY: We are seeing strong business in the construction industry. Our partnership with John Deere has given us access to even more construction businesses. We are seeing an increasing interest in using technology to improve planning, operations and safety on-site so the use of a drone-based aerial intelligence platform fits perfectly with that.
EVAN CLARKE, THE WIRTGEN GROUP/KLEEMANN: We are cautiously optimistic. We are seeing continued levels of confidence with contractors regarding their workloads for 2018. Kleemann continues to grow in all segments: jaws, impactors, cones and screens.
DAVE MCLAUGHLIN, KPI-JCI/ASTEC MOBILE SCREENS: North American business has been strong through three quarters in 2017. The aggregate, sand and gravel, and recycle markets have all grown over 2016, and we anticipate a strong finish in the fourth quarter. Our overall view of national economy remains strong and the outlook looks to be healthy. According to most key economic indicators growth is expected to remain between 2 to 3 percent, which is good. Unemployment as well as inflation remains favorable for the industry. Specific to the construction economy, most experts are predicting growth of 7 to 9 percent overall, which we agree with today. Residential will be even stronger at 9 to 11 percent, which is a positive reflection of single-family housing rebounding. Non-residential, commercial and others segments are also strong, however, less than residential.
JOHN GARRISON, SUPERIOR INDUSTRIES: Business has been very strong this year. Demand for crushed stone has been high and producers have actively upgraded their plants and other capital equipment. At Superior, we’ve especially seen growth in turnkey operations for our construction management division. Conveyor systems, wash plants and portable plants have been selling strong. Crusher volumes have been down a bit across the entire market.
MATTHEW LEPP, VAN DER GRAAF: Business has been great in 2017. We’ve seen a solid increase in all aggregate markets as well as several of the other industries we supply.
TONY SPAKE, VOLVO CONSTRUCTION EQUIPMENT: Business is good overall. The North American equipment market is up slightly, and Volvo has gained a little share, which is a good combination. My segments include quarry and aggregates, industrial minerals and civil construction. In these segments, Volvo volumes are slightly down year-to-date, but some of this is planned as we have moved into smarter and better transactions. So, it has been a good tradeoff, and there is decent backlog for the balance of the year.
TOM SEUSS, KOMATSU AMERICA: The company recently announced earnings and North American construction sales for the first six months of the fiscal year are up by more than 50 percent year-over-year. Also, North American revenue continues to lead all Komatsu global regions with roughly one-quarter of total revenue coming from this part of the world.
|Evan Clarke, The Wirtgen Group/Kleemann|
How is your business specifically in the aggregates industry? Are producers investing in new equipment this year, or planning for future capital improvements?
SPAKE: The aggregates industry is chock full of older equipment that is costing owners a lot in repair costs, so we’re seeing numerous ways our customers are interested in replacing their fleet. Thankfully, many of the global markets are rebounding; the industry is still highly competitive, but I would say less desperate than the past couple of years. There is an interesting dichotomy right now with financial products like leases, which have been incredibly popular over the past couple of years as an easier way to freshen fleets. However, changes in global reporting standards could curb some of this appeal in the very near future.
ROSS: The aggregates industry has always been the backbone of our business and we don’t see a slowdown in investment in drones to support inventory management, mine planning and operations management. In fact, as we enter the winter we are seeing an increase in investment in equipment that will be deployed to support operations in the spring of 2018.
KRAUSE: We see producers planning but even more importantly, going ahead and purchasing. Optimism seems strong that business levels will continue to improve. The enthusiasm and hope of an Infrastructure bill has worn off, but regular commercial and residential construction looks to be sustainable and allows companies to plan ahead. It looks to be a common cycle of the aggregates industry. We see some operations adding some new pieces to make the site more efficient or replacing a higher maintenance piece of equipment. Other operations are opting to a completely new and larger operation than what existed. This is true in those growth areas of the United States like Texas and the Southeast. We are also seeing a trend toward buying sooner so that the operation is ready for the next season. Some of that might have to with some longer delivery times from suppliers and some has to do with making sure the plant is at full operation for the next season.
POMPO: The aggregate market right now is at or above last year’s production, with the exception of a few being way up. Producers are skeptical of the future. They do see a light at the end of the tunnel but want to make sure the outlook gets a bit brighter. Equipment is a huge investment for producers and if the industry slows, their payments don’t. There are some producers who are investing and have good future business prospects to allow these investments.
MCLAUGHLIN: Aggregates are the largest segment of our business and the one we focus on the most given our product offering. We offer products for both the small and larger producers and can offer complete, stationary track and wheel systems. Producers are investing in new equipment in 2017, however, we are also seeing many utilize our distributor’s extensive rental fleets. We have participated in several large North American companies’ capital expenditure programs, and feel 2018 could be a much larger year for new equipment purchases.
WEISS: Through various means, we monitor equipment utilization and we’ve seen a trend of increasing utilization – which translates into greater demand on the aftermarket side. Our customers are increasing their capital expenditures for new mobile equipment, and the indications show further increases going into 2018. Producers are investing in new equipment both stationary (including plants and operations) and mobile fleets. Future capital improvements remain on the radar as demand and efficiency needs increase for most customers.
CLARKE: We continue to see increased demand for Kleemann in our dealers’ rental fleets as well as retail sales. Crushing and screening continues to be a rental-oriented market. Many contractors will rent machines before converting the asset to a purchase for several reasons, including workload balance.
|John Garrison, Superior Industries|
LEPP: In the aggregate market, we’ve seen an increase in capital projects – a sure sign of confidence in the economy.
President Trump promised $1 trillion in infrastructure funding, but so far that has been bogged down by disagreements over public money vs. private investment and other logistical logjams. How confident are you that we will see a solid plan in the coming year? What do you base your answer on?
GARRISON: I’m not confident that a plan will emerge this next year. Many of us at Superior attended the National Stone, Sand and Gravel Association Legislative & Policy Forum/Fall Board Meeting in Washington, D.C., in September. We had eight meetings with congressmen and senators about a potential road bill being passed. The feedback we got did not look very promising. Healthcare and tax reform are taking precedence for the Trump administration right now and the fact that 2018 is an election year for the House of Representatives makes it highly unlikely that anything major will get pushed through for infrastructure next year.
SPAKE: As I understand it, this is a multi-layered problem. Yes, I agree stereotypical political disagreement is part of the overall delay, even within parties. This is the third administration that has attempted to cut through the red tape of multi-year permitting delays. And what about the funding – who, how and when? Overall, I believe infrastructure should be the cornerstone of the current administration, one that promised to strengthen the economy and add and improve jobs. Talk about a vertically integrated economy – this investment should (eventually) leave a legacy of prosperity if prioritized and managed properly. I can’t see the political hurdles being cleared this year, but maybe next. If there is one area our elected officials should find consensus and urgency, this is it.
LEPP: We have confidence in the continued infrastructure work that President Trump is pushing forward. Across this country, badly needed work is well underway and we believe the voters will push to continue these improvements.
WEISS: Administration officials and congressional leaders have made it clear that a robust infrastructure plan will follow the important effort to reform the tax code. Caterpillar, along with our customers, dealers and business allies, are engaged with policy makers to deliver a plan that will fix our outdated infrastructure and serve as an engine for economic growth and job creation. One particular point of emphasis is the need to address the underlying issue that there is not enough money coming into to the Highway Trust Fund through existing user fees to pay for existing levels of expenditures. In order to do so, policymakers should explore collection mechanisms that are not administratively burdensome or costly, while tackling inefficiency in federal transportation programs to ensure that every dollar gets the most ‘bang for the buck.’
MCLAUGHLIN: Visiting with producers, state association meetings and the general overall feel on how the general public views the current administration leads us to believe that many producers still remain skeptical about the administration’s ability to complete an infrastructure plan. But we must remain positive the Trump administration will finalize an aggressive program not only for 2018 but also for years to follow.
CLARKE: Based on what we hear from our customers and our industry associations, there is a general optimism that funding will eventually be put in place for longer terms than in the past 10 years. The concern is that tax and healthcare reform need to be addressed first.
POMPO: Washington needs to get off their butts and start working together, if not, the infrastructure is going to get worse than what it is now and we are going to see things fall apart. The longer we wait the more it’s going to cost to fix. Can we do it all at once? The answer is “no” but we need to start and use the monies that are supposed to be used for repairs, instead of diverting it to items that has nothing to do with infrastructure. We send money overseas and they have better roads and transportation than we do. Washington needs to put our needs first. You can drive down any highway and see and feel what needs to be done. We have the technology we need to start putting it to work. This would help our economy tremendously. Yes, we do feel that we will see a plan in the coming year.
ROSS: We hear optimism from our construction and aggregate customers that there will be an increased level of investment in infrastructure but that its likely to come from a patchwork of sources. That will make contracts and bids more complex but we’re confident that there will be an increasing number of projects started next year. The need for solid planning and progress data will make drone based aerial intelligence more important, especially if multiple agencies or government bodies are involved.
|Mark Krause, McLanahan Corp.|
KRAUSE: After being in Washington, D.C., for the recent NSSGA Legislative & Policy Forum, it appears as if the priority for infrastructure within Congress is low. There was some faint hope that infrastructure might be tied to tax reform and that repatriated funds could help pay for infrastructure. After the administration stated that any repatriated funds would be used elsewhere, any momentum toward an infrastructure bill faded. Everyone we saw on Capitol Hill said that the priorities were taxes, healthcare and immigration. Infrastructure would be 12 to 18 months away, unless the Trump administration pushed it up in the priority listing. With the current focus on taxes, this will indicate whether we can expect any major legislation from this Congress. Next year is a midterm election. This would normally be a good time to promote infrastructure and all of the good spending brings to our economy. My fear is that we are in a cycle where we will not have enough money to pay for all of the priorities we want to tackle and nationwide Infrastructure will not be funded. Luckily local and state funding is there to bring a base level of sustainability to the aggregate Industry.
Mergers continue to be a way of life on both the producer side of the business and also the manufacturer side of the business. Are mergers affecting your company directly? Is the continuing merger and acquisition activity good for the industry, in your view?
MCLAUGHLIN: Generally, mergers and acquisitions do not affect our short-term business for small to mid-size equipment purchases. However, major system purchases as well as large upgrades can have a negative affect (slow down) as a result of mergers and acquisitions. For 2017, it seems the aggregate industry has experienced increased mergers and acquisitions compared to the previous several years. As director of major accounts for KPI-JCI and Astec Mobile Screens, I believe mergers and acquisitions by producers has had an overall positive affect on the industry. Producers have become much more technical in evaluating all aspects of their operation. The net result forces manufactures to supply better products, which in turn helps producers lower their total operational costs and the ability to produce higher quality aggregates.
LEPP: While we’re not directly affected by mergers, we do view them as a positive action that will promote growth.
SEUSS: Komatsu hasn’t been active on the construction side of the business, but our recent purchase of Joy Global has been a nice shot in the arm for the mining side and the company is already seeing benefits around economies of scale, selling advantages, etc.
KRAUSE: There certainly are M&A cycles in our industries. In the frac world, during the recent slowdown, we saw some consolidation of companies and operations. The result is a smaller group of companies with larger operations. As cycles go, with the new uptick in frac, we have seen some new players enter the market. Very typical type of business cycles. We are seeing something similar in aggregates with some high-profile announcements like Bluegrass and Ash Grove. Mergers do affect our business in that it changes some of the buying habits and styles of end users, but other than that it does not affect us. The expectation is still the same that we respond quickly to inquiries. We deliver a product that fits their market needs. Delivery and set up is fast and efficient. We assist in the start-up to make sure the equipment is performing properly. We train their people and then we have local parts and service to take care of whatever arises. That is basic no matter what the size of the company or the operation.
POMPO: We are in an industry that is about all, any and everyone who sells tires. The mom and pop companies are feeling it the worst. With insurances company fees, it’s very hard to be in business. So, we are seeing companies merging or being bought out by bigger companies. If there is competition in the area it is okay, but when there isn’t then they only have one source, you pay their price. Competition is good for business, but too much competition and only the end user wins. It’s a bidding war, and you can’t pay bills with that.
ROSS: M&A activity is just a reality, neither good nor bad. We do see continuing consolidation in the aggregates industry as something we pay attention to, especially as we see more opportunities for organizations to start deploying fleets of drones through corporate purchasing as the use of the technology becomes more sophisticated.
|Matthew Lepp, Van der Graaf|
GARRISON: We’ve made numerous acquisitions over the past three years, which has allowed us to expand our product range and service offerings. So, for us on the manufacturing side, the current state of business has been beneficial, allowing us to see growth. For producers, a new merger or acquisition can be a Catch-22. In the long term, being a part of a larger company can provide stability and expanded potential, but in the short term, current projects often get delayed. This past year, we had a project quoted for a producer that needed two or three crushers and a host of conveyors only to have it put on hold because the company was acquired.
SPAKE: Large global and North American aggregates producers and road builders have been growing at a fast pace for the past few years, and it continues. I can say that they are affecting Volvo, but not in a noticeable direction. For example, I don’t believe we have won or lost business, per se, because of these mergers. Whether the mergers and acquisitions are good activities depends; there are companies out there that are very good at driving efficiencies, implementing needed change and running smarter businesses – we’ve seen this. We have also seen others that have struggled with the large-scale and rapid growth. For us, it generally comes down to the personal relationships and the procurement process, the latter of which tends to become more complex with significant growth.
WEISS: For our customers, mergers can provide both positive opportunities and challenges: Positive from the standpoint of improving a customer’s fleet and system efficiency by combining best practices, technology and talent; challenges from the standpoint of potential disruption in asset, business and talent rationalization that can sometimes accompany mergers. To add, some of our larger customers are moving to a centralized procurement strategy, driving consistency among their sites and negotiating purchases on their behalf with their suppliers. With our extensive dealer network and Caterpillar Corporate Account Services team, we are able to establish and maintain these critical relationships.
Have you noticed changes over the past year in the way aggregates producers evaluate equipment and consider it for purchase? Are buying decisions made more on the corporate side or more on the production side? Is used equipment getting a closer look right now?
KRAUSE: The biggest change is in the area of long-term expectations and views of equipment life cycles. Capital justification timetables have shrunk as well. There are many machines in the field that have operated for 30 to 50 years. Today it seems as if five years is a long-term view of equipment. I am not sure how this is affecting actual purchases or buying habits, but if this stays a trend it is something we will continue to watch. Buying, to me, is still a local responsibility. As long as the local manager is held accountable for uptime, productivity and profitability, the local manager must be comfortable that the local support and service is there to back up the equipment after it is purchased. Corporate accounts can help shape the transaction and things like terms and other services, but the ultimate buying is still local.
CLARKE: Uptime, production and ownership costs are among the top categories customers consider. We’ve got to be the best value for all parties involved in the decision-making, from the purchasing people to the crews running the machine.
SPAKE: It really depends on the customer and how they manage their equipment acquisition. We refer to a centralized or decentralized process; most large customers have elements of both. Generally, the corporate entity sets the budget, but most of the time, the production or operations department heavily influences the buying decision. Some companies move or attempt to move toward centralized decision-making, but doing so isn’t without its challenges. As for used equipment, inventories are down and prices are improving, which are both good things for an OEM. When purchasing production equipment, generally used equipment is not considered. However, used has filled a lot of voids for us over the past year as supply has tightened.
LEPP: Our market looks to be shifting toward products that provide long-term advantages and savings as opposed to a “quick fix.” This shift has caused much more consideration for drum motors in projects.
GARRISON: Lately, we’ve noticed that producers are looking for equipment with more robust safety features in addition to the standard requirements for efficiency. Safety is a priority. Operators are also expecting greater automation. Remote telemetry is a big thing as customers want to operate and monitor their plants from an app on their phone or tablet. If you can see your crusher levels with a quick glance to your digital device, you have more time to get other work done.
MCLAUGHLIN: It appears increased emphasis has been placed on “total cost of operation” and “payback time period” and higher “return on investment.” Purchasing decisions vary with every producer regardless of industry and size of company. I would generalize by saying larger producers are receiving more internal input from sourcing, performance and engineering than in the past. Yes, both used equipment and rental purchase options are increasingly important factors for many producers, particularly in the contractor market.
SEUSS: Owners are always looking at total owner and operator costs. In our experience, operator opinions carry significant weight with owners in the purchasing decision.
WEISS: Over time our customer base is using a more robust process in how they evaluate equipment purchases. They have become more sophisticated in respect to understanding total cost of running equipment. Yet everyone is challenged to tie this cost to production in order to understand true efficiency. At Caterpillar, we continue to develop solutions and advanced productivity tools aimed at helping our customers understand this more comprehensive view of their fleets. Some of our customers are looking for more mobile fleet flexibility beyond outright purchase including rental, leasing and increasingly Caterpillar’s Job Site Solutions, that can provide scalable and more holistic approaches incorporating asset management and off balance sheet services. We have also seen some customers focus on rebuilding existing assets or acquiring low-hour used assets instead of new equipment where it makes sense to their business.
ROSS: We are seeing decisions around drone purchases and deployment shift more to a corporate level. Many organizations were happy to have their earlier adopters at specific sites deploy whichever solution they preferred as long as it was within their budget. Now we are seeing more strategic procurement driven by real world ROI in the field. This is a great sign that the use of drones in aggregates and construction is becoming mainstream.
POMPO: Aggregates producers look at what is needed and evaluate it based on the need. At the corporate level, aggregate producers can get a better buying price. At corporate level, they have larger amount of the amount of information regarding cost per hour and that will govern the buying decision on equipment, new or used. Those who opt for lower initial price have learned the hard way that they did not get a good deal.
|Dave McLaughlin, KPI-JCI, Astec Mobile Screens|
What products manufactured by your company are you focusing on these days?
POMPO: BKT produces the largest amount of SKUs in the OTR market in the world. No company matches BKT in terms of range. We focus on all OTR tires. We are looking at new BKT loader tires in L4 and L5’s, new BKT scraper tires in many sizes, haulage tires different sizes and 65 series for loaders and articulated dumps. The industry changes something with equipment every year and we must keep up with them. We also closely monitor our performance against the best in the industry. Our BKT tires in pattern SR 45 have clocked industry leading 13,000 hours on them and are still running. So, from our new SR49 and SR53 for loaders to our SR48 and SR46 for haulage trucks. If we see that there is a long-term demand for a tire, we will make it. We have over 2600 different SKUs and growing.
GARRISON: The past couple of years we’ve launched dozens of new products and expanded our offering to include crushers, screens, and wash plants. Our goal is to provide all the equipment producers need from “Rock Face To Load Out.” We’ve enjoyed success, especially with the launch of our Guardian Horizontal Screen. With that being said, we haven’t forgotten about our core product lines. Our Telestacker Conveyor now features FD Auto Level – new and exclusive technology – allowing the telescopic stacker to automatically maintain a level head pulley while in radial travel mode. We also have a road-portable 210-ft. Telestacker Conveyor (the longest in history) in the works.
ROSS: Kespry is the only aerial intelligence solution that takes you from information capture on your aggregates and construction site to finished data and insights you can use in the office. The system is designed to make it easy for anyone in your team to use. The Kespry Drone flies autonomously. There are no joysticks or piloting skills needed. Both data transfer and processing are automatic. Using your data in the online Kespry Cloud is simple. And you have powerful reporting to guide better decision-making and efficiency.
WEISS: Our customers are at the center of everything we do at Caterpillar. Our products and our solutions are developed to serve a broad spectrum of customers and applications, and we are focused on offering equipment choices and configurations to right fit applications. We continue to invest in technologies that are aimed at improving our customers’ productivity and reducing their total cost of ownership. In general, we continue to offer products aimed at the typical demanding customer applications, but we also offer “GC” products for support applications where customers expect fewer hours per year. On the opposite end of the spectrum, in higher hour applications that require the ultimate in productivity and efficiency, we have developed and introduced machine platforms and technology such as our “XE” models with hybrid power trains. One great example of this is electric drive technology. We know that certain machine applications benefit from electric drive and we’ve recently announced our 988K XE electric drive loader which can deliver 25 percent or greater overall efficiency and up to 10 percent more productivity in load-and-carry compared to the standard powershift 988K.
CLARKE: We continue to focus on all products; impactors, jaws, cones and screens. and we have several new products we are excited to launch in 2018. For the record, Kleemann’s product brand names are the Mobicat mobile primary jaw on crawler chassis with feeding unit, pre-screen and conveyors built in various sizes ranging from 221 to 1,100 tph capacity; the Mobirex mobile primary impactor on crawler chassis with feeding unit, pre-screen and conveyors built in various sizes ranging from 386 to 772 tph capacity; the Mobicone mobile secondary crushing machines with feeding unit, cone crusher and a screen to produce up to three particle sizes; the Mobifox mobile secondary crushing machines with feeding unit, impact crusher and a screen producing up to three particle sizes; and the Mobiscreen mobile screening units, producing up to four particle sizes with fixed or swiveling discharge belts, with a screening surface dependent on ultimate use.
SEUSS: The WA500 yard loader is the perfect tool for two-pass loading on highway trucks leaving the gate. It allows owners to move more trucks through the facility faster, with less chance that trucks are re-assigned because they are waiting to get loaded.
|Paul Ross, Kespry|
MCLAUGHLIN: Our core product lines of crushing, screening, material handling, washing and classifying, track- and wheel-mounted portable units remain our focal points. We are currently expanding our focus on stationary and modular systems both in the United States and international markets. With such a broad product offering, KPI-JCI and Astec Mobile Screens offer comprehensive total market solutions to the end users.
LEPP: Van der Graaf’s Extreme Duty line is growing quite well. With our new Planetary Gear systems, we are now competing in harsh environments with drives up to 350 hp.
SPAKE: I deal mainly with the large end of our product portfolio – large wheel loaders and excavators and articulated haulers. Most of our customers know Volvo for our articulated haulers. Volvo developed the world’s first articulated hauler over 50 years ago. Today, Volvo haulers tend to enjoy worldwide favor. Most recently we have introduced three brand new products. Two are state-of-the-art wheel loader models – the L260H and the L350H, which will be quickly adopted in the industry. The third is the new A60H articulated hauler – the first true 60-ton hauler on the market. Volvo is still on the leading edge of introducing this product to a very interested marketplace. In early 2017, Volvo launched ActiveCare Direct, a service which provides 24/7/365 machine monitoring and monthly fleet reports directly from Volvo and managed by local dealers. The service helps customers manage fleets and improve operations by reducing idle times and machine abuse, and improving overall fleet utilization. It helps cut through the noise of telematics and allows customers to use telematics data to its full potential without having to spend a lot of extra time deciphering alarm codes.
|Gary Pompo, BKT|
KRAUSE: We have a very broad product line in both crushing and screening and wet processing for the aggregates industry. There does seem to be the growing trend, which we saw some years ago start in Europe, of modular systems which require little to no engineering and can be set up quickly and moved as the market changes. Speed to market and ability to deliver the savings that were needed to acquire the capital for the project are a very large focus. Being able to help identify the pain points of the operation and the cost-effective way to address the problem assists the local managers in their justifications and decision-making. With our line of individual modules like primary plants or ultra-sand plants modules as well as complete plants including conveyors and electrical, McLanahan is well positioned to address this newer segment of the market while still being able to deliver the custom-engineered solutions a major portion of the market still requires.
How do you expect the industry to perform in 2018? What factors point to an up versus down year? What are some of the hot spots around the country?
LEPP: We have high expectations for 2018. The surge of capital projects and improvements shows not sign of slowing. We expect growth across the industry, especially in companies involved in infrastructure.
GARRISON: I believe 2018 will be another strong year. There are a lot of capital projects booked and based on our current activity and the size of our backlog, next year’s potential is looking bright.
MCLAUGHLIN: While there are some feelings of uncertainty, many aggregate producers remain cautiously optimistic about the administration’s promises to cut regulations and implement a substantial infrastructure proposal. What factors point to an up versus down year? GDP growth, low inflation and low interest rates are several key factors as are many of the comments above. It seems we are almost over the ill effects of the financial crisis and have a positive outlook the economy will continue to grow at a steady pace.
SPAKE: It’s always hard to say. We called this year flat, and it’s tracking about 4 percent up. Personally, I think next year will be similar – I’ll call it flat. One hotspot is industrial minerals, including renewed optimism in frac sand, which includes the expansion currently occurring in West Texas. Large construction jobs will make the difference.
|Tom Seuss, Komatsu America|
CLARKE: Again, we are cautiously optimistic. For example, the asphalt industry is seeing increased volumes of RAP. The percentage of recycled material in the asphalt industry is amazingly high, which creates opportunity for recycling for us on the crushing and screening segment.
WEISS: Overall, we expect to see continued growth in 2018 – current economic indicators support this assumption for our products. For the Americas, we see the quarry and aggregates segment including sand, cement, asphalt and stone to continue a positive upward trend resulting from general economy, hurricane/natural disaster recovery, growing population and infrastructure maintenance and expansion focus. The Southwest and North Central regions remain strong in sand production for the gas and oil industry, and the Southeast will continue to see benefits of housing and infrastructure projects.
|Tony Spake, Volvo Construction Equipment|
POMPO: In 2018, the OTR industry should keep growing. With a better economy, strong companies will continue to buy new tires. The South will particularly have a strong year because of rebuilding after those debilitating storms that hit those areas. All over the country, we will continue to see new subdivisions, more businesses, new roads, which will create demand. If we do start fixing the infrastructure, the economy will grow every aspect of businesses that need tires. Then it’s a win-win for all.
ROSS: For construction, we see an ongoing investment ahead of projects in 2018 so feel like it is going to be an up year, any global events aside. Aggregates is following that trend with the added sense that the road infrastructure projects coming out of 2017 will have an added benefit.
KRAUSE: I believe that 2018 is already locked in and looks to be a very good year for the industry. Business climate, for the most part looks strong. Any thoughts of the federal government providing short-term stimulus has gone. Things like fuel prices and interest rates remain relatively low. If we start to see an uptick in any of these factors, it will tell us what kind of year 2019 will be. As I said we seem to be in a rather normal business cycle and unless something occurs to shake things up good (infrastructure bill) or down (fuel prices or interest rates) 2018 will be a strong year for our industry.
|Karl Weiss, Caterpillar|
Please comment on anything that is impacting your business or the aggregates industry right now that you would like to bring up.
CLARKE: It’s exciting to be part of changing the market in North America. Not only are we relatively new to the North American market, but we are a technology leader. Many of the familiar brands and processes have become a bit too familiar and it’s fun to bring something innovative and new to the market. Engaging with customers about how they process materials and approach jobs with new technology is something that continues to motivate us. Providing the tools AND the expertise gives us partnerships that keep us “Close to our Customers.”
KRAUSE: Our industry is still facing a lack of workers at all levels. This will change the buying habits of our customers. We are already seeing more requests for turnkey installations as there are less and less experienced engineers focusing on aggregate. The trend toward service contracts where the part is not only purchased but the install of the part is included in that price. Technicians, whether for mobile or static servicing, as scarce and so operations are looking to regional dealers and service centers to provide this to them. How we address this as an industry is critical as the aging aggregate worker gets closer to retirement.
POMPO: The biggest impact we see in the tire industry is going to be labor, finding qualified quality people that are willing to get dirty. It’s not an easy job! The people that are in it can make good money but to get more people interested, the pay structure will have to adjust.
MCLAUGHLIN: Skilled labor shortages both in manufacturing and aggregate producers continue to be a major concern for all firms across the United States. Also contributing is a lack of technical training in schools and less emphasis on the trades resulting in a smaller pool of workers entering the industry.
SPAKE: The industry is all about data management, process improvement and best practices. There’s still a lot of noise in the industry that customers are trying to decipher and figure out how to use to improve their business practices and costs. I believe the customers that best figure out how to use this data, benchmark and improve their operations will be the ones that thrive. The OEMs that make the data easy to understand and use will provide the best value and will differentiate their total offer.
GARRISON: We’ve been fortunate to have a lot of activity in the industry around frac-sand this past year. In the future, that activity may not continue. We’re really looking to see a long-term funded road bill passed to keep the projections for the industry positive.