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Aggregate Producers Look To 2008

Representatives from Michigan aggregate producing companies recently met with Michigan Contractor & Builder at the Michigan Aggregates Association office in Okemos to discuss the status of the aggregates industry and what is in store for the industry in 2008. H&D, a Division of Rieth-Riley Construction Co.

January 07, 2008

Representatives from Michigan aggregate producing companies recently met with Michigan Contractor & Builder at the Michigan Aggregates Association office in Okemos to discuss the status of the aggregates industry and what is in store for the industry in 2008.

H&D, a Division of Rieth-Riley Construction Co., Inc., has operations in Michigan and Indiana focused mainly on asphalt production and placement, and aggregate production.

"Our sales dropped off in the 2007 season by approximately 15 percent to 20 percent," Donald E. Griffin, operations manager for H&D said. "2006 was slower than 2005. I see a similar trend, looking forward to the 2008 season, in all three areas that we work in — residential, commercial, and Michigan Department of Transportation work, both in aggregate production and bituminous production and placement," he added.

Rick Becker, regional manager for Stoneco of Michigan, a Division of Oldcastle, said that Stoneco expects a similar drop of 15 percent to 18 percent in its business from 2007 to 2008. Stoneco has four limestone operations in Monroe County and several sand and gravel operations throughout Michigan.

Consumers Concrete Corporation serves Central and Southwest Michigan. Gregory A. Thomas, vice president-Aggregate Division, said that Consumers' business was off approximately 24 percent in 2007 over 2006.

"The biggest loss for us in 2007 was residential construction. We were off over 8 percent in residential business. We're predicting to be flat or slightly better in 2008, but it doesn't look very good. We're predicting a turnaround to happen in 2009," Thomas said.

Robert W. Wilson, general manager for Mid-Michigan Materials, Inc., said that his company did about the same amount of business in 2006 and 2007.

"We took a huge hit in the residential market in 2006. We lost 70 percent of our commercial and residential market in 2006. Michigan Department of Transportation work picked up a little bit in 2007, plus there were some key jobs in the Port Huron and St. Clair County areas that made our year fairly successful. There is the possibility that 2008 can look about the same as 2007 and 2006," Wilson said. Labor issues were also discussed.

Thomas pointed out that Consumers has several union contracts expiring in 2008 and the company intends to work hard at getting concessions.

"We're self-insured. We changed some of our benefits in order to try and save money. The cost of health care and everything else is continually going up. You get to a point where you can't pass it on anymore. We're going to ask the employees to take some of it," Thomas said.

"My concern is keeping good people," Becker said. Becker said that it will be challenging to rehire and retrain employees once the economy picks up again.

"This is a real issue for us. We haven't had a lot of turnover. We've always prided ourselves in taking care of our employees the best way we can. We don't have union contracts. It's getting to the point where you don't want to see good people lost. Because we are not actively hiring, some of them are doing double duty. How long are they going to do that? You hate to see good employees go," Wilson said. Griffin, Thomas, and Becker said that their companies are also doing cross training. Concerns over trucking issues were also expressed.

"Back in January 2007, Aggregate Industries got a gravel operation permitted in Alamo Township in Kalamazoo County. The people in Oshtemo Township, just to the south, enacted a truck ordinance not allowing any trucks on any of their roads, other than a designated truck route," Thomas said.

"The problem with that is that there are five gravel producers in the next township that use those roads and now we can't use them, so now we're battling the township trying to get their ordinance changed or modified. The roads are restricting our primary roads, which the county has paid for and there is federal money in them. Our argument is that we've all paid for those roads and now they are denying us use of them.

"The only problem with this is that we checked with the state and they told us that the township has final jurisdiction over all of their township roads. The only roads that are not restricted are state roads. Well, if Oshtemo Township is allowed to do this, then every township in the state of Michigan could say that they don't want trucks going down these roads anymore. Basically, they could put trucking operations out of business."

Thomas added that trucks are allowed to go into Oshtemo Township to make a delivery, but if they are going through the township to a neighboring township, they must travel on a designated truck route.

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