Rock Products 120th Anniversary – Part 7

26 120YEARS 150

In This Issue, We Cover The Years 1960-1969.

The first part of our historical account of the 1960s appears in this issue, part two appears in the February 2016 issue. – Ed.

26 120YEARS 400In the first half of the 1960s, the rock products industry continued to enjoy record demand for its products. Aggregate sales increase 26 percent between 1961 and 1966; cement use increased 18 percent. But highway funding problems and increasing costs and competition signaled major problems facing some industry sectors.

From 1949 through 1962, the dollar volume of total construction increased an average of $2.76 billion per year. The only year dollar volume did not increase during this period was 1960. But as a percentage of Gross National Product (GNP), construction was beginning to lose ground. It now accounted for about 11 percent of GNP, down from 15 percent in the mid-1950s.

Residential construction was undergoing structural changes compared to the post-war building boom period. Easy availability of mortgage money was not affecting housing starts appreciably. The volume of new homes was related more to family income and the ability of the housing industry to entice homeowners to trade up to larger homes. In addition, residential development began moving west. By 1963, 36 percent of the homes built in the United States were in 13 western states. California led the nation in homebuilding.

Government funding for highways, which experienced setbacks in 1959 and 1960, was expected to resume its upward trend when President Kennedy took office. But it was 1963 before spending increased appreciably. The highway program bogged down in 1961 and 1962 because Congress was slow to authorize spending, some states were unable to raise matching funds, and attempts to ease urban traffic problems were starting to siphon money.

And interstate construction, while progressing toward the 1972 target completion date, seemed to be moving slowly. By 1961, 12,400 miles of the 41,000-mile interstate system were open to traffic, but nearly a fourth of that already needed additional work to meet anticipated traffic needs in 1975, as required by the 1956 Highway Act.

Highway funding finally was increased 8 percent in 1963 to a to-date record $6.6 billion, and increased another 8 percent in 1964 to $7.1 billion. As the interstate program approached the half-way point, more money was being spent on actual construction rather than on engineering and right-of-way acquisition.

No Smooth Sailing

But record demand for aggregate and cement didn’t mean smooth sailing for the rock products industry in the first half of the 1960s. The greatest problems were escalating labor costs and increased competition, particularly from a growing number of large companies that began dominating some markets. Labor unions sought a shorter work week (35 hour), double pay for overtime, greater job security and improved benefits. “The best advice,” wrote a Rock Products editor, “is to automate now, no matter what the cost.”




Crushed Stone

Sand & Gravel










































Source: US Geological Survey   million short tons

But cost did matter. One sand and gravel producer complained that competition made it difficult to make high enough profits to reinvest. “We need higher depletion allowances so more cash can be used for newer and more efficient and larger handling equipment,” he said. “We are lagging behind the technical advances in our customer’s business, requiring sometimes radical changes in the raw materials required.”

Between 1947 and 1962, average productivity at sand and gravel operations increased 74 percent and product prices increased 30 percent. But employment increased 98 percent, weekly wages increase 109 percent, and benefit costs increased more than 300 percent, Rock Products reported.

“Survey results indicate that though many outside forces are at work to harass sand and gravel men,” reported Rock Products in 1963, “a good number of the problems are internal in nature: prices, collections, cost control, scarcity of land, and alas, poor business ethics.”

The crushed stone industry, however, seemed less affected by the problems plaguing sand and gravel producers. “Soaring with the Sixties” was the headline Rock Products used for a 1964 overview of the industry. In a survey, 46 percent of respondents said their plants were operating at 100 percent or more of capacity. Modernization efforts at crushed stone operations focused on increasing plant efficiency, not necessarily plant capacity. Efforts included taking advantage of recent drilling and blasting advances and using primary and secondary surge piles in automated crushing circuits.

Changing product specifications did frustrate crushed stone producers. Often, specifications varied widely between private and public customers. The American Association of State Highway Officials’ road tests, which led to greater use of stabilized base, also reduced demand for crushed stone base and sub-base.

In retrospect, 1966 was a turning point for the aggregates industry. During the following 30 years, crushed stone production continued on an upward trend – cyclical peaks and valleys notwithstanding. Sand and gravel production, on the other hand, never climbed much higher. Sand and gravel’s best year after 1966 was 1994, in which production totaled 982 million tons, only 8 percent greater than 28 years earlier. Peak annual production of crushed stone, 1.4 billion tons in 1995, was 74 percent greater than in 1966.

Cement Growth

35 120th 300In the early 1960s, the cement industry faced growing demand for its product, but like sand and gravel producers, found profits elusive. “Haunted by profitless prosperity” was how Rock Products described it. Following an unprecedented period of investment in new cement plant capacity during the 1950s, the industry was in a situation of severe overcapacity. By 1963, it was operating at only 73 percent capacity, according to a Rock Products survey.

To make matters worse plant capacity additions continued. “The widening gap between productive capacity and actual use makes one wonder what the reason is for continued construction of the new cement capacity,” commented one cement company official. It was 1964 before growth in demand for cement outpaced capacity additions. But even toward the end of that year, companies had announced plans to add 30 million bbls of capacity during the next year.

Efforts to soak up excess capacity resulted in lower prices, higher costs and reduced profits. Many companies opened distribution terminals to expand markets, but then this led to higher transportation costs and greater competition in some areas. Following price cutting in 1962, a frustrated cement company president said, “We’re half-witted in this industry.”

In the cement industry’s defense, much of the new plant capacity was the result of modernization programs carried out to retire old, high-cost plants. The newer plants were almost always larger to offset high fixed equipment, fuel and labor costs, with lower costs per barrel. Larger plants were also necessary to supply a growing number of distribution terminals.

The industry benefited from increased automation of plants with “electronic computers, autometers, concentric preheaters, and various types of automatic centralized controls.”

Computer controls were installed at two cement plants in 1964, and work was under way to install them at two others. Plants in the 1960s were also built with internal heat exchangers, such as chains, quadrants and lifters, to improve energy efficiency.

But reduction of labor costs was the reason for a lot of projects. “The modern cement was born on a bargaining table, not a drawing board,” commented Rock Products. “Spiraling labor costs have exerted more influence on current plant design than any other factor.”

Vertical Integration

The cement, aggregate and concrete industry also continued to vertically integrate. In 1965, the trend caught the attention of the Federal Trade Commission (FTC), which began a probe of the effects of acquisitions on competition. The FTC included in 1966 that “vertical acquisitions by cement manufacturers, especially of sizeable ready-mixed concrete companies, can have substantial adverse effects on competition.

“As a matter of general enforcement policy,” the FTC said it would “issue a complaint in the case of every future acquisition by a cement producer in any market to which such acquiring cement producer was an actual or potential supplier.”

The FTC also ruled that “acquisition of key aggregate production can constitute a way by which ready-mixed concrete companies and other cement consumers can by influenced in making their cement purchases, and competition can by considerably lessened thereby.”

While the cement industry struggled with government rulings and overcapacity, the other pyroprocessed products – lightweight aggregate and lime – enjoyed generally healthy and improving markets during the early 1960s. Lightweight aggregate, due to its increased use in structural concrete, was the fastest growing segment of the rock products industry. Plants ran at greater than 90 percent capacity to keep up with double-digit growth.

Production of expanded clay and shale in particular increased about 30 percent from 1961 to 1963. In 1964, sintering plants were developed to produce lightweight aggregate from waste fly ash. Although some bugs needed to be worked out of the process, production in 1964 totaled 150,000 tons.

Lime and Slag

Lime, which had experienced declining markets because of reduced steel production, received new life from a new method of producing steel. The basic oxygen process being adopted by an increasing number of steel manufacturers required 12 times more lime as flux than older methods. Total lime production increased each year of plant utilization improved from a depressed 65 percent in 1960 to 75 percent in 1964.

The switch to the basic oxygen steel process, which produced more slag, also helped slag producers, who were dependent on lagging steel production. A decrease in the number of operating blast furnaces caused a raw material shortage even as market demand was growing. Slag produced per ton of iron in 1961 was only half that produced prior to World War II. Following the trend in steel output, slag production gradually increased through the first half of the 1960s.

Equipment Developments

Several important equipment developments were unveiled between 1961 and 1966 that helped producers in their quest to lower costs and produce more:

  • Euclid introduced a wheel loader with “Pivot Steer” (articulation) in 1962. A year later, Caterpillar developed its 988 articulated loader.
  • DuPont introduced a non-electric delay blasting system.
  • Eagle Iron Works began manufacturing Autospec, a computer-controlled sand classifying system.
  • Prototype rubber screens, manufactured by Linatex, were tested in England.
  • Koehring improved its hydraulic shovel design, incorporating a mono-race turntable connection on which the machine swings, allowing it to accept greater vertical, horizontal and radial loads.
  • Clark (Michigan) introduced a 13-cu.-yd. wheel loader designed specifically for loading shotrock, according to advertisements at the time.
  • Allis-Chalmers developed a radio-controlled, 4-½ -cu.-yd. tracked loader that could be directed from any distance within visual range. Its first commercial application was in steel mill slag removal.

Next month, in the continuation of the 1960s, trade shows evolve, costs rise and over-capacity threatens industry growth.

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