Aggregate Business Looks Bleak

By Aram Kalousdian, Editor | September 28, 2010

It came as no surprise when Michigan aggregate producers painted a gloomy 2009 forecast for their business at a recent meeting with Michigan Contractor & Builder.

"We will be somewhere between 15 percent and 20 percent off from 2008 levels," Martin A. Jones, P.E., president of Great Lakes Aggregates, of South Rockwood, MI, said.

"We're probably going to be dropping 50 percent under 2008's production if we're lucky," Cliff Halliday Jr., vice president of Halliday Sand & Gravel, Inc., of Houghton Lake, MI, said. "We don't know where the bottom is at. We could have a total shutdown in 2009."

"From an aggregate and asphalt materials standpoint, we're looking at a 20-percent to 40-percent reduction in business in 2009 compared to 2008 in all areas including Michigan Department of Transportation work, commercial and residential. It's a pretty significant downward trend," Donald E. Griffin, operations manager for H&D, a division of Rieth-Riley Company, Inc., said.

"With the financial market the way it is today, if people can't get a line of credit, what are they going to do? Startup costs are atrocious for everyone," Jeffrey W. Wilson, president and chief executive officer of Mid Michigan Materials, Inc., of Jeddo, MI, said.

"Our material costs are soaring on one hand and on the other hand, sometimes you can't pay someone to come in and take the material. So, the profit margin has dwindled to practically nothing," Halliday said.

Mike Newman, managing director of the Michigan Aggregates Association, said that relations between the aggregate industry in Michigan and the Michigan Department of Transportation (MDOT) have improved with respect to specifications.

"We've seen our relationship with MDOT improve and we think that is going to continue. The department is much more interested now in looking at our expertise and sharing our ideas on how we can change specifications and reduce the cost of the material that they have to purchase. This could also provide the producer with a little incentive because any leftover material could be used for another type of application. We've been working on that. We haven't resolved any of those issues as far as how we can change the specifications, but we're working on that," Newman said.