Major Federal Decision

On Feb. 10, the U.S. 9th Circuit Court of Appeals upheld a consent decree that had settled a lawsuit between Los Angeles County, CEMEX Inc., and the United States, allowing a major mining project on federal lands to go forward. Kerry Shapiro, a partner at Jeffer, Mangels, Butler & Marmaro LLP who was lead counsel for CEMEX, believes the decision could have broad implications for all projects on federal lands. "The decision helps to establish that local governments can go too far in the name of local regulation and be preempted from interfering with projects on federal land,” he said.

The City of Santa Clarita, where the project was based, bitterly opposed CEMEX's Soledad Canyon Sand and Gravel Mining Project - the largest federally-contracted sand and gravel project in the history of the United States - and was instrumental in the County’s denial of the deal despite that it was on property owned by the U.S. Bureau of Land Management and had secured the appropriate federal approvals.

On behalf of CEMEX, Shapiro and his team sued the County successfully, arguing that the local government's delays in conducting environmental reviews and subsequent denial of the project were preempted by federal mining laws and BLM decisions. Under the consent decree, the County agreed to rescind its denial and complete its environmental review. Two months later, the County approved the project and issued the surface mining permit. The City of Santa Clarita, in its continuing effort to stop the project, appealed the consent decree.

Within days of the case’s oral argument, the 9th Circuit Court of Appeals ruled unanimously that the settlement was negotiated in good faith, is "fundamentally fair, adequate and reasonable" and that CEMEX had made a “plausible” case that further County review was preempted. Your comment?

If you build them, they may not come

The Commerce Department reported today that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month. That was the slowest pace since January 2005 and left the number of unsold homes at a record high of 528,000. Analysts viewed the new data as further evidence that the nation's red-hot housing market, which hit record sales levels for five straight years, has definitely started to cool. I'm not sure it's the housing market itself that is the culprit. It may be a case of consumer "cold feet" as families are not willing to commit to change in their lives when they are uncertain that the federal government, with its domestic scandals and mismanagement of foreign affairs, offers them any promise of stability. Your comment?

Handsome profits for Hanson

Hanson Building Materials grew its 2005 profit 20.2% at its U.S. Aggregates division and 8.7% at its U.S. Building Products division, according to President Alan Murray. Looking ahead, Murray says demand in the U.S. is expected to remain strong but may decline in the UK and Australia. The increase in energy costs incurred in the latter part of 2005 will impact the company's annual cost base in 2006, despite cost-reduction initiatives. The company expects to make further progress during 2006 based on strong market positions, value-adding acquisition opportunities and continued financial discipline. In other words, look for M&A activity to heat up, as they compete with Vulcan, Martin Marietta and Lafarge to buy up a few quarries in areas where some new strategic reserves wouldn't be a half-bad idea.

Back on track

We've got the P&Q editor's blog back on track after a brief vanishing act.

Have you seen the recent Bureau of Labor Statistics re-benchmarked jobs data? According to the report, job growth over the last five years is the weakest on record. The U.S. economy came up more than 7 million jobs short of keeping up with population growth. Over the past five years the US economy experienced a net job loss in goods-producing activities. U.S. manufacturing lost 2.9 million jobs, almost 17% of the manufacturing work force. The wipeout is across the board. Not a single manufacturing payroll classification created a single new job. Communications equipment lost 43% of its workforce. Semiconductors and electronic components lost 37% of its workforce. The workforce in computers and electronic products declined 30%. Electrical equipment and appliances lost 25% of its employees. The workforce in motor vehicles and parts declined 12%. Furniture and related products lost 17% of its jobs. Apparel manufacturers lost almost half of the work force. Employment in textile mills declined 43%. Paper and paper products lost one-fifth of its jobs. The work force in plastics and rubber products declined by 15%. Even manufacturers of beverages and tobacco products experienced a 7% shrinkage in jobs. Glad aggregates producers are having a great year. But soon, if people don't have good paying jobs, they won't be able to afford the cars needed to drive on the great roads being built.

Homes sweet homes

Unseasonably warm weather led to a blast-off in home building in January. Housing starts jumped 14.5 percent to an annual rate of 2.28 million last month, the highest since March 1973, acccording to the Census Bureau. Statistics from the South, which accounts for nearly half of new home construction in the country, and where weather and seasonal adjustments are less of an issue, showed a roughly 9 percent gain in housing starts, so increases were not specific to warm weather in the Northeast and Midwest. Building permits are seen as a sign of builders' confidence in the market, and they came in at an annual pace of 2.22 million in January, up 6.8 percent from December. Economic experts -- naysayers one and all -- still believe the real estate market will cool off later this year. Your comment?

Martin Marietta goes further

The results are in for the nation's second largest aggregates producer. Martin Marietta Materials reported record fourth-quarter results. Rising energy costs and weather disruptions from the Gulf Coast hurricanes early in the quarter hurt sales. But business improved as rebuilding began in areas wrecked by Hurricanes Katrina, Rita and Wilma and demand picked up for Martin Marietta's goods and services. With the increased demand, the Raleigh company raised prices 9.8 percent during the quarter. "Certainly it's a very good time at Martin Marietta," said CEO Stephen P. Zelnak. He said the Gulf Coast area makes up just 10 percent of its business. But the demand there was strong enough to offset declines in other markets. Demand for its construction materials is expected to rise 2 percent to 4 percent this year, boosted by office and retail construction and road and highway expansion. Prices for aggregates are expected to increase 9 percent to 11 percent this year, reflecting heavy demand, rising transportation costs and supply constraints in the Southeast and Southwest, Zelnak said. Your comment?

Present a paper!

According to NSSGA, the deadline for the call for papers for the 2006 NSSGA Automation Conference & Expo has been extended to March 1 because of the low number of papers submitted to date. For this conference to succeed aggregate producers to participate! To that end, NSSGA is offering complimentary registrations to producers who present a paper (or have a major role in doing so). This meeting will be held in Dallas, TX on October 21-24. If you are interested in presenting a paper at this conference, please complete the form at the following link. This is the largest industry event dedicated solely to automation in the aggregates industry. Please consider presenting a paper to share your knowledge with the industry. Your comment?

But what does it mean?

Lafarge has floated a $3 billion cash offer to buy the 46.8 percent it does not own in Lafarge North America Inc., but if the deal goes down, what does it mean? Well, it would streamline its operations and enhance its earnings. But more importantly, analysts say this transaction makes strategic sense for Lafarge because it will enable the company to pursue business and growth opportunities in North America even more effectively. With persistent rumors that Lafarge plans a major acquisition in North America, the infrastructure to do just that begins to fall into place. Your comment?

Florida rockin'

Florida Rock is looking good out of the blocks this year. Net income in the first quarter was $42 million or 63 cents per share versus $30 million or 45 cents per share a year ago. Consolidated total sales rose 22% to $306 million from a year ago. Average selling prices and product volumes increased in all three of its industry segments. Gross profit rose 28.4% from a year ago to $89 million. Not to mention, the company acquired Grand Rivers Quarry, a newly developed limestone quarry on the Tennessee River in Western Kentucky. Nice start to the year. And as The Rolling Stones sang during halftime of the Super Bowl, "If you start me up I'll never stop." Your comment?

Good news, bad news

The Bush administration's proposed budget for fiscal year 2007 contains some good news and some bad news for the for the aggregates industry. The request for federal highway programs came in at $39.06 billion.  This is $3.4 billion more than last year and follows what was recommended in SAFETEA-LU.  Transit funding was set at $18.875 billion, $370 million more than last year and also in line with SAFETEA-LU.  However, the request for aviation programs came in at $12.2 billion, a $2.1 billion cut from 2006.  The Airport Improvement Program (AIP) receives only $2.75 billion, $765 million less than last year and almost $1 billion less than the amount authorized. The feds giveth and the feds taketh away. But it ain't over until it's over. Your comment?

Vulcan's smokin' year

Last year was just flat out smokin' for Vulcan Materials. Revenue leapt 24 percent to $754.6 million from $608.7 million in 2004. Full-year net income totaled $388.8 million, or $3.73 per share, up 35 percent from $287.4 million, or $2.77 per share, in 2004. Sales increased 18 percent to $2.9 billion from $2.45 billion. Shares of the company' stock rose to a new 52-week high on the news, up $5.34, or 7.4 percent, to $77.22 on the New York Stock Exchange. Your comment?

Construction Material Costs Skyrocket

A 22 percent increase in the cost of materials used for highway and street construction over the past two years is eroding the impact of the new federal highway bill and will likely limit the ability of the states to meet their ever-growing transportation needs, according to an analysis by the American Road & Transportation Builders Association (ARTBA). In 2005 alone, highway contractors paid 13 percent more for materials over the previous year, ARTBA's analysis of Bureau of Labor Statistics' data found. By contrast, the overall rate of inflation for 2005, as measured by the consumer price index, was just 3.4 percent. Of course the Catch 22 here, is that construction materials prices have seen only meager increases over the years. So the increases are overdue, but now that they are occuring, they stand to drain budgets sooner. Go figure. Your comment?

Stand down day not for nonmental

After consulting with MSHA, NSSGA has confirmed that the agency's call for a nationwide shutdown of mines on Monday, Feb. 6, for one hour to conduct safety checks applies only to the coal mining sector.  The national "timeout" for coal mines was urged by David G. Dye, acting assistant secretary of labor for mine safety, who designated Feb. 6 as "Stand Down for Safety" day because of the recent surge in coal mining deaths.  While the metal/non-metal sector is not affected at this time, it is likely that closer scrutiny of safety measures will occur in the near future.   Your comment?

Plant Operators everywhere

NSSGA's plant operator's conference has drawn more than 400 people to Long Beach, CA. While the weather here is not 70 degrees, it is sunny. The event is characterized by a great slate of educational sessions, as well as the expo. Reports from the expo area are really pretty positive. Exhibitors are saying that they are making some solid contacts, although not as many as they had hoped. Almost to a man, exhibitors are telling us that the aggregates industry offers great economic promise right now. Your comment?