Hot market in China

The hot market in China will continue unabated. Construction expenditures in China will increase 11.6 percent annually through 2010, reaching 5.8 trillion yen, according to a new study from The Freedonia Group, a Cleveland-based industry market research firm. In real terms, spending will grow at a 9.7 percent annual rate. Although growth in Chinese construction expenditures will moderate from a blistering 2000-2005 pace, the country will continue to outperform other major national construction markets through 2010. An expanding domestic economy, sustained strength in foreign investment funding, healthy demand for Chinese manufactured goods, and further population and household growth will all work to drive demand for construction in China. Nonbuilding construction will be the fastest growing sector, with expenditures climbing 10.5 percent annually in real terms through 2010. Growth will be driven by government funding for large-scale infrastructure construction like the Beijing-Shanghai High Speed Railway, the West-East Oil Pipeline, the South-North Water Diversion and the “7918 Network” national highway system currently underway. Your comment?

Happy holiday weekend

Have a great memorial day weekend. The P&Q Editor's Blog will be back next week!

Mine matters

MSHA will have to be a tougher customer in the future, judging by the Mine Improvement and New Emergency Response Act of 2006 (MINER Act). In a press conference today, Congressman George Miller of Georgia claimed that the House is ready to accept the language of the Senate bill. Congressman Miller has three amendments, which may or may not be added. They would 1.) mandate no less than a two-day supply of oxygen for trapped miners; 2.) mandate, within 15 months, communications and tracking devices to find and communicate with trapped miners; and 3.) require MSHA to regularly inspect miners’ individual oxygen devices, known as self-contained self-rescuers. Thanks to Ellen Smith of Mine Safety and Health News for following this closely. Stay tuned. Your comment?

MSHA inside info

For some great insights on what is going on with MSHA, check out Kathy Snyder's blog MineSafetyWatch. Snyder, former public information officer for the agency, brings an insider's perspective and some very valid sources to the table as she comments about regulations, personnel moves and double dirty dealing at the Mine Safety & Health Administration. Your comment?

Lots of money, few companies

Got the following "summary" of a research report being ofered for sale. "The U.S. mineral construction materials industry includes roughly 45 companies that operate 118 cement plants, hundreds of local sand and gravel quarriers, and thousands of ready-mix concrete operators. In addition, about 130 companies operate 200 brick plants, 500 produce asphalt, 190 produce gypsum products, and about 1,000 produce concrete blocks and pipes. The combined annual revenue of the industry is about $65 billion, of which $35 billion is due to sales of cement and concrete products." Hmmmm, only 45 companies, huh? Interesting. Your comment?

Bill on the move

MSHA legislation is on the move. According to NSSGA, the Senate Health, Education, Labor and Pensions Committee (H.E.L.P.) marked up new mine-safety legislation in a "hideaway office" in the Capitol. The bill, which was not amended during the closed session, was a bipartisan compromise, which bodes well for its ultimate consideration in the full Senate. NSSGA obtained a copy of the Senate bill and says it is satisfied that it does fairly take into account the differences between coal and other non-metal mining. Provisions applying to all mining sectors would codify MSHA’s recent 15-minute emergency notification requirement when an incident or accident poses a reasonable risk of death; and penalty provisions, which propose a minimum $2000 fine for Section 104 (d) (1) violation, as well as increasing the fine for “flagrant” violations to a maximum $220,000. Your comment?

Diesel and dust

Well, we knew this was coming. MSHA has issued a final rule strengthening protections for miners exposed to diesel particulate matter (DPM) from diesel exhaust in underground metal and nonmetal mines. "Diesel Particulate Matter Exposure of Underground Metal and Nonmetal Miners" will be published in the Federal Register on May 18th. "Exposure to DPM is a significant public health concern, and underground miners are exposed to higher concentrations of DPM than any other occupational group," said David G. Dye, acting administrator for MSHA. "This final rule ensures enhanced protection for miners from the effects of diesel particulate matter." Your comment?

Lafarge is all Lafarge

Well, Lafarge owns all of Lafarge. The company has successfully completed its acquisition of the remaining shares of Lafarge North America that it did not acquire previously through its tender offer that expired on May 12, 2006. in other words, Lafarge now owns 100% of the shares of Lafarge North America, effectively removing the company from the New York Stock Exchange. Your comment?

How does that float your boat?

Our neighbor up the road, Oglebay Norton Company, signed a definitive purchase agreement to sell six of its nine marine vessels. The previously announced intention to sell also includes long-term contracts for transporting limestone from the company's Michigan operations. Closing of the sale is subject to regulatory clearance; therefore, terms of the agreement have not been disclosed. In addition, the company stated that it intends to sell its remaining three vessels and is in negotiations with a potential buyer. This is just the next step in the company's evolution from a troubled financial state to an efffective business model. Congrats to President Mike Lundin for his fine efforts to move the company forward. Your comment?

The long and the shortage of it

Ken Simonson, chief economist for The Associated General Contractors of America, says things are looking, well, short in the construction industry. "Construction faces much higher materials cost increases than the economy as a whole, and availability of some materials may be a problem," Simonson says. "Contractors in the past two weeks have reported to AGC that cement had run out in Spokane, Wash. and Little Rock, Ark., and that fly ash was unobtainable in Oregon. Tires for offroad equipment are a continuing problem. The Institute for Supply Management said on Wednesday that its nonmanufacturing members reported price increases in April for asphalt, construction labor, copper, diesel fuel, freight and fuel surcharges, insulation, roofing materials, steel, tires, wallboard, and wire." Hopefully the aggregates industry can keep cranking out its products, so there will be no shortage there, at least. Your comment?

MSHA vs. LLC's

In response to MSHA's recent interpretive bulletin on LLC's, the following memo came in from Ellen Smith at Mine Safety & Health News:

"Last month, we asked MSHA a Compliance Corner question about the status of LLCs and whether 110(c) status would apply to "agents" in LLCs. This question came up in November, and there was some discussion as to whether agents of LLCs would be treated like those of a "partnership" whereas 110(c) liability would not apply, according to an old FMSHRC decision, Pyro Mining Co. In Pyro, FMSHRC held that § 110(c) personal liability applies only to agents of corporations and not to employees of a partnership composed of two corporations, and actions against a maintenance foreman and production manager who worked for Pyro Mining Co. were dismissed. MSHA’s argument that such a literal interpretation of § 110(c)’s coverage thwarts the Mine Act’s purpose of protecting miners was rejected. The Commission stated in Pyro that, “On its face,” § 110(c) applies only to agents of operators that are corporations and there is no legislative intent to expand the section’s coverage. Donald Guess, Docket Nos. KENT 91-1340 et al., 15 FMSHRC 2440 (Dec. 13, 1993), 1 MSHN 16, D-10 (Jan. 14, 1994), 2 MSHN 193 (April 7, 1995)."

So there you have it. Your comment?

Welcome to the show

Does the aggregates industry need another show? Some say yes, some say no. We'll find out in 2009, when NSSGA debuts World of Aggregates, a show that will bring together manufacturers and suppliers with purchasing agents from aggregates plants. The show is already endorsed by Vulcan, Martin Marietta, Lafarge and other major producers. I think this show can be the missing link in years when there is no ConExpo/Con-Agg. Let's all work together to make this exciting new venture a success. Your comment?

Big Dig, big trouble

According to news reports, a multi-count indictment has been returned by a federal Grand Jury, charging six individuals employed by Aggregate Industries NE with conspiring to defraud the United States by generating and submitting false records to the Central Artery Tunnel Project (“Big Dig”) and mailing fraudulent invoices to general contractors on this government funded highway project. They are charged with highway project fraud and related offenses for their participation in a scheme to provide concrete to Big Dig projects that did not meet contract specifications, and to conceal the true nature of the concrete through false documentation. If you remember, back in 2002, several of the company's senior managers were investigated after a criminal complaint concerning price-fixing. This is the kind of thing that gives the construction materials industry a bad name, and coming during a time of economic prosperity in the industry, it does nothing to lessen the national perception that big corporations gouge customers. Your comment?

Martin Marietta rolls

Martin Marietta Materials has jumped out to a hot start this year. The key statistic to note is that the company's heritage aggregates pricing was up 15% and volume up 8.5%. The almost universal uptick in pricing around the industry is welcome news, although the positive effects are somewhat dampened by the huge spike in diesel prices experienced in the market. Stephen P. Zelnak, Jr., Chairman and CEO of Martin Marietta Materials, stated, “The increases in aggregates shipments and pricing, coupled with our focus on cost management, resulted in a 610-basis-point improvement in aggregates operating margin as a percentage of net sales, in spite of the rising costs of diesel fuel, repair and supply parts, and freight costs embedded in the Corporation's long-haul transportation network. In fact, embedded freight costs per ton increased 22% when compared with the prior year's first quarter. . . . The outlook for the Aggregates business for 2006 is positive. We currently expect aggregates shipments volume to increase 3% to 4% and aggregates pricing to increase 11% to 12.5%. We expect the Aggregates segment operating margin to increase approximately 300 basis points."

Very solid indeed. Your comment?

Eagle eye

Almost lost among the great performance of aggregates corporations such as Vulcan Materials and Martin Marietta Materials is the Eagle Materials story. Created as a spin-off from Centex in 2004, Eagle has methodically established itself as a solid player with holdings in aggregates, concrete and cement, as well as wallboard -- all solid growth areas both nationally and especially regionally in the south. Aggregates reserves at one of its California operations are rumored to be among the state's largest. This is a prototype construction-materials supply chain company. It's stock has just soared in the two years of its existence, and recently split three for one. Keep an eye on Eagle. Your comment?

Lafarge leaps forward

Well, Lafarge is sitting pretty. The company announced that first quarter sales were up 28.1 percent. Strong demand and favorable weather in North America led to a very significant increase in cement sales, according to teh company. Average prices increased significantly in both the United States and Canada. Good volume trends were experienced in aggregates across North America, together with favorable pricing. In ready-mixed concrete, a strong increase in sales was recorded in North America, together with solid price increases to cover higher aggregates and cement costs. A good equation for success and future profitability. Your comment?