Pit & Quarry • April 2024 • CURRENT EVENTS

The presidential election was a leading discussion point in one Roundtable discussion while global events took center stage in another

The following transcripts were edited from two concurrent Feb. 2 discussions at the 2024 Pit & Quarry Roundtable & Conference. The transcript from one discussion begins on this page, while the transcript from the other starts on page S21. Both discussions were edited for brevity and clarity.

KEVIN YANIK (PIT & QUARRY): Let’s talk about the 2024 elections. What business impacts, if any, are you preparing for regarding possible outcomes of the November 2024 elections, and which races are you most invested in from a business standpoint when you look at the more downstream Senate and House races?

ALEX KANARIS (VAN DER GRAAF): The 2024 election is going to be very important for our business and everybody else’s business.

Today is a Groundhog Day, and the only thing I can predict is nine more months of broken borders, a broken economy, high grocery prices and high gas prices. There is nothing we can do to change what is going on.

It comes down to [former President Donald] Trump and [President] Biden. For Trump, a win depends on who becomes the vice president. For Biden, we already know who the vice president is, and she has a lower rating than he has.

For us, we think the Trump administration is going to at least be better than what we have today. With Biden, we don’t even know if he’s going to make it to the next election. And if he makes it, is he going to finish it?

JAMIE JONES (CAPITAL AGGREGATES): With the majority of our business being in Missouri, I feel like right now, whatever happens with the presidential race, we are still going to have a very healthy [industry] in our state. A couple years ago, the governor was able to pass a gas tax. Missouri had been 17 cents per gallon since like the 1990s. He was able to get a two-and-a-half-cents per-year [increase] for five years.

There’s also been a lot of investment. The governor is pushing to improve I-70, the interstate running from St. Louis to Kansas City. They put $2.8 billion into a six-lane I-70 all the way across the state. So, we’re really starting to see this backlog in DOT work in our state.

With what we’re currently seeing with the new gas tax funds and the other money [the governor] invested in general revenue, there’s a comfort level in the state of Missouri with what’s going to happen in the coming years.

SCOTT ALEXANDER (SUMMIT MATERIALS): I don’t really foresee a big change in our industry based on who’s going to be the president in 2025.

There are drivers to our business, and population is a huge one. You can look at per-capita consumption in the back end of what the demand is. Our industry, over the long haul, has seen steady growth.

I think we are trying to spread a little bit of fear, which is unfounded, to look at who’s going to be president. There’s still tremendous demand out there for roads and buildings. Funding is there. So, I will not change my budget forecast for 2025 based on the election.

JASON WADDELL (JONES BROS. CONTRACTORS): I kind of share Jamie’s sentiment. I’m in the state of Tennessee, which has a pretty robust state funding mechanism. So long haul, it doesn’t matter politically.

We’re on the contractor side. We are trying to greenfield operations. And I think that who’s in the White House matters there, as well as from a jurisdictional Waters [of the U.S.] determination with the whole nexus/non-nexus piece. That could be a headwind that occurs depending on who’s in the White House and how various agencies are leading.

STEWART PETROVITS (ROUTE 82 SAND & GRAVEL): In regard to what Scott said, in New York I feel like it could be raining gold on the other 49 states, and somehow New York wouldn’t experience that. Everything is so city central. For us, I think it comes down to the state level.

people leave New York state. These are people who pay taxes. These are the top 5, 10 – 1 percenters, even – who are fleeing to places like Florida and Tennessee. We had four of my guys – young guys – run to Carolina, Tennessee and two to Florida in the past year. These guys aren’t billionaires, but the billionaires are fleeing as fast as they can.

So, I think state government is more of a concern for me than who’s actually the president.

NATE RUSSELL (IROCK CRUSHERS): I have seen through my dealer network how emotionally based end users can be on the smaller contractor level.

The only place where we could possibly see a slight business [improvement] that can be good for us is with oil leases. I think Trump will open things back up and get some of these businesses going. But other than that, I think it’s a very emotionally based buying environment. Overcoming that is really going to be the challenge for us and our end users.

GEOFF HAWKER (HAZEMAG): Just one minor point on here for the election: The last time that Trump won, we were celebrating in New Mexico and we found that project activities dropped precipitously.

The following transcript was edited from a concurrent Pit & Quarry Roundtable & Conference discussion.

JACK KOPANSKI (PIT & QUARRY): What impacts, if any, have global conflicts like the Russia-Ukraine war, the Israel-Hamas war and China-Taiwan tensions had on your business to date? What other events or developments outside the industry are you watching that might ultimately affect the aggregate industry?

BRIAN VRABLIC (RULMECA): One thing we should all be aware of is this Red Sea situation. It won’t necessarily slow down the movement of material or change the availability, but what it’s going to do is increase the cost of containers because there aren’t enough containers being built in China or in other parts of the world.

So, when these ships have to go around Africa instead of going through the Red Sea to get to where they need to go in Europe to supply a lot of European manufacturers in here, the cost of the container is going to go up. Maybe it’s a small number, but I think we should all be keeping an eye on that Red Sea situation and how that affects supply chain.

CHARLIE JOHNSON (DSC DREDGE): During the pandemic, I was tasked to find containers. I found out that China was paying double what they were worth in order to get them shipped out. China bought up all the existing containers in the U.S. and right after that happened, our freight costs from China doubled.

JOHN BENNINGTON (SUPERIOR INDUSTRIES): The war in Ukraine affected steel pricing, and I don’t think anybody here isn’t affected by steel costs significantly.

As far as 2024, what we’re anticipating is inflation to stay in that 2 to 2.5 percent range. That’s what we’re hoping for anyway because then it means it won’t affect rates too much. That’s probably a bigger concern for us than anything else in the industry.

NICK PEARMAN (ROGERS GROUP): A lot of the extended lead times on anything electrical are coming out of China or Taiwan – especially processors. That can cause a whole world of burden. If you’re already just recovering from everything from COVID and something sets that off, it’s very hard to operate when you can’t get those electrical components.

CHRIS WILLIAMS (CAPITAL AGGREGATES): China-Taiwan seems like it may be a major risk to supply chain again in certain segments if anything were to happen there. It’s a point I think we should all pay attention to.

CHARLIE JOHNSON (DSC DREDGE): Our 72-week lead time on Cat engines is chip related for the modules. They couldn’t get the chips or semiconductors for the modules that run the engines. That was what Caterpillar reported to us. It was all centered around chips. All of our touchscreens, all our dredges – we couldn’t get because of the chip issue. It translates into a lot of different components.

NICK PEARMAN (ROGERS GROUP): We have to get better, and technology is the way to do it. The reality is a lot of the technology is not robust. It doesn’t stand up in a brutal environment.

When you’re talking about buying equipment where you know there’s a lot of vibration and a lot of risk getting hit with heavy rocks, you start looking at how to tone down the number of sensors and things on it so that it runs. It still has a safety aspect, but it runs more dependent. Challenges in getting chips and other electrical components do play a big part in what we decide to do.

JONATHAN KOLBE (ALLEGHENY MINERAL CORP.): It comes down to the idea of technology for the sake of technology. I don’t think anybody’s going to argue with some additional safety features, but a lot of these sensors are not built to be in quarry applications.

Talking to our shop staff, they would love to rebuild old 980s in lieu of purchasing new equipment just to get away from the electrical issues that they’re having. We hear that time and time again from our shop foreman just because it avoids all of those additional sensors that seem to just plague a drop zone.

CHARLES GILBERT (ASTEC): I hear more of our customers today asking for those sensors [or] fail safes because they need the insurance due to the quality of help they’re able to hire.

It’s a double-edged sword: You want the safety, you want the data, you want the technology, but you don’t want what comes with it. It’s kind of a necessary evil. We don’t have the quality of the people coming into our industry, and we have to protect them. So, we need to invest in all these safety features that include all those sensors, unfortunately.

MARYANNE GRAVES (JOHN DEERE): From a manufacturing perspective, we’re facing the same thing. What are the problems our customers are facing? Jobsite safety and lack of skilled labor. Technology can help us solve those problems if we do it right.

Our testing needs to be robust enough, and we are making those adjustments as the manufacturer. Looking at doing the job right the first time and making customers more productive, it’s those automation things that allow us to do that. We’re making sure we’re balancing the tech with not doing it for the sake of technology. Helping solve the problems you’re all facing on jobsites is really what we’re trying to do.