Aggregate Industry Faces Challenges, Uncertainty in 2011

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By Christopher Hopkins
Senior Vice President, Aggregates and Mining
The Saint Consulting Group

The challenges bedeviling the aggregate industry will continue in 2011, most experts seem to agree.

Despite signs of improvement in the second half of 2010, the three big sectors that are the lifeblood of the sand, stone and gravel industry remain in a severe state of uncertainty:

  • Housing: Forecasters predict an increase in housing starts in 2011 — a small but steady growth, depending on geographic region.
  • Commercial Development: Many questions remain regarding non-residential private development. An abundance of vacant commercial retail and office space is still on the market and must be absorbed before we will see any major increases in these sectors.
  • Roads, Highways, Infrastructure: The 800-pound gorilla hanging over the aggregate industry is the lack of a long-term renewal of federal transportation infrastructure funding. The lame-duck session of Congress last month renewed the Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA-LU) only until March 4, 2011. The lack of a permanent bill, which would allow companies to forecast long-term, is hampering the rebound of the aggregate industry. Politicians on both sides of the political aisle agree that they want to renew the act, but the roadblock appears to be how to pay for it.

The aggregate industry will improve in 2011 over the performance of the two previous years, but only slightly, according to analysts. The larger companies will still have to fight to retain their capital and remain profitable. Optimists say 2011 will be a building year that will lead into a growth year in 2012.

Mark Kuhar talks to a number of academic and industry experts to examine this and other industry forecasting issues in the latest issue of Rock Products Magazine. Here is a link to his informative look at the situation: Rock Products

Chris Hopkins is senior vice president for aggregates and mining at The Saint Consulting Group, email hopkins@tscg. biz, phone 615-656-3794

 

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