Aggregates Manager survey ranks 2018 as a strong year for the aggregates industry

More than half of the respondents who took part in a recent survey carried out by Aggregates Manager ranked 2018 was an excellent or very good year for their businesses, and more than 40% of the quarrying professionals taking part reported higher production volumes than 2017.

It wasn’t all good news: nearly 18% described business as fair or poor – which represents an increase of more than 18% over 2017’s results. Also, says Aggregates Manager, the amount of those who said they had lower production volumes nearly tippled that of last year.

In terms of outlook and business confidence, there was an increase of  5% in respondents taking an “excellent or very good” view of the coming year, versus the same point at the end of 2017. However, nearly 7% more took the opposite view, predicting a “fair or poor” year ahead.

The report highlighted that participants reporting a good year reduced from a forecast of 42.7% to 31.5%. Despite this, respondents anticipate a resurgence in the centre, with nearly 40% who called for a good year. Growth is also anticipated at the high end, with more than 15% predicting an excellent year while 1.4% anticipating poor business results in 2019.

More than 10% described 2018 as an excellent year while 39% say it was very good and more than 30% say it was good. Nearly 15% regarded 2018 as fair and 4.8% said it as poor.

The bigger boys are feeling more positive. According to the findings, operators producing more than 5,000,000 tons per year reported excellent (15%) or very good (50%) results. Nearly 8% of those producing more than 3 million but less than 5 million tonnes per year reported excellent business ratings and 61.5% rated 2018 as very good. However, smaller operators who produce less than 500,000 tonnes per year were the most likely to report fair (22.2%) or poor (9.3%) business ratings.

The survey showed that sand and gravel producers were the most likely to report excellent (13.3%) or very good (40%) results in 2018. These results are followed by producers of crushed stone & sand and gravel with a combined 53.1% who reported excellent or very good results, and crushed stone producers with a total 48.7% who indicated excellent or very good results.

In terms of region, operators in the northeastern parts of the US were the most likely to report strong business conditions as 10.7% described it as excellent and an additional 52.7% who said it was very good. This is followed by operators in the west, with 46% who reported excellent or very good conditions, while 46% of operators in the South and North Central chose the top two business condition ratings.

From a year-over-year perspective, Aggregates Manager says three of four regions had a higher percentage of respondents in the top two business rating categories for 2019. These results showed the Northeast (+9.9%), the West (+7.9%), and the North Central (+0.5%). In the South, there was a lower percentage of respondents in the top two categories (-5.2%). Also, it was the region most likely to report lower business ratings with 14% who described 2018 as fair and additional 12% who categorised it as poor.

2019 forecast

More than half of the respondents predict excellent (15.1%) or very good conditions (35.6 percent) in the year ahead. Nearly four in ten expect 2019 to be a good year. Less than one in ten anticipate fair (8.2%) or poor (1.4%) business ratings.

Bigger producers are also more positive when it comes to forecasted business conditions. The report found that nearly two-thirds of respondents at sites that produce more than 5 million tonnes per year expect excellent (25.0 percent) or very good (40.0 percent) business conditions in 2019. In addition, 37% of small producers (up to 500,000 tons per year) believe either an excelled year 11.1%) or very good (25.9%) year.

By commodity, half or more of all respondents have strong expectations for this year. Sand and gravel producers were most likely to predict an excellent year (20%), with an additional 30% percent who said it would be a very good year. These findings represent a 20% decline from sand and gravel producers’ expectations for 2018. More than 15% of crushed stone & sand and gravel producers are anticipating an excellent year, with 35.9% more who stated it will be very good. Nearly 11% of crushed stone producers called for an excellent year while 43.2% have for forecast a very good year. Producers in this category predicted the sharpest increase in top business ratings for this year with a 16.7% increase compared to 2018 expectations.

2018 production volumes

More than four out of ten of respondents said they produced more aggregates in 2018 than during the prior year – which represents a slight decline (4.8%) from the percentage that reported increases during 2017. The average production increase was nearly 21%, a 4.3% uptick from 2017, while the average decrease was 20.5%, more than double last year’s average decrease of 10.1%.

Operators with annual production of 500,001 to 1 million tonnes were the most likely to experience an increase (63.4%) and least likely to experience a decrease (3.3%) during 2018. Meanwhile, producers of 500,000 tonnes or less were the least likely to report an increase (27.8%) and most likely to report a decrease (27.8%).

By commodity, crushed stone producers were most likely to indicate higher volumes (48.7%). These are followed by crushed stone & sand and gravel producers (45.3%) and sand and gravel producers (36.7%). More sand and gravel producers reported a decrease (23.3%) than any other commodity.

Half of operators in the Northeast and West noted increased volumes in 2018 followed by 40.6% of operators in the North Central and 38% of those in the South. Operators most likely to report a decrease in volumes are South (24%) and Northeast (7.1%).

The Northeast also had the biggest production gains, as 35.7% of respondents stated that volumes increased by 30% or more. The South had the biggest declines, with a quarter of respondents said that volumes declines by 30% or more.

Overall, the results showed that the most significant challenge for operators in 2018 was worker retention which has been the top source of concern for producers since 2016. This year more than 30% of respondents described it as a major problem while a further 39.7% regarded it as a minor challenge. Labour was the top concern in the south, west and north central parts of the US. In the northeast, the top concern was aggregates availability and permitting, followed by labour.

Other growing concerns include community relations (+4.2%), water availability (+1.9%), environmental issues (+1.6%) and competition for sales (+2%). Furthermore, 11% of respondents cited community relations and environmental issues as a major challenge. In the West, 21.5% of respondents described community relations as a major problem, while environmental issues were more frequently reported in the Northwest (17.9%).

Aggregates Manager stated that 2019 is likely to be a strong year for most operators but the industry must remain vigilant for pockets of weakness. To see the report in more detail, please click on this link: https://www.aggman.com/forecast-largely-positive/

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