portable plant purchase sometime in 2018. Photo courtesy of
Keestrack
Construction material producers and contractors operated under limited capital budgets in the years during and after the Great Recession.
They were expected to maintain older equipment and squeeze as much life out of it as possible, tabling capital purchases where they could.
But now that the construction materials industry is once again growing, producers and contractors are on the prowl to upgrade equipment and incorporate the latest technologies into their plants.
In fact, based on a survey of aggregate producers done by PP&E’s sister publication, most spent more on capital projects in 2017 than they did in 2016.
Nearly 63 percent of producers upped their capital spending in 2017, and nearly 46 percent increased their spend by at least 5 percent. One in four producers were especially bullish, increasing their capital spending upward of 10 percent.
So, in which areas did these producers make “significant investments”? Excavators and loaders (51 percent) were the most coveted equipment in 2017, with conveying and material handling equipment (39 percent) and crushing and hydraulic breaking equipment (39 percent) not far behind.
Three in 10 producers made significant investments in screening and screen media, and about one in four invested significantly in haul trucks. Other equipment categories in which producers made significant investments in 2017: washing and classifying equipment (20 percent) and plant automation (16 percent).
Additionally, 18 percent of these producers made a significant investment in portable plants.
Not everyone expanded budgets for 2017, though. Capital spending was flat for 29 percent of producers, and a handful of producers (8 percent) decreased their spending in 2017.
2018 outlook
division of McCloskey International, 2017 was a busy year for
it in North America. The washing equipment specialist says it
designed, delivered and commissioned more than 10 wash
plants across the United States and Canada in a six-month
span. Photo courtesy of McCloskey Washing Systems
Most aggregate producers are, however, positioned to increase their capital spending in 2018. Nearly 63 percent of producers say their spending will be up this year, with nearly 37 percent increasing their spend by at least 5 percent over 2017.
While the number of producers increasing their spend by at least 5 percent is down for 2018, more producers (15 percent) say their budgets for capital projects will be at least 10 percent higher in 2018 versus the previous year.
In addition, a similar percentage of capital spending budgets (33 percent) will be flat in 2018 compared with 2017. A very small percentage (4 percent) of producers plan to reel back spending in 2018.
Fortunately for the health of the construction materials industry, most are ready to spend in 2018, with plans for significant capital improvements in a number of areas.
In 2018, for example, 44 percent plan to make “significant investments” in conveying and material handling equipment while 35 percent say they’ll invest significantly in excavators and loaders.
Producers are also planning significant investments in crushing and hydraulic breaking equipment (33 percent), screen media (25 percent) and plant automation (17 percent). About one in five producers plan to invest in a portable plant this year.
Manufacturers, dealers weigh in
A common narrative from manufacturers and dealers throughout 2017 was that sales were good and that equipment was moving steadily out the door.
Many of these vendors described last March’s ConExpo-Con/Agg as a success, and some still depict a sales environment in which keeping up with the demands of producers and contractors is a challenge.
Well, that’s a good problem for the industry to have.
According to a handful of vendors who were surveyed, they, like producers, describe 2017 sales that were 5 or even 10 percent (or more) greater than the previous year. According to these vendors, sales were up to crushed stone and sand and gravel producers, as well as to those who recycle asphalt and concrete.
By producer segment (i.e., crushed stone, portland cement, lime, slag), sales were down in very few areas. A couple of vendors describe experiencing decreased sales to asphalt producers, but no producer segment was dramatically down in 2017 based on the data our sister publication collected.
Most vendors say their sales were up in 2017 simply because they benefited from increased demand for construction materials. Others had a good year because they expanded into new markets.
These same vendors expect 2018 to be another good year, with equipment and technology sales to the industry up, for the most part, 5 to 10 percent. A smaller contingent expects sales to be up more than 10 percent in 2018.
The outlook of these vendors especially changed with the outcome of the 2016 presidential election.
“We did see customers waiting to see results of the election before committing to new plants,” says Eric Prim, who handles outside sales at Texas Bearing Co., describing the state of Texas as growing immensely and with few signs of slowing down.