In this episode of Drilling Deeper, Kevin and Jack talk about how the supply chain has changed over the last several years. They discuss what producers, manufacturers and dealers are doing to right-size the supply chain, as well as how equipment is moving – or not moving – in different sections of the industry.
Also, Kevin shares insights from his recent visit with two longtime producers Brian Pfohl (The Sunrock Group) and Steve Zelnak (formerly with Martin Marietta). The industry veterans reflected on how the industry has changed for the better over their several decades working in aggregates.
Transcription
KY = Kevin Yanik
JK = Jack Kopanski
KY: Welcome back to Drilling Deeper, a Pit & Quarry podcast. I’m Kevin Yanik, Editor-In-Chief of Pit & Quarry magazine, and once again, my friend and colleague Jack Kopanski, our Managing Editor. Jack, how are you doing?
JK: Good, Kevin, how you been?
KY: Doing well, down here in the downtown Cleveland office. Fall seems to be here; six months of gray, I guess, ahead for Cleveland. That’s just the norm, right, In Northeast Ohio?
JK: I don’t mind when it cools down. But yeah, when that when that sun starts going down at like, five, six o’clock, that’s when I’m starting to get the wintertime blues.
KY: It seemed like the sun was about to go down on our local Cleveland Browns here, but they eked out a win over San Francisco recently. [It’s been] up and down, but it’s a good week to be a Browns fan, at least as we’re recording our second podcast here.
JK: Great as a Browns fan, not so great as a San Francisco spread better. But, you know, I’ll take what I can get, obviously a win’s a win and better to be three and two, than two and three, so…
KY: Yeah, well. Our office down here is about three blocks from Cleveland Brown stadium. We’ve been busy, obviously, as it’s the fourth quarter here. We’re working on our year-end December “State of the Industry” issue at Pit & Quarry. In recent weeks, like probably a week or two ago, we got our October 2023 print edition left on our desks – That’s our Buyer’s Guide. So, anybody looking to purchase equipment, find new vendors, contact information for old vendors, that’s now available to you. Just last week we wrapped up our November edition. We’re always on the go, and I guess we’re always kind of looking back a little bit, but for the most part once we put an issue out, we’re looking ahead to the next one. Even though it’s still October as we’re recording this, we’re already all minds on December.
JK: Yeah, yeah, absolutely. I feel like especially in these once-a-quarter months where it’s not only a Pit & Quarry month, but we also have our sister publication Portable Plants going out as well, it’s a double workload. But like you said, we closed November, and I feel like the next day you are already in the team’s group saying “Hey, I got this feature ready for you, it’s ready to go.” It definitely seems like we’re always working on something. There’s not a whole lot of downtime, but I think we kind of like it that way.
KY: I like it that way. I think it’s important to celebrate your victories now and then. I remember years ago, because New England, the Patriots, they’ve won…six Super Bowls with Belichick and Brady? I think I remember reading a story about how Belichick would celebrate a Super Bowl victory for the evening after the game, and then the next morning he’s back in his office planning the next day. We’re not exactly [like] that at Pit & Quarry – I mean, we’re always looking ahead a little bit, but it’s…take your time and celebrate your victories now and then. It’s kind of crazy, we’re already ten, eleven issues down for Pit & Quarry this year. We’re in our 108th year, I guess it would be and still going strong.
JK: I think the nice thing about that is even with some of the short turnarounds that can sometimes be a little stressful, I think the nice thing is there, there never seems to be a shortage of talking points or a shortage of things going on within the industry for us to write about. So that’s the nice thing is that we never have to dig too deep, or should I say drill too deep to find relevant topics or relevant stories to tell. So that definitely makes it easier for us. And, , plus. And I know you’ve again, been around as long as you have have developed a plethora of great connections and a lot of people that are awesome to work with, and will, are great sources for stories and I’m developing my own network as well. So I think we’re never, never at a loss, which is nice.
KY: One storyline we’ve been keeping tabs on in recent years is the supply chain. , as we mentioned in episode one of our drilling deeper podcast, Pit & Quarry is the authority on equipment technology, that’s the tagline that you see at the top of every cover of Pit & Quarry magazine that goes out monthly and the supply chain, while very normal, I guess you could argue if you want to call it that for for the longest time I experienced a lot of disruption coming out of COVID and, the year or two after that and and some things still seem disrupted in a way because our industry is in a good position our readers, the agro producers out there, they’re busy they’re they’re crushing rock. That means that their equipment and technology and needs to be addressed. that they’re looking to make upgrades, buy new plants buy new equipment, even though the economic environment might not necessarily be super conducive to all that right now with interest rates being Being at highs we haven’t seen since you were a young lad Jack, but our industry is doing really well, that said, because of demand for equipment right now is kind of causing a little bit of disruption still and, and as I mentioned, we’ve just put out our October issue. And we wrapped up our November issue, which should be hitting mailboxes here, come the next month. And you’ve been talking about that in a couple of articles that you put out in Pit & Quarry, so maybe you can share a little bit about what it is you learned from some of the sources that you talked about, talked with on supply chain and and what’s happening out there?
JK: it’s definitely an interesting kind of dichotomy to look at where the supply chain is kind of writing itself from a parts perspective where manufacturers are able to get their hands on the things they need to make the equipment, producers are able to more easily get replacement parts for their equipment. But that almost sort of caused its own its own set of its own set of problems with manufacturers now able to make the equipment they need that sort of spiked the demand or has led to an increased spike in demand that was already pretty high for producers wanting to get their hands on this equipment. I know I spoke with a I spoke with a manufacturer for for one of the stories I was doing. And he made a point to say that they have product lines that are 12 months out for orders. And it’s been that way for about 18 months now. And in working with their dealers, they have orders placed through the end of 2024. And project orders are extending into 2025. So we’re seeing lead times sort of ballooning a little bit again, but not from the causes. We’ve been seeing before that there’s just there’s so much demand for equipment that can’t necessarily get into the hands of producers fast enough. Where I asked that same manufacturer like kind of seems like a good problem to have. And I think to an extent it is, but he was a little maybe hesitant to put it in those words, that , it’s certainly good to have demand. But , as a manufacturer, you want to obviously be able to supply as many people as you can. But yeah, it’s it’s an interesting, it’s an interesting spot to be in because there was a producer that I talked with that had mentioned he ordered a skid steer on Tuesday, and he expected to get it on Friday. So there’s there’s parts and pieces that you’re seeing a vast shift in from how it was two and a half, three years ago. But for a whole new set of reasons, there’s still a, there’s still going to be a pretty big wait time on certain pieces of equipment that I think producers are more able to plan for now, because of some of the problems that they experienced during COVID.
KY: That’s the key I think you just touched on at the end there, Jack, I mean, it’s planning. And we’ve talked about capex projects and supply chain at our annual Pit & Quarry roundtable and conference the last couple of years, this has kind of been a hot topic, where as we used to operate in the just in time world where now if you want to portable Crusher, you want that skid steer you talked about, you call your dealer, you tell them what it is you need, and it’s going to be there, when you need it before you need it. Nowadays, we’re talking about lead times, for some manufacturers that are not just stretching into 2024, which we’re in the fourth quarter, that’s not surprising, but into 2025 I kind of agree with your original thought there and talking to that one manufacturer that, that that is good and bad. I mean, it’s bad because if you’re that producer in need of the crusher or the conveying component, the conveyor the conveyor, you want it today and if you can’t get it from manufacturer a you’re going to shop around to get it from somebody else. But again, it kind of goes to show that, that there’s such demand right now for equipment, people want one equipment, and despite again, the economic environment, surrounding it, they’re ready to go out and and make investments they’re not necessarily afraid to, to put the money out there for afraid to put the money out there. Like we saw, probably in 2020 Maybe even leaking into 2021 in our industry obviously has an infrastructure bill, a federal one $1.2 trillion that were put aside directly for federal infrastructure projects at the end of 2021. And we’ve seen a lot of states investing in infrastructure legislation, and that’s given producers Pit & Quarry readers, a lot of confidence to go out and, and make these types of investments. But it is a little frustrating, I guess, if you’re ready to make a purchase and in some cases we’re talking these are not nickel and dime purchases, these are big, massive investments. , if you’re buying a new plant don’t invest in new plant you’re talking about many millions of dollars to try to get something like that off the ground so I could see why manufacturers are are trying to get a little bit creative to do things has to accommodate the market at this stage.
JK: And I think one thing I’ve seen and one thing I’ve heard is, is sort of a similar trend. To what I saw when I first joined the magazine back in late 2001, when , lead times and supply chains were still double, triple, quadruple what they were pre COVID. And because of these ballooning lead times, again, producers are resorting to other ways to get equipment, whether it’s renting, refurbishing, old equipment, buying used, , so there’s, there’s definitely, again, that demand is so high that producers are kind of doing whatever they can to stay on top of it. And again, going back to my story from October that that that same manufacturer I talked with had mentioned that they’re their dealers are increasing their rental fleet. And those dealers, rental utilization is up to almost 90% at this point. And that’s kind of in the way to go. Because there may not always be the quality of used equipment on the market. And, , if someone needs to get a job done, it’s easier and potentially more cost effective to say, let me let me get this Crusher, let me get this screen for X amount of days, weeks months, do the job, give it back, and then, , go from there. So that I think highlights one of the most impressive things about this industry that I’ve seen since I’ve come on board. And that’s just the it’s the resilience, and it’s the sort of creativity of, of this industry to say, alright, this isn’t going to work, What’s plan B, what’s Plan C and just sort of going down the road, because it’s, it’s not a matter of this, this isn’t something that can’t get done, this has to get done. So we need to find a way to make it work. And however they have to they’ll they’ll do what they do what they need to
KY: Where there’s a will, there’s a way that people have the aggregate industry. , despite these problems, and we hear it regularly, in talking with sources, we hear it at our annual roundtable there’s frustration there, and the inability to access the things that you want when you want them but but producers find a way, some of the most tenacious people in the country, they, it will work a problem, they will fabricate a plant themselves, do what the things they need to do in order to ensure the longevity of their of their operations, to ensure the sustainability of them and make sure that those things keep running. Jake, one other note that was included in one of your stores, I think it was the October one that we put out here recently was the idea that the manufacturers not necessarily the dealers, but one dealer had kind of mentioned to us in recent months that, that he was looking at the manufacturers to kind of figure out ways to to increase capacity. And we’ve seen examples of that whether it’s investing in new facilities, or kind of transitioning old facilities and making them something else. , there’s one instance we talked about recently, where somebody shifted some of their remanufacturing in and repairs to another facility to try to streamline some efficiencies. So I think we are seeing some of that, that is a little bit of a trend in terms of manufacturers, trying to find ways to meet the demand, meeting the demand by finding ways to put more products down these production lines, at the end of the day, having more production lines even.
JK: yeah, absolutely. like you mentioned, the, the company that sort of shifted really from from one state to another, their entire remanufacturing and repair capabilities to sort of their, to one of their distribution facilities. they’re just utilizing the space they have on hand, they got 50,000 square feet in this facility. And this now allows them to sort of have one sort of one home base now. , not only is it a it’s a it’s a cost saver, it’s a quality control thing, but it also allows them to sort of get more more hands on with this with these three manufacturers and repairs as equipment is sort of harder to come by. And more people might be inclined to say alright, this this piece is a little older, I could buy new but if I send it in, I can maybe get a few more years out of this one before I need to buy again. Let’s up for that route. So and you also mentioned expansion. I know we we’ve written one or two pieces about superiors expansion in Prescott Valley, Arizona, where they’re adding a fourth production line, their need for Portable Plants production is going up their need for just just overall production capacity is going up so they’re they’re expanding that and I know there’s countless other companies both domestic and abroad, that are doing the same thing, whether it’s to to house more parts and equipment, whether it’s to increase their production capacity. Yeah, everybody, it seems like everybody on every front of producers, manufacturers dealers are doing everything they can to have more equipment on hand and be able to produce more equipment just to just to meet this insane demand right in
KY: the supply chain is an interesting day. Dynamic obviously, you got manufacturers on the very starting point. And dealers who are distributing equipment and wear parts and, and goods to the end market, which would be the agri producers, the readers of Pit & Quarry, and each one of those cogs in the chain is essentially looking to another one to do a little bit more. But at the end of the day, nobody really wants to bear the costs of, of having those things on hand having so much inventory on hand. But one dynamic that I’ve heard more and more of, of late is that if you don’t have it, you can’t sell it. whether that’s the manufacturer or the dealer, it seems like there’s a lot more aggressiveness on the dealer front, maybe even in particular, to make sure that they have things on hand. Because if they don’t, they’re going to have to get at the back of these long lines, you’re talking about Jack, where those lead times are weeks and weeks and months and months. So I think people have for the most part in our industry adjusted to this new normal that we’re operating in. But , you even referenced one producer in your October wrote a prosperity story about having a warehouse, I think on site to make sure that there’s there’s enough components and wear parts on hand so that you’re not having to wait 2448 hours, , for your dealer to drive on out and deliver that stuff. So it’s interesting how we’ve adjusted with the supply chain since COVID. Don’t know if this is where we’re going to stay. Maybe we shift back to just in time. I don’t think anybody knows. But But I think the key right now is just staying on top of things as they are and continuous adjustments along the way, it seems.
JK: Yeah. And if we if we would have hopped on here and 2020 2021. And one of us would have told the other that there was a producer out there that was able to again, like you said, fill a warehouse have doubles have triples, and then some of different parts? We’d probably ask them what what secret sauce or what what MJ secret stuff they were using to to make them able to get their hands on all that. So yeah, it is definitely a shift. like you mentioned, the sort of just in time has kind of gone away. looking at the again, sort of the good news, bad news of this mentioning superior, I spoke with Johnny Garrison for one of the stories and and he he basically said that, that he doesn’t anticipate this going away soon, he said, we’re going into our second and third year of record levels of demand and equipment. I think there’s a feeling across the industry now that this is going to stick around for a while it’s not a one year, boom, this is going to be a three to five year boom. So clearly from from someone who is dealing directly with this demand and seeing firsthand how intense they’re working to help meet this demand and help produce enough equipment. Certainly doesn’t sound like this is going away anytime soon.
KY: No, and I think about 2023 for the iron industry. In some ways, it feels very much like 2022, it was very healthy. For the most part, when we talked to people, Jack, I don’t really feel like I ever talked to somebody who says this year is terrible this year sucks. You hear things are good. It’s hard to find people, but we’re putting materials out we’re selling things. It’s still relatively good. I think it’s interesting to note, when we look at some of the production numbers that we get from the US Geological Survey and and some of the reports that we look on from dodge construction network. And Andre, we’re looking at some of the monthly stuff that the lake carriers association is publishing because they’re keeping tabs on on limestone as it goes out on the Great Lakes in Michigan, Ohio and Ontario, Canada, it seems like volumes are down. So aggregate volumes are down. And I’ve noticed that for three or four quarters in a row now, which originally was making me think are we not in a good place are things kind of down turning so much. But at the end of the day, kind of what’s happened out there is we essentially had peaks in 21 and 22 in terms of volumes peaks that in terms of aggregate production crushed on sand, gravel production that we hadn’t seen, since the great recession. And year after year, production numbers just crept up to unbelievable levels that we hadn’t seen in a while. And yes, Agra production numbers are down of late but they’re still in a relatively healthy position. Historically when you think back to the Great Recession, and some of those really down years of Oh 809 Those are before your time in my time I’m Pit & Quarry Jack, but we hear horror stories, when we’re out and about and, and guys are reflecting on those times, but all that to say is that while productions down, it seems like there’s still plenty of production out there to be had. There’s enough infrastructure projects out there that are going on, although hear about slowdowns here and there. our industry is very much regional. But I guess the point I’m trying to say is our industry is in a good position. , maybe we’re not at at the peak levels in terms of production that we had of 21 and 22. But here in 23 It’s a good place to be.
JK: Yeah, and I remember talking about about the health of the industry, I think back to the 2022, Pit & Quarry roundtable that we had. And there’s a there’s a manufacturer that that was that was in my room. And we were talking about how how the industry was kind of thriving, even amidst some lingering pandemic issues. And he was very, to the point when he said, if you’re not doing well, if you’re not thriving, right now, you’re doing something wrong. And it was about as staunch of a sort of statement on how well the industry is doing as a whole. As as I had heard to that point, and really, even in the year plus, that’s followed since our summer roundtable and 2022, it’s been more of the same, if not even more increased, with how with how thriving everyone throughout the industry is.
KY: Yeah, I think the term that we hear a lot is cautious optimism. I think that’s where our industry continues to be. We’re going to be reporting a little bit about the state of affairs, the state of the industry, in our December 2023 edition that we’re putting out here. Not too long, not too long from now, but it seems like the aggregates street continues always on this slow but steady course. you can’t expect to be doubling production yet plants are only capable of, of doing so much but but there’s enough for everybody out there to be had. And again, like you said, if you’re not doing well, you’re doing something wrong. from time to time, you do see agro producing companies, and those supporting them on the vendor side right away. But again, it kind of par for the course for our industry as it stands right now versus past years. Recent years.
JK: Yeah. And you kind of got to see some of that success and some of those real world cases firsthand. Recently, I know you recently were on some travels, visiting a couple producers visiting, visiting some spots, sort of sort of being the man about town recently. So what what kind of stuck out to you most tell us about some of those travels you had what you saw and what what kind of your main takeaways were.
KY: It’s been a busy, travel stretch for me lately, I’m trying to think of all the places I’ve been from Nashville to Jackson, Mississippi, we’re in Washington, Rob, full up our publisher de Nova tans, our associate publisher and I, for the NSS GA legislative and policy forum, right at the end of September. And I was up in Minnesota not too long ago, either visiting with a couple of producers and, and I think that’s one of the beauties of getting out there. And being a part of these events, being a part of the industry, and being out and about is that you’re able to kind of tabulate what it is people are feeling. Again, our industry is very local or regional. Not every economic indicator affects everybody else. What happens in the southeast doesn’t necessarily impact what happens here in Cleveland, necessarily, but I guess, taking some of the sentiments that I gathered from those those trips, maybe I’ll start with Minnesota, I was up there with with Fisher mining Nicastro has been at our roundtable least once or twice, , he was showing me some a new plant that they’ve got, and he was talking about the market there in Minneapolis. And it seems like it’s a growth market, one of those growth markets for for the country for aggregates. Fisher’s an example, they’ve got a pretty old plant there in Apple Valley, Minnesota. And in recent years, I think five years ago, they they made an investment in a new plant not too far away. It’s an empire Township, Minnesota, to kind of keep their their aggregate business flowing to support their readymix business. That’s essentially what their the majority of their materials are supporting. Nick shared how much of their market is kind of based on residential and the non-residential side and feeling out residential of late is been interesting is, I think what we were all expecting for a while there was that it was just going to crash. , interest rates started ticking upward a year and a half, two years ago, and buyers were getting skittish, but it seems like they’re still building homes. And that’s the case in Minneapolis. It seems like that metro area is just making its way outward, even more and, , that’s creating opportunities for, for producers to to support the growth there. , where there’s residential going up, they need schools, they need retail, they need businesses to keep those those communities thriving. And it seems like there’s a good story there in Minneapolis, , with Fisher mining and and some of the other producers that are that are tapping into that market. I was visiting to with with Cody Ladd during my Minneapolis visit. Cody recently joined Kramer mining materials, and he’s the CEO of that company. he came on board. He’s an m&a guy at the end of the day. We were talking about not just kind of what’s happening in the Minneapolis market but But what Cramer is trying to do there, whether it’s in Minnesota or elsewhere. So, our conversation there talked a lot about their desire to kind of replicate the operation that they have in the Minneapolis area. And, and purchase another operation or expand via em, m&a could be within Minnesota could be outside of Minnesota, but we’re always keeping tabs of some of the transactions that are taking place in the industry. It’s been a little bit slower of light here in 23. , we haven’t really seen a ton of big deals but but we did see recently, some of materials purchase Argos USA on the cement side. And that’s something we can get into a little bit but again, I guess being out there in Minnesota, doing these travels just reinforced that our industry is in a really good position. Cody at Cramer was talking about the desire there to be very bullish. I asked him about the financing environment and that’s not necessarily scaring him off, maybe it’s scaring off some other buyers in the US who are sellers potentially don’t want to sell their business at this time. But there’s still appetite for m&a, it seems. And we’ll have more on Kramer mining materials. And my interview with cody in our November edition, also had more with Cody and their plant manager in our December edition as I got a tour of their plants, and saw some of the cutting edge investments that they made in that operation not too long ago that is allowed for the ability to kind of do something a little bit different and try to expand the business in some way.
JK: You’re out a lot more frequently than I am visiting these producers and seeing the sights. But I think both of those are great examples of kind of what we talked about with the health and success of the industry where you see with Fisher, sort of that resourcefulness of capitalizing on what’s going on in residential in their area, and really making that a point where they can thrive and grow in their own right. And then you look at Kramer with Cody Ladd I mean, mergers and acquisitions have obviously been sort of booming the last few years, maybe not as strongly this year as it was in 2022 or 2021. But nonetheless, he wouldn’t be looking to grow and be as bullish with that growth, as you mentioned, were it not for them doing well. So I think those are two two really great case studies to show. Yes, this industry is doing well. Yes, there’s a great future ahead. Let’s hope that it stays that way.
KY: As you know Jack, as many of our readers do, too. We have a partnership with FMI Capital Advisors, , they keep our readers abreast of what’s happening with mergers and acquisitions. And, and at our roundtable every year, we have George Redden who will deliver a forecast for the year ahead on construction materials. , as I put together the story on Kramer, again, it’s kind of an m&a business type of story. And I went back and looked at some of the data that FMI has share with Pit & Quarry of late, about construction materials transactions, mergers and acquisitions type of deals, and it has slowed of late. I think about a couple of years ago, we saw Martin Marietta make a really big deal on the West Coast acquiring Hanson’s Western assets. Vulcan materials did another one with us on concrete, these are some really really big deals in the the billion dollar multi billion dollar range. And for the most part 2023 has been not so much that it’s it’s been producers who are looking to buy tacking on the a bolt on acquisitions, operations, enhancing existing territories that have not seen a whole lot of platform type deals or those thunderclap deals that I know, as George describes them. But nonetheless, it seems like there’s still still a desire out there among producers like a Kramer to go out there and find out where there are areas to grow. The growth in our industry is somewhat limited. And it’s interesting as you go out to Minneapolis, and other metropolitan areas, all these obviously need construction materials, all of them have quarries, whether they’re in the metro market or outside and materials are being trucked or railed or barged in. Yeah, like you said, Jack, it’s kind of exciting to see that, that the industry is not stagnant. , they’re willing to go out there and, and find ways to expand. I guess kind of what I was trying to say earlier, too, is that, that the pathway to growth in our industry has been kind of confined to, to m&a, , buying another business, finding that family business owner, or somebody who’s looking to offload an asset and acquiring it via some sort of deal where you’re getting an FMI or some sort of advisory services company involved with that transaction. In Minnesota. It seemed like there was a little bit more opportunity maybe on the Greenfield fronts, Greenfield if you don’t know out there, it’s Starting a quarry from scratch, essentially finding a property getting it permitted zoned. And that’s been a years long process in recent years becoming much more difficult. So it seems like companies that are that are looking to grow they’re looking at that at m&a route is the means and my trip to Minnesota and kind of just recent conversations just reinforced that that that’s where we are,
JK:, and among those travels and kind of a kind of a different kind of merger if you will, , you recently visited with Brian fall and Steve Zelnick over at Sun rock Sykes to two real industry titans that , at one point as I kind of learned from from reading your your part one of your of your interview with them that , we’re kind of industry rivals, if you will, kind of working against each other and now they’re working together and just a lot of wealth and knowledge in the industry. And and obviously, as you’ll, as you’ll hopefully read in the November issue, part one of Kevin’s interview with Steven Bryan, they kind of talk a lot about how the industry has changed in their time. And I won’t take too much more away from from Kevin talking about how that conversation went. But yeah, definitely a unique opportunity being able to talk to to sort of titans in the industry.
KY: I was fortunate to be able to go down to the site supply. It’s where we had this this meeting hosted in Burlington, North Carolina supply is one of several companies as I understand it, that that Steve Zelnick, the former chairman and CEO, of Martin Marietta is now a part of and Steve was more very gracious. With his time, he brought in, like you said, a former competitor. They’re in North Carolina and Brian full who, whose history essentially goes all the way back to Western New York where they’re not present anymore. But but, , Brian full made the decision for son rock, , many years ago to venture down into North Carolina, and, and compete with companies like Martin Marietta, and in other ones that had had identified that there was growth opportunity. In the Tar Heel stayed. It was really interesting, having those two guys in the room, I’m not sure exactly how many years combined, they’ve been in the industry, but you’re probably talking about 80 to 100 years of executive level leadership between those two guys, Brian and Steven, and, , we had others in the room from from Pit & Quarry from like, supply from Sun Rock. And, and I guess, as you and I are typically going out and about collecting information, we’re doing interviews, and I found myself not doing a whole lot of talking because you got to guys with a lot of experience, , and those two who are imparting their knowledge and swapping stories, sharing laughs so I probably only asked a handful of questions. And, and Brian and Steve, were reminiscing and it was really interesting, I found talking afterwards with the Sykes and, and son rock folks how, how they were just taking that in the fact that you had these two giants of our industry in the room together talking about how the industry has changed. They talked about a lot of different things. I mean, they talked about people and how our industry just as isn’t really well understood. But , and O’Brien and C were talking about the idea that, , you bring somebody into a quarry for a job and, , they might not know anything, but you’re going to Marvel them when they see the fact that the tire, the haul truck, that is running through the quarry is taller than them, they’re going to marvel at the size and scope of the plant and, and how much material is coming out. Those are things that we need to do better as an industry promoting, , in order to bring people in but it was really cool to hear kind of the evolution of the industry from the 1980s to today. And how Steve had more married at the time and the things that he was trying to do and and Brian at Sun rock is still trying to do because he’s still involved in I think he’s been active with his family company for 50 years. Astounding when you think about it. But yeah, that was really an awesome opportunity. It’s one you can read about in our November and December issues with parts one and two. It was really a cool opportunity to sit down again with Steve Selnec, who’s a member of the Pit & Quarry Hall of Fame. Steve joined our Hall of Fame back in 2016 with Don James and Rick Felton. The Pit & Quarry Hall of Fame is ongoing, we’re going to have that here again in March of 2024 at AGG1. So good to catch up with those guys. And in knowing Steve a little bit again from the Hall of Fame and kind of getting a sense of Brian. Just having met him there. There’s a time where, as an editor, the guy doing the interview, you just sit back and you let the source do the talking. Those sorts of interviews are the easy ones at the end of the day.
JK: Yeah, makes our makes our job a little easier when they kind of take the ball and run with it. I’ll have people that will be like “Oh, sorry! I’ve talked too much?”, and I’m like…”No, listen, you just answered like five of my questions. So this interview is going to be about half the time it would need to be.” So, I appreciate it.
KY: Yeah. Now one that I mean, you get an interview with somebody who…I’m not sure what your process is exactly, Jack, but I’ll tend to kind of jot down some topics or questions and, say it’s 1-10, just start with number one. And then you get somebody talking for 45 minutes, the interviews done. You don’t have to jump in at all.
JK: Absolutely. There are times where I’ll be in those situations. Like you said, I’ll have a list of questions, and I might ask one, and then they’ll answer a handful of them [at once]. Then I’ll ask another, and they’ll answer another handful. And I’m sort of sitting there after asking two questions, and I’m like…that’s all I got for you. Like, you hit everything I wanted to talk about. It’s sort of a funny, awkward kind of feeling where you’re like yes to questions, but they’re so thorough that you get everything you need as an interviewer and a reporter. Yeah, I definitely know that feeling.
KY: Well, what we touched on earlier this episode about greenfields and and m&a is kind of a means to growth. That was a talking point that surfaced at supply when when Brian and Steve were swapping stories. I asked those guys, “How do you feel like the aggregate industry is situated at this point in time here in 2023?” And I know Steve Zellner, he kind of took his answer in one specific direction. He was talking about how the window is closing a little bit in certain markets. And I’ve seen this over the years as I travel, and I think about the Denver market and Nashville, it’s another bustling one that you and I were in recently, and there’s no shortage of aggregates out there. But the aggregates aren’t necessarily where we would like them to be. And kind of what Steve and Brian were talking about, during their get together was how those companies weren’t married at the time and, and the sunrise group, they identify that the Raleigh Durham area that these key metros in North Carolina were going to be high-growth areas in the decades to come. That’s why, at the end of the day, Brian Fuller decided to leave Western New York. like their days of glory, or in the past. It’s a high-tax state, you hear about that nowadays, and we still hear about population [shifts], [people] fleeing that state and moving into higher growth areas. North Carolina still seems like it, there’s opportunity there, and you still see young people with an interest in moving to North Carolina. But again, he talked about how the window was closing, how the most ideal aggregate reserves were permitted put online. It kind of reinforced the idea that there’s only so many opportunities out there, to Greenfield a quarry to get it going today, because there’s such resistance in these metros. And, , Brian, just happened to get in on it the right time, he talked about studying demographics, I think it was Rand McNally. He said he was looking at, , back in the day, it’s kind of a resource to identify, , what are the high growth areas of the United States going to be in, and he came to the conclusion that, that that part of North Carolina was was going to take off. And, and luckily for him, it has interesting to kind of get into a market that had a mark maryada when Steve was there, he took the company public in 1994, I believe, and so while you identify a market as an opportunity for growth, you may not be the only one. You’ve got Martin Marietta, and other players there. But again, sometimes the growth of a market provides enough for everybody. And it seems like that’s the ongoing case here in 2023 for producers in the metropolitan areas of North Carolina.
JK: To your point, it’s been a while since I’ve seen one personally, but I know every once-in-a-while we’ll get reports that will look at the top-performing crushed stone states and top-performing sand and gravel states. There are sort of the “to be expected” ones; Texas, California, Florida…but again, being a Cleveland Ohio-based company, I always feel a little vindicated when Ohio gets shown in there, or another Midwestern state or maybe a Nashville gets shown a place that you might not immediately think of, as, , sort of a a maybe a powerhouse state in this kind of regard. So it has been definitely interesting as someone who’s still kind of learning the industry a little bit seeing where some of these hotspots are starting to pop up, and a very cool experience to again, be able to talk with them and kind of get that viewpoint of, of, , shifting from such a big state, , just a very, very cool case study and the way the industry is kind of molding itself into, , into what it looks like now.
KY: In Brian’s case in some Rock’s case, they’re not just limited to North Carolina, they’ve got, they’ve got a company in Canada. So again, just like I was talking about earlier, with Minneapolis in the Kramer story, it seems like those who who want to grow who are hungry, they’re going to find a way. It kind of goes back to what we were talking about, I think at the beginning of this episode, too, it’s hard to find equipment isn’t necessarily readily available by, , vendor one, vendor two that you you may work with, but , those vendors may work the problem with you, , there are solutions out there, you talked about using the word creativity or creative earlier, Jack, and I think that applies on just about every front, that our readers operate, whether it’s on the capex side with equipment and technology or on the business side, and trying to find ways to grow the business to sell more more materials. We do have very creative readers!
JK: Speaking of that creativity, I think one of the spots where I think that can, or at least the ideals of that can really shine through the at National Stone, Sand and Gravel Associations legislative and policy forum that you and our publishers, Rob and Dino, went to. I know it’s an event you guys have been going to for a while now. I haven’t had the opportunity to go yet. But, this was kind of an interesting year and an interesting time to go, with some of the drama going on in DC with the Speaker of the House and the potential shutdown that was ultimately averted. So, I’m curious, how did this year stack up to past years?
KY: It seems like every year, or maybe at least every other year, there’s some sort of story going on. The legislative and policy forum that you’re talking about, that’s an event that Pit & Quarry participates in every year. We have good partners at the National Stone, Sand and Gravel Association (NSSGA) who put on that event in Washington jointly with a couple of other construction materials associations this year. It’s interesting the backdrop of having a potential government shutdown looming when you’re walking into the office of a congressman or a senator. And those topics did kind of surface when we were meeting with their staffers and legislators, and in a way it kind of serves as a distraction. We were going over to the hill across two different days this year, Tuesday and Wednesday, and I think there was a deadline Friday at midnight to avoid a government shutdown. And we did avoid that. I mean, it’s just funny, at least those are icebreakers when you’re walking into somebody’s meeting, talking about the things that you need them to support you on, as an aggregate producer, are for us at Pit & Quarry, being an advocate of our industry, it’s an event, , going to Washington walking the halls of Capitol Hill is something that I’ve always kind of enjoyed, I can’t tell you how many times I’ve done it, I think I’ve lost count here at North Coast Media Pit &. Quarry is parent company, I used to have the opportunity to do that with LP Gas magazine, which is our propane publication here, North Coast Media. And it’s a cool experience. Remember, it was intimidating when I was a little bit younger, and in my 20s, and you’re sitting across from a senator, and , you’re, you’re still kind of figuring out what it is your industry does and full, and you’re trying to lobby for it. But at the end of the day, going into their offices. Now, these are the people that you see on TV, that you read about in the newspapers, , some of the big names, , being from Ohio, we would go around visiting with Ohio legislators. So we went into Jim Jordan’s office, and it’s kind of interesting, looking back, , now he’s making a run for the speakership as we’re recording this episode. So it’s kind of wild when you think about the fact that you’re either sitting across from them or you’re in their office or a staffer on their behalf is visiting with you and, and talking about the needs of our industry, in terms of what crushed stone sand and gravel is asking legislators in Washington to do on their behalf?
JK: Yeah, and obviously, like we kind of mentioned a lot of other external stuff going on at the time. You kind of hit on it in your November story that’s going to be coming out, writing about the LPF, you noted some of the legislators can Congress people that you and the group were able to speak and interact with a little bit. Even with all of these things going on, how was it this year talking with the legislators and trying to get the industry’s message across? Was it a “receptive” conversation, or how did it stack up?
KY: There are a lot of issues that an SGA kind of briefed to its membership. Those of us who went to Capitol Hill to speak with legislators about probably a dozen or so issues. In our group from Ohio there were probably 10 or 12 of us, headed by Pat jakim at the executive director of the Ohio aggregates and industrial minerals Association. Pat does a great job for OAIMA and a great job leading our contingent on Capitol Hill. We focus on three key issues with legislators and we talked about em show and what they’re trying to do with silica. It seems like they’re still trying to figure out what that role is. I know they had a comments period back in September, where they’re receiving feedback from the aggregate industry, not just aggregates, but mining as a whole and other stakeholders who want to have some input on that role. So we’re basically advocating for, for that role to kind of be a little bit dissimilar on the metal, non metal side, where our industry operates. Versus coal, which has more issues with silicosis. So we’re hopeful that we’re going to see a role emerge from MCL. When the time comes that that looks a little bit different for metal, non-metal operators and coal operators. But TBD on that front.
We talked about WOTUS. That’s the Waters of the US rule. And I feel like it’s not always the home-run or headlining issue that we take into congressional offices every year. But we had some developments this year; in an EPA case, it was saccade versus EPA at the Supreme Court, where the court essentially ruled in favor of our industry and against EPA. But we saw some development after that ruling medeor, I believe, where EPA kind of put another rule out there with the Army Corps of Engineers and in the rule has kind of a lack of clarity still on what a water body of the United States is. So we took that talking point to legislators again, and we’re asking them to, to give us some clarity on what a an actual waterbody is for not just for our industry, but for, for businesses alike. And we also talked about some of the issues that been kind of plaguing the rail industry or rail transportation, switching rail lines has kind of been problematic for anybody that’s moving aggregates on rail, in the last couple of years. And The Surface Transportation Board has proposed reciprocal switching role out there that promotes competition and improved service, through a kind of lobbying for that, to ease some pain that’s being felt on on the rail transportation fronts. I think one of the reasons why we go to Washington every year and sit down in front of our legislators and talk about some of these issues, I’m sure WOTUS rail transportation is because if we’re not in front of these people, in front of Congress, then other industries are going to be and we do have a strong lobby at NSGA with rock back. And that our event, the legislative and policy forum, has been growing every year. And it’s kind of been fun, and exciting to see that grow. interested in understanding that people that we need to be out there in DC. But again, we’re not a huge industry. There are about 10,000 cores out there, and I know that may seem like a lot, but at the end of the day we’re not that big of an industry and it’s just so important to be out there making relationships with legislators. I can’t say that I did see familiarity with some of our issues, and in some of the people who are revisiting congress people for the second, third, fourth time and, and it’s good, especially because we’re seeing turnover, each each congressional session with with freshmen who need to learn our industry if they don’t know anything about it already.
JK: I obviously haven’t had the chance to get out there yet, certainly is something I would love to be able to experience I kind of feel like I might, I feel kind of similar to how you do it first a bit, maybe intimidated, meeting with all these people that you might see on TV or read or hear about, and all these powerful people in the nation’s capital. I think being able to be a part of giving this industry a stronger voice, and being one of those voices, is important for us to do. Obviously we cover what is actively going on, but I think also using our voice to help bolster the industry as well. It’s important, so, yeah, glad that it was a good trip and looking forward to hopefully getting out there in the next next year or two to experience it for myself.
KY: Yeah, it’d be a good one DC is a little chaotic right now. It seems there’s a lot transpiring but, but the experience of getting the walk those halls and, and, , lobby on behalf of our industry that’s that’s a valuable experience and one that we want to get for you. Well, I guess that’s gonna do it for episode two of drilling deeper Pit & Quarry podcast, Jack, it’s been fun. We’ll do this again here soon. And I look forward to seeing everybody on a podcast again soon.
JK: In the meantime, be sure to visit pitandquarry.com. Check out our website, check out our socials, sign up for our e-newsletters. Find us any way you can, we’re out there!
