NSSGA convention

NSSGA gathers the best and brightest to its national convention in San Francisco this week. Pit & Quarry Editor-in-Chief Darren Constantino will be on-hand to cover the proceedings, as will Associate Publisher Rob Fulop. The association has a big year ahead of it, as it adapts to a changing industry and makes plans for its World of Aggregates show, to debut in 2009. Your comment?

Lafarge on the grow

Lafarge is sitting pretty, according to its latest trading report. The company said annual profit rose 25 percent after the it increased the size of plants in China and India and bought full control of its North American unit. It spent $3.5 billion last year to acquire the rest of Lafarge North America Inc. to speed decision-making in the company's biggest market as homebuilding slows. Lafarge also said it expects to beat its earnings growth targets through 2008 after making acquisitions to bolster revenue, secure raw-material supplies and tap demand in faster-growing emerging markets. Your comment?

Hanson weighs in

The third largest producer in the U.S. market has weighed in with financial results. Hanson plc posted a 12 percent increase in second-half profit, buoyed by acquisitions and demand for asphalt and gravel from U.S. road-builders. Pretax profit advanced to 287.6 million pounds ($561 million) from 257 million pounds a year earlier. Sales at the London-based company rose 8.6 percent to 2.14 billion pounds. Hanson gets almost half its revenue from North America. "Infrastructure spending in the U.S. is a robust program and a very good platform for our business,'' Chief Executive Officer Alan Murray said. "Aggregates are a scarce reserve and we encourage strong price discipline to recover cost increases.'' (Scarce? Hmmmmm.) Hanson stock rose to its highest level in almost five months on Feb. 20 as Vulcan Materials Co.'s purchase of Florida Rock Industries Inc. bolstered optimism about building demand in the U.S. Hanson has itself been the subject of takeover speculation, spoken about both as a target for Mexico's Cemex SA and as a potential partner for Rinker Group Ltd. of Australia, as it fights off a takeover by Cemex. Your comment?

It's gonna be HUGE

Officials from CONEXPO-CON/AGG 2008 have announced that the construction industries exposition has set an exhibit space sales record, soaring to more than 1.9 million net square feet of exhibit space, with more than 13 months to go before the show is held on March 11-15, 2008 at the Las Vegas Convention Center in Las Vegas. This is the fourth consecutive time that the triennial exposition has broken its previous exhibit space total, starting with the 1999 show. More than 1,000 exhibitors have signed on, ranging from longtime show participants to first-time exhibitors, and from multinational firms with extensive equipment lines to small companies with specialized products. Book your hotel room fast. Your comment?

Commercial boom

Interesting article in today's Christian Science Monitor about commerical construction, Staff writer Ron Scherer writes, "Behind the commercial-construction push is a combination of powerful economic forces: For one, gigantic investment pools – some from overseas – are looking for places to invest. Also, an enormous growth of imports into the United States is spurring a rush to build new warehouse space. Moreover, developers are building new communities that offer environmentally friendly spaces to work and require less commuting time." Where there is commercial development, roads and highways go hand in hand. Your comment?

Vulcan takes a big bite

While all eyes were glued to the Cemex-Rinker Materials slugfest, no one was watching Vulcan Materials. The industry's number-one aggregates producer just got bigger, announcing plans to buy Florida Rock in a cash and stock deal that values the two construction materials makers at about $4.6 billion. The transaction is expected to close mid-year. Long-time industry veteran and Florida Rock President/CEO John Baker will join Vulcan Materials' board of directors after the deal, and Vice President Tom Baker will become president of Vulcan Materials' new Florida Rock Division headquartered in Jacksonville, Florida, according to the rumor mill. Your comment?

Stephen P. Zelnak predicts

Interesting commentary from Stephen P. Zelnak Jr., president and CEO of Martin Marietta Materials in the company's fourth-quarter report, reinforcing the industry's shift from a volume-based business to an industry driven by pricing structures: “Based on current forecasts and indications of business activity, management has a positive outlook for 2007," he said. "Aggregates product line pricing is expected to increase 9 percent to 11 percent for the year, reflecting continued supply constraints in many of our southeast and southwest market areas. Demand for aggregates products is expected to be flat with expectations of a softer construction market in the first half of 2007 mitigated by volume growth in the back half of 2007. Commercial and infrastructure construction is expected to increase in 2007, although not at the same rate as in 2006. In light of a fundamental shift in the supply/demand dynamics of aggregates in the United States, we have been reviewing the capital structure of our business over the past nine months. We believe this has been an appropriate time for this review since, in our evaluation, 2006 further established a new foundation for the performance of the aggregates business with the impact of pricing outweighing the impact of volume through the construction cycle." Your comment?

Vulcan rolls on

Another strong quarter for Vulcan Materials Co., despite the fact that production volume was down (offset by positive price increases). The company announced record fourth quarter and full-year 2006 sales and earnings. Earnings from continuing operations were $115 million or $1.19 per diluted share in the fourth quarter as compared with $92 million or $0.89 per diluted share in the prior year. Net sales increased 9 percent from the prior year’s fourth quarter. Full year net sales increased 16 percent to $3 billion. Earnings from continuing operations were $477 million or $4.79 per diluted share, a 45 percent increase per diluted share from the prior year. Company president Don James noted that, "The increasing demand for aggregates in a broad range of public infrastructure and nonresidential construction projects has helped offset the correction that has occurred in residential construction." If residential bounces back in the second half of the year, as some experts predict, it could be yet another record year for Vulcan. Your comment?

California Crisis

A new report and map concerning aggregate supply and demand has been released by the California Geological Survey. The map shows four areas with less than a decade's worth of permitted resources:

* Sacramento County (67 million tons permitted, 733 million tons of projected demand).

* Fresno County (71 million tons permitted, 629 million tons of projected demand).

* North San Francisco Bay (49 million tons permitted, 647 million tons of projected demand).

* North Tulare County (12 million tons permitted, 117 million tons of projected demand).

All told, 10 study areas have permitted resources covering less than a quarter of their projected needs. Only six regions have permitted reserves covering 50 percent or more of their future needs. The Yuba City-Marysville region is the only area projected to meet 100 percent of its 50-year demand. The regions with the highest projected future need for aggregate are South San Francisco Bay, San Gabriel Valley, Temescal Valley-Orange County, Western San Diego County and San Bernardino. Each of these regions is expected to utilize more than a billion tons of aggregate by 2056. Currently, California has about 4.3 billion tons of permitted resources.”Over the next 50 years, the state is projected to need approximately 13.5 billion tons of construction grade aggregate. So, anyone have any good ideas? It looks as if, lacking a rapid increase in local permitting, imports from other western states, Mexico and Canada are in the offing, a solution sure to drive up the price of construction in California. Your comment?

Budget battle

Concerns about the Highway Trust Fund are driving budget revisions in the the Bush administration's $2.9 trillion fiscal year (FY) 2008 budget proposal. This federal spending plan includes mixed results for the $65 billion the measure recommends for the programs administered by the U.S. Department of Transportation, according to ARTBA. Specifically, the budget recommends record investment for a number of federal transportation programs, including the highway and transit programs. Unfortunately, the budget plan fails to adhere to the surface transportation program investments guaranteed by SAFETEA-LU. The Administration is proposing $39.585 billion for the core federal highway program—a $500 million increase over projected FY 2007 investment—based on reports that Highway Trust Fund revenues have exceeded projections by $631 million. Unfortunately, the administration is proposing to cancel the $631 million upward adjustment of FY 2008 highway investment these additional revenues require under SAFETEA-LU's funding guarantees due to concerns about the trust fund's solvency. This proposal would represent the first explicit violation of the Highway Trust Fund's investment guarantees since they were enacted in 1998. The measure also calls for increasing federal transit investment by $450 million to $9.4 billion. This amount, however, is $300 million below the FY 2008 funding level required by SAFETEA-LU and also would be a major break from the transportation funding guarantees. The Administration's budget also recommends a $765 million, or 22 percent, reduction in federal airport construction investment from the current level of $3.52 billion to $2.75 billion in FY 2008. Let the budget battle begin. Your comment?

MSHA under fire

Some legislators are warning MSHA chief Richard Stickler that he better get on the stick. Rep. George Miller, the chairman of the House Education and Labor Committee, said in a letter to Labor Secretary Elaine Chao: "I hope you agree that we must do everything in our power to make sure that 2007 is not a repeat of 2006, which was a disastrous and tragic year for miners and their families." Congress passed the MINER act eight months ago in response to two major mining disasters. In all, 47 coal miners died in 2006. In his letter, Miller, D-Calif., said it's "critical" that the law "be implemented quickly and effectively." But he said he had concerns about the progress the department is making. U.S. Senator Robert C. Byrd, chairman of the Senate Appropriations Committee, also got in on the act, urging Congress move forward with tough oversight on MSHA. Your comment?

Taming Tulloch

After 14 years of protracted legal battles, the U.S. District Court for the District of Columbia has ruled in favor of NSSGA and its co-plaintiffs in the Tulloch rule litigation. This suit is the most recent manifestation of a longstanding legal dispute about what constitutes the discharge of "dredged" or "fill" material into waters of the United States, including wetlands. NSSGA has long argued that excavation activities that do not create fill from re-deposited material or incidental fallback into wetlands or waters of the U.S. should not be regulated. Aggregate producers still must obtain Section 404 permits for actual filling activities. However, the agencies may be forced to decide on a case-by-case basis whether federal approval is still required for small discharges. Between 1986 and 1993, the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency defined the discharge of dredged material as any addition of dredged material into waters of the United States, while expressly excluding de minimis incidental soil movement occurring during normal dredging operations. In 1993, however, the Corps issued a new rule that eliminated the de minimis exemption. This rule became known as the Tulloch Rule. NSSGA and other trade groups challenged the Tulloch Rule, claiming that the Clean Water Act regulates only discharge into waters of the United States, not excavation activities that would include incidental fallback or other means of material redeposit. The court concurred with NSSGA in the opinion and called on the agencies, with the Corps in the lead, to rewrite their definition of incidental fallback. Your comment?