Never mind the stunted 2002 production figures, say industry prognosticators. Aggregate demand still has a lot of growing to do in the coming years.

The Freedonia group's recent study, World Construction Aggregates, predicts worldwide demand for aggregate products will increase 4.7% annualy through 2007. This sum includes crushed stone, sand and gravel, clay and recycled debris.

The study indicates the United States should experience a 2.1% annual increase through 2007 — nearly an 11% increase at the end of the five years. The United States should produce 3.1 billion metric tons in 2007 compared with the 2.8 billion metric tons produced in 2002.

Freedonia Group is an independent research firm that sells original and customized data. It based the study's predictions on trade data, manufacturing sales, economic status of countries, and regulatory issues. It also relied heavily on the U.S. Geological Survey and government sources in Europe, United Kingdom and Japan.

Industrial Analyst Kenneth Long authored the Freedonia study. He predicts an economic turn around in the next few years based on economic trends and cycles. The turn around should provide aid to U.S. highway funds that have been relatively flat.

Economy.com Economist Katherine Lievense says a high unemployment rate hindered income tax revenue that caused governments to cut back on highway plans. Lievense, who specializes in the aggregate business, agrees with Long, saying historical trends predict a positive future. Soon revenues will start regenerating, highway construction and repairs will resume, and aggregate demand will again be on the rise, she says.

Global Insight recently released Global Construction Study 2003, which predicts a positive future for construction. The study analyzes 55 of the largest construction markets up until 2025. Global Insight is a private research firm, formerly DRI and WEFA, which based its study on construction activity in 55 countries.

The study predicts a 5% global growth in construction through 2012. In the near future, however, activity should only increase by 2.8% globally through 2004.

Global Insight expects U.S. construction to increase by 4.8% through 2012, just under the global average. India and China makeup the largest increases at 9.2% and 7.9%, respectively. China is expected to grow by 8.5% during the next five years.

The study suggests the economic slowdown will continue to limit demand in the United States and western Europe. But an economic rebound is expected in both regions by 2004, resulting in increased construction.

China, which already has the highest demand for aggregates, should produce 5.7 million metric tons annually to accommodate drastic increases in infrastructure activity and industrialization. The United States is the second-largest aggregate-consuming nation, accounting for 16% of all global sales.

Continued industrialization in India, Poland, Russia, Taiwan, Thailand and Turkey should spark production surges in those countries.

Corinne Gangloff, Freedonia spokeswoman, says an increase in world demand should have little bearing on production in the United States.

Long says foreign trade only accounts for about 2% of the aggregate market. Yet, he expects it to increase at a slow but steady pace as industrialized nations enforce strict environmental and land regulations making production more expensive. Continued technological growth will make transportation costs consistently lower. He says enhancements in dredging technology has made waterways more navigable for self-unloading vessels. All this could add up to more Canadian and Mexican aggregates coming into the United States.

Lievense says Thailand has become a large cement exporter, now that more Asian countries are adopting free-trade policies. However, it is still too soon to foresee how trade will affect the market.

What may influence demand for aggregates is a global increase in recycled and alternate construction materials. The demand for recycled and alternate building materials including fly ash, slag, clay and shale should increase to 185 million metric tons by 2007, compared with 145 million metric tons in 2002. Gangloff says recycled material is replacing traditional aggregate, but crushed stone maintains the highest production rate followed by sand and gravel.

“It's definitely not going to take the market share away from crushed stone because the market for crushed stone has also increased dramatically,” Gangloff says.

Lievense, however, says slag cement, a “green” product that uses less energy to manufacture, may have taken a bite out of Portland Cement's sales. She says, according to www.slagcement.org, slag cement sales were up 22% while Portland Cement was down 3.5%.

Nonetheless, many experts agree that aggregate production figures will be marking off new record levels during the next five years.