In this episode of Drilling Deeper, Kevin and Jack recap their experience at the inaugural Dirt World Summit, hosted by BuildWitt. Hear about key talking points from the summit including workforce retention and attraction, leadership, employee mental health and more.
Also, Jack shares his takeaways from a recent conversation with Ken Simonson, chief economist with the Associated General Contractors of America. Find out what Simonson expects from the coming year when it comes to interest rates and recession concerns.
Transcription
Kevin Yanik: Welcome back to Drilling Deeper: A Pit & Quarry Podcast. I’m Kevin Yanik, editor-in-chief of Pit & Quarry Magazine. We’re here with episode three of our podcast, and this show is brought to you by Sykes Supply. With 80 plus years of truly personalized customer service, Sykes Supply offers competitive pricing on top power transmission, conveyor and power tool brands. With leadership that solves problems for customer partners, Sykes Supply is a difference maker. Visit sykessupply.com/podcast and experience the Sykes difference today.
With me today I’ve got managing editor Jack Kopanski. Jack, great to be back in the studio here with you here today.
Jack Kopanski: Yeah! Yeah, excited to dive into episode three here. Been a fun venture recording our first two episodes. A little different, but definitely exciting as we venture into this new project.
KY: Yeah, there was certainly a lot of prep work that went into getting episodes one and two off the ground. And here we are with our third rendition of Drilling Deeper, and we’ve got a couple of topics we are going to drop for our audience here today. Jack and I recently were at the inaugural Dirt World Summit. It was down in Houston, Texas, toward the end of October. And it was a kind of unique event put on by BuildWitt, which has a unique story of its own, which we can probably get into here a little bit.
But often when we’re traveling, Jack, it seems like the meetings that we get into whether it’s trade shows, industry conferences, state association events, you know, they’re very much focused on equipment and technology. But it seemed like the the spotlight at the Dirt World Summit was very much on business management and building leaders, finding ways to build up your workforce. What was your takeaway? What was your expectation, first of all, of going into the first Dirt World Summit? And did the expectations meet what you expected to come out of it?
JK: Yeah, you know, I really wasn’t sure entirely what to expect. Obviously, with a first time event like that, you can look at the agenda, you can sort of look at the plans all you want, but until you actually get in there and sort of see how everything’s flowing, see how people are interacting with it, it’s sometimes hard to kind of, you know, really anticipate what it’s going to be like. But like you said, obviously the focus was on leadership, workforce development, stuff like that. And I think they nailed that with all the different, not only events they had – I know they had like 4:45am PT that people could go and do and get outside and then start your morning off with that. And obviously they had Jocko Willink speaking for, I think, combined like six hours on leadership and sharing some of his story. And then, you know, getting to hear from people within the industry in different panels and discussions talking about how to retain workers, find new workers. So obviously that theme was very present.
I was incredibly impressed, especially for a first time event. I think we heard they had over 700 people end up coming. So just a massive turnout. And I think that kind of like you said, and we might get into in a little bit here about BuildWitt, I think that speaks to what Aaron has done there and what that company has been able to show and provide – that it was able to get such a good turnout. I thoroughly enjoyed it. What did you think?
KY: Yeah, we’re in a unique position because we don’t have our own construction materials businesses. We’re here at Pit & Quarry Magazine. We’re covering our industry, we’re offering insights, whether it’s from the Dirt World Summit or elsewhere to help our readers and our listeners out there do their businesses better, but I find myself kind of reflecting a little bit upon some of the speakers and the things that they were sharing with the audience and asking myself, “How could I be a better manager? What could our company do for our people a little bit differently?” I think our industry has struggled for years.
Y’know, as we mentioned on previous podcasts, with with the workforce, and not only bringing in people bringing the next generation, but retaining people and building them up to ultimately make them the managers and the leaders that we need them to be – that our readers need their people to be. But there was a lot to take away. I’d like to eventually kind of go through my notes and put out some individual stories for Pit & Quarry because I thought they had a good slate of speakers, some of whom we’ll go through here a little bit in terms of what they imparted to build up your workforce and better promote the industry and things like that.
But no, overall I’d say it exceeded my expectations. And I think it’s really an opportunity for aggregate producers to join in. Y’know, BuildWitt, as you mentioned, you mentioned the name Aaron and that would be Aaron Witt – the self proclaimed, I think, chief dirt nerd at BuildWitt. He’s the CEO, I believe, is his title. But yeah, there’s a lot of emphasis on workforce, and I think it’s interesting how they kind of turn that event into a business-oriented event, not so much equipment and technology focus. There was a trade show component where I think we had some conversations in our experience with it about opportunities in equipment and technology, but you know, very much an event focused on business, and interesting how they were able to execute that.
JK: Yeah, and I think one of my biggest takeaways – and this is probably something you’re gonna get into when you address some of the speakers that were there – is that during a panel they had representatives from Granite and from a couple other larger producers in the area. And they were talking about how, y’know, there’s so much focus on attracting workforce, but they kind of took a different approach where they kind of said, “If you want to attract people, you got to start by retaining the ones you have.” And they kind of dived into what that looks like, how they can adopt – or adapt – to meet people’s needs, and give people what they’re looking for. And emphasizing flexibility in certain areas. And obviously, it’s a … We’re not in an industry where you can do the job from the couch. You can’t work from home in this industry.
So I think finding ways like they were talking about to meet people’s needs, whatever it be, whether it’s financial, whether it’s more time with their family and their kids, whether it’s more time doing different things on the job site even. Just finding those different ways and really listening to their employees. It was definitely something that was a little different from, I think, what we’ve heard a lot before, because it’s all about finding that talent. It’s all about looking for new people, looking for the younger people. But I think taking the approach of, “How do you retain the people you have now?” Is something we maybe don’t necessarily hear as much about.
KY: Yeah, I think one thing that stuck with me was shared by Bob Chapman, who I believe is the CEO of Barry-Wehmiller. He was talking about how 88 percent of people feel like they work for an organization that does not care about them. So you can bring somebody in, maybe they work for 90 to 120 days, and they just go on out the door. And you know, in our industry, that’s kind of been the storyline year over year for many years. It’s an unfortunate one. And I think our readers, our listeners who are out there operating quarries, like you said Jack, they’re tough jobs, they’re dirty jobs. They’re high demanding in terms of the hours and the output that needs to go into working in an aggregate operation every day. But I think one thing that Bob Chapman shared was that you need to kind of be a little bit flexible, and maybe give an inch.
I think we’ve been a little bit rigid as an industry, and maybe that’s why we’ve struggled to attract people. But there’s been a little bit of stubbornness. – I think you could even argue on the part of producers or the general construction industry – to want to be a little bit more flexible, to find ways to make people a little bit happier and want to stay at work for you.
You know, I know through COVID, just working here at North Coast Media, the parent company of Pit & Quarry Magazine, we were continuously reevaluating the way that we engage our people and the needs of our people. But I do think, of course, there’s a line that needs to be toed in terms of making sure that you’re achieving the outputs and getting the work done that needs to get done. But really, I think one of the big takeaways, for me from the Dirt World Summit was that we gotta find ways to be a little bit more flexible, to help somebody go home to their family or get to the swim meet to be able to do their job a little bit more manageably.
JK: Yeah. And I think that really resonated, at least with me personally, being from sort of a younger generation. And I think that flexibility is such an important part. And it’s something that I wrote about in my column for Portable Plants a couple months ago – our sister publication – where I feel like there’s such a stereotype or such a stigma where the you know, the term work life balance, I feel like people might get the impression that it’s, “Oh, you know, I want to work half the hours I’m working now.” Not wanting to do some of the hard work.
People are willing to put in the work, but they want to understand that they’re feeling valued, that they’re feeling heard. And like you said, that their employers are willing to work with them to make them feel appreciated, give them the time they need to recharge, not get burnt out. So I think that is such a relevant message right now. Just that idea of flexibility, where it’s not an all or nothing thing, there’s a way that companies and employees can meet in the middle and sort of find a happy middle ground between, “When you’re here you’re going to work hard, you’re going to get your work done. And if that happens, then you know, we’ll give you some leniency. We’ll give you what you need here so that you’re happy, so that we’re happy and everyone can continue making money.”
KY: Yeah. I can see some of our listeners, if they’re aggregate producers, and maybe they’re rolling their eyes a little bit. But at the end of the day, what we’ve been doing for the last decade, couple decades, just hasn’t been working, and it probably is time to go back to the drawing board. I think that’s something that the Dirt World Summit addressed. We gotta think outside the box a little bit.
Another thing that Chapman, the Barry-Wehmiller executive shared, was the idea that treat employees the same way you would treat your son, your daughter, your mother, your father. At the end of the day, the people who are coming to work with you, they’re people. They have real lives. Maybe they’re climbing into an excavator or they’re driving a haul truck every day and they’re trying to hit those numbers that they’re being asked to hit. But they have real world problems, and the way that they perform kind of is affected in part, and in large part really, by how their employer or how their manager affects them. Somebody who has a bad manager – or somebody who wants to fire their manager – isn’t gonna wanna go work for that company or stick around very long. So, the whole idea, to treat your people the way that you would treat your son or daughter is kind of something to give pause to. And a justification for it on the Barry-Wehmiller side was the idea that they put their people first in, it sounds like, everything they do. And the marks that they’re hitting, the financial numbers that they’re achieving, their CEO was arguing that they’re somewhat better than the typical approach. So, something to consider, I think. You don’t necessarily have to go back to the drawing board completely and reinvent how you’re thinking about your people or approaching your people. But, I think the idea of maybe giving an inch and not necessarily letting someone take a mile, but just working hand-in-hand a little bit more could go a long way for for our industry.
JK: Yeah, and I think just sort of a couple final thoughts on my end for Chapman here, because he really was such a great presenter that I think we both took a lot from. You mentioned sort of the idea of treating your employees like you would your son, your daughter, your brother, your sister. You know, he summed that up with a great question where said, “You need to ask yourself, would I want my son, my daughter, my cousin … Would I want someone working for this company?” You know, that’s a question that I think can reveal a lot if leaders and managers are willing to have some of that self-reflection and ask that question, and really maybe look at the tough answers that there could be out there.
And, you know, the second thing is, he was nice enough to have a collection of his books out for people to take, and just looking exclusively at the title of the book – I haven’t had a chance to crack it open yet, I don’t know if you have. But, just looking at the title, it’s called Everybody Matters. And I think that that is what it ultimately, all of this conversation boils down to is that there’s there’s no one that is lesser than anyone. Sure, there are people that outrank others and maybe have more responsibility and more … I don’t know if power is the right word, but you know, there certainly are different dynamics. But when you take off the hard hat, or when the CEO takes off his suit and tie, like you said, at the end of the day, we’re all people, we all have feelings, we all want the best for ourselves, for our families, for everyone we care about. So, I think it’s just taking that simple idea of everybody matters and treating people ultimately like you would treat, like you said, your brother, your sister, your son, your daughter. Going back to the golden rule, treat people like you want to be treated. I think that’s something that, if implemented wide scale, can hopefully have a very large positive effect on the workforce in the industry.
KY: That was some of the retention conversation that was had at the Dirt World Summit. We also heard from the president of CW Matthews, a contracting company. That would be Dan Garcia. Something that he shared – something I’ve heard a little bit about before because I think Jurgensen Companies is doing this a little bit – but when we’re bringing kids out of high school, and that’s something that we’re seeing a lot more effort put forward by state associations and individual companies to try to promote the good things, the good jobs, the careers really that you can have in aggregates. Something CW Matthews talked about a little bit of the Dirt World Summit was the idea of these signing days, which I thought was pretty cool.
Think about high school football, you got these talented players who are getting scholarships to Ohio State or Michigan, big time division one programs and they make such a big deal out of that. We’ve really glorified athletics, and we’ve glorified other careers and things in society. We haven’t necessarily glorified construction. We haven’t done that with aggregates, for sure. But there’s no reason why we can’t celebrate the kids or the men and women who are coming to work for us and choosing a career in this pathway. So essentially, what CW Matthews is doing is they have these signing days and they kind of have that look and feel where you got a kid sitting down or a group of kids, and it looked like they were kind of filling out some paperwork or signing a contract and basically committing to go to work for CW Matthews, launching their career in the industry and hopefully having many fruitful years ahead of them. Just one unique way, one unique approach that we’re seeing a construction company go about celebrating its people on the front end, bringing them in.
JK: Yeah, and as a big sports fan myself, like I know you are as well, for me that was just so cool to see.
Again, like you said, we see the signing days so much where someone’s got the Ohio State hat or the Michigan hat or … All this pomp and circumstance that goes along with it. And I think this, again, goes back to some of that conversation we were having about making people feel valued and appreciated, where, again, the work that these people are doing is such crucial work to our way of life. Everything around us requires construction in some way, essentially. And so to be able to provide this opportunity, where I know if I was in that situation, if I got a signing day when I went to Kent State for journalism, if I was able to get a Kent hat and hold up a Kent shirt and make a big deal about it, I’d be over the moon. So, I can only imagine how great these kids feel now that they understand that they’re going to get some of this recognition, that they’re going to a place that they say, “Hey, they didn’t have to do this. They went out of their way to make a big deal about us, to give us sort of our time in the sun.” And I think that’s gonna go a long way.
And, you know, kudos to CW Matthews for doing that. That’s a great move, and hopefully that inspires more people to sort of look at this and say, “You know, this isn’t necessarily the thankless job I thought it was going to be. There’s some recognition.” And, you know, I really appreciate that and hopefully that drives more people into the field.
KY: Yeah, and it doesn’t just stop with that first touch point with with hiring. Really, when people want to feel mattered they’re looking for regular, continuous touchpoints and ways that you could make them feel good about themselves, encourage them, want them to go to work for you. One thing we do here at North Coast Media, again, the parent company of Pit & Quarry, is we’ve got these On the Spot Awards. Something I think we unveiled here in 2023, early on. And it’s just recognizing, celebrating employees who are going a little bit above and beyond. We have an area of the building here in downtown Cleveland where we talk about the individual job that was done and the person who went ahead and did exceptional work. So, it’s recognizing in various ways, sometimes with monetary gifts, other contributions, those sorts of things. It never stops, really, because the moment it does stop for a company to its people, that’s probably when the person, the employee is gonna look elsewhere for that sort of gratification.
JK: I think to an extent, it maybe is somewhat misunderstood when people think about gratitude in that sense. Where it’s like, you know, there doesn’t have to be … Again, to your point, there doesn’t have to be monetary stuff attached to it. Obviously at North Coast it’s nice when there obviously is, and that’s, I think, is part of what makes this company as great as it is. But at the same time, I think even just as simple as acknowledging someone did a good job. Saying, “Hey, thanks for doing that, that looks great. Thanks for going the extra mile. Thanks for taking that step.” Just acknowledging someone for doing a job well done, I think, goes such a long way.
And like you said, it’s not one of those things where you can do it once a quarter once every half year, once a year, because then it … Once you lose those touch points, like you said, it becomes that slog again. There needs to be just sort of that ongoing recognition and appreciation. And again, doesn’t have to be a lot just, “Hey, you’re doing a great job. Appreciate it. Keep it up. Hey, we’re really glad to have you here.” So yeah, like you said, just starting with what they’re doing with the signing days, and then even more. So like you said, continuing those touch points is, again, big, big kudos to CW Matthews for that.
KY: Leadership starts from the top, too. You know, we joke here in Cleveland all the time. We’ve got our Browns, they’ve been woeful for 22 years. And people as we travel, they’re asking us about football and the sports teams we follow, and they ask us, “What’s the problem with the Browns? Why haven’t they won or done much since ’99?” And I keep arguing it starts from the top. The person at the top is creating the culture and setting the tone for how things get done in the building, and then out on the field, and hasn’t been very good in the case of the Cleveland Browns. It starts the top just like it does with the Browns in our companies, in our industry companies as well.
I’m always amazed when we’re doing manufacturer tours, checking out their facilities. They’re very proud to show off how they make the equipment that they do, but we’ll walk around with the CEO or somebody in a high capacity position. Maybe they’ve got hundreds of people at their places of work, yet they’re going around the floor engaging us, obviously, and showing us the way that they make equipment proudly, but they know these people by name on the factory floor. They they know everybody, many of them. I can’t say this is the case on every factory tour I’ve done, but I’ve always been impressed when I see somebody who’s in the highest ranking position and recognizing somebody by name, engaging them in conversation in those lower level conversations. I think that is the mark of a strong leader.
JK: Yeah, and I think one of the things that I took away, and it’s something I’m sure people have heard before and in different verbiage or in different ways, but the question was posed at the Dirt World Summit: “Are you leading or are you managing?” And I think that that’s another one of those self-reflective questions that should be asked where, yeah it’s easy for it’s easy for people to say, “Okay, you do this, you do this, you do this, go.” But it’s different for someone to say, “Hey, we’re going to do this this way. Here’s why.” It’s setting that example and it’s just literally looking at what leading and managing looks like. If you’re a leader, you are asking people to follow you. You need to set that example. You need to be the one showing why things are done a certain way, how it got to this point, what the consequences are for doing it correctly versus incorrectly and leading and not just saying, “You’re going to do this,” and leaving it at that and letting them letting them fail or succeed on their own. There needs to be that integral part of it, where, like you said, when you visit these large companies, even with as many employees as they have, having a CEO or a chairman or a president be as involved as some of them are, it’s small stuff like that that just makes such a difference. You can’t think you’re better than anyone. Again, it comes back to that. And it’s being able to set that example, lead by example, that I think sets a lot of these successful companies apart.
KY: One other Dirt World Summit take away from me, and Jack, I know you’ve got one you want to share of your own here in a bit. But there was a panel they had, and there were an aggregate producer or two on this panel, just talking about the workforce a little bit and opportunities to change your company a little bit. One thing that I kind of sat back and thought about was the whole idea that our industry is so male-dominated. It kind of always has been. I know it’s changing a little bit, but there was a panelist from Granite Construction, Jorge Quezada, he’s the vice president of people and culture at Granite. He was sharing some ideas about 10, 20, 50 years outward, thinking if we’re going to sustain this industry, we have to start thinking outside the box. We have to start asking questions that are going to provide solutions that ultimately bring more women into the workplace. In his vision, it sounded like we’re not too far off, maybe a couple of decades off from from getting to a point where maybe we’ll have 30 or 40 percent women. At the end of the day, when we’re only allotting ourselves 49-50 percent of the potential workforce in the male side, it’s such a limiting factor. I mean, think about the idea of going to work and if you only work with men in any environment … And it’s just a different experience. But I think you get different perspectives, and there’s different values, and there’s different offerings that men and women can bring.
I think Jorge – he’s out at Granite – and also Jackie Alf at Jurgensen Companies who was on the panel, they were talking about multilingual employees and how do we embrace them? How do we bring them into our companies effectively? Because that’s part of where the workforce of the future is gonna come from, as well. You know, we struggle with finding people to go to work. Well, there are opportunities to engage people of a variety of languages. One of those companies, I believe, was even bringing refugees in from the Ukraine. So, outside the box thinking, but the whole idea, again, of bringing in a variety of people and not necessarily limiting to the people that we’ve traditionally brought in, being men, I think that’s something that companies, if they’re not already starting to think about, they need to start doing so.
JK: 100 percent. And I think the part of that conversation that struck me the most, going back again to the idea of leading versus managing, it’s easy to throw out the statements. You know, we need more women in the industry. Okay, how many people have said that in the last dozen years or so? The difference with what Jorge said was he talked about needing to expand the workforce, about needing to get more women, needing to get more bilingual, multilingual employees, and then he backed it up with concrete examples of what can be done, whether it’s finding daycare options to be able to take care of the kids while these women are at work, being able to accommodate perhaps pregnant, nursing female workers in the industry. It’s that extra step, it’s going the distance between saying, “Okay, here’s what we need to do,” and tasking other people. But being able to say, “Here’s what we need to do. Here are some ideas, here are some starting points,” that goes a long way. So, I was very impressed by what Jorge had to say.
KY: Jack, one thing you had shared coming out of that panel – the workforce panel – was something the moderator had shared, it struck you. Tell me a little bit about what happened with the panel at the end of that session, and kind of what you took away from it personally.
JK: Yeah, so after the panel, as there often is, there was a Q&A session and people were asking different questions. I think the last question that was asked was something regarding employee mental health and I know that’s something that’s getting a bit more attention lately, really, across all industries, but also in construction. And the moderator kind of took it upon himself to answer the question and you can tell right from the get, he was getting pretty emotional about it. He had shared that two of his brothers who worked in the construction industry had committed suicide and that they were dealing with their own mental health problems, but didn’t necessarily feel like they could talk about it, that it was sort of that stereotype or stigma of, “Buck up, keep going, don’t talk about your problems.” And ultimately it cost two of his brothers their lives, which is, you know, incredibly tragic. And he talked about his own struggles with mental health and sort of what he has learned from his own experiences.
As someone who takes mental health very seriously, and who is very … It’s a very close subject to me, I appreciated his earnesty and his honesty and his, really, courage to be able to share his experiences, because that’s … It’s not an easy thing to talk about. Again, in a room full of, you know, sort of manly men that don’t … maybe were taught the same thing to not talk about their feelings or that maybe aren’t as comfortable doing it because of the industry they’re in, having someone that was able to take the time and be brave enough to share their own experiences with a very, very heavy topic … I commend Randy Blunt with BuildWitt a lot for doing that. It was I think … Hopefully his that conversation and others like that can start setting the tone and change the narrative around mental health and talking about how you’re feeling in an industry that, again, it’s not a very common, it’s not an easy thing to do. So yeah, that just struck me a lot. I was very, very, very pleased and very impressed that he was willing to dive into that.
KY: The whole conversation around mental health and understanding that and what your employees are dealing with, I think that kind of goes back to the concept I touched on at the very beginning, and that’s flexibility. Again, your employees, you don’t know what they’re dealing with. If you don’t ask, you don’t necessarily know. You could guess, I suppose, but yeah, a lot of takeaways personally, and I think that our industry could learn from to better their businesses. Doesn’t have to be a wholesale change, but I mean, I think one thing that that BuildWitt’s Aaron Witt challenged those in attendance with was, if there’s one thing you could take from this seminar, from this conference, and apply it to your business next week, I mean, go and do that. Because if everybody, if all 700-750 people in attendance at the Dirt World Summit made those sorts of changes at their companies, those changes for the better, the industry is going to be that much better. And hopefully, that will then replicate with other people importing that sort of change elsewhere, and we can get to a better place. We can bring more people into the industry, we can retain them better and talk about the better things, the great things that we’re doing as an industry, industry wide.
JK: Yeah. And I think that’s such a great way to look at it where, you know, you can’t attend this summit on a Thursday and Friday, or whatever days of the week it was and come in Monday and say, “Alright, I have all the answers. We’re going to fix this completely.” Because that’s just … It’s unrealistic. And once you realize that you can’t do that, you’re going to feel deflated and defeated and not wanna do it anymore. So again, taking that approach of what’s one thing you can do? What is one concrete thing? You know, it’s like the … This may or may not be a saying, but this is what come to mind where it’s like, “It only takes one spark to start a fire.” Where just starting off with whatever you can, start where you’re at and then build from there. And, just taking those steps is … it’s not it’s not always easy, but it’s incredibly important. I will just reiterate that I think I was thrilled with what the Dirt World Summit had to offer across the board.
KY: The inaugural Dirt World Summit this October is not gonna be the last one. They already unveiled that they’re going to have another one in November of 2024. It’s gonna be back in Texas, but back to Jack’s favorite place to visit, San Antonio.
JK: Let’s go!
KY: I think there’s opportunity, again, for aggregate producers to engage that. We did see a few there, there weren’t a ton. I know BuildWitt has a very broad appeal to different segments of construction. But, a lot of the content and the messaging that was imparted there certainly applies to our world. So, something to consider in 2024.
Probably a bit of a sharp transition here, Jack, but we wanted to talk a little bit about your conversation of late with Ken Simonson. He’s an economist with the Associated General Contractors of America. We’ve worked with Ken a little bit from time to time on content, engaging him a lot on video through our Road to Prosperity video series. You recently had the chance to sit down with him and talk about a lot of business topics: What’s happening with the economy, inflation. What’s your initial takeaway as you caught up with Ken recently? And again, Ken is with AGC.
JK: Yeah, no, I’ll just start by saying this, that I’ve, as I mentioned in, I think, the first episode or two. I’ve been here for a little over two years now, and getting to know some of the people within the industry, I just want to say that I think we in the construction industry are so lucky to have some really great economic minds that we get to work with. Not only Ken, but Richard Branch with Dodge Construction, Anirban Basu with the Associated Builders and Contractors. Again, getting to talk with Ken was was great, because they all kind of provide different different outlooks. Some may be more optimistic, some may be more pessimistic. It kind of kind of goes with the territory. At the end of the day, these are guys that have studied this stuff and know this like the back of their hand. Some surprising stuff, ultimately.
One of the first things we hit on was, obviously, interest rates have been a big topic and a big issue over this past year. And I asked him, I said, “Fed didn’t raise rates in September. They’d had 11 consecutive increases before that.” I was like, “Where do things stand?” And he pretty much said he doesn’t anticipate more increases by the end of the year, but early next year, kind of through the end of the year, there’s likely going to be more increases as the Fed tries to get that inflation down to kind of its ideal rate of 2 percent. So that’s going to kind of be a work in progress. And he had one quote that really stuck out to me where he said, “Interest rates at the end of ’24, it’s unlikely that they will be any lower then than they are at the end of ’23.” So, it sounds like we kind of got a bit of a reprieve now, but going into next year and continuing to move forward, it sounds like there’s gonna be some more rate increases, which kind of makes sense based on where inflation is and kind of everything is standing. But yeah, kind of how definitive he was about it was notable.
KY: That’s kind of wild to me, because I think as you wrote it up for us, Jack, that was the 11th straight time in September that rates had gone up. It seems like a lot of times – and I know that’s not exactly what our listeners want to be hearing about is interest rates at the this time in 2024 being at the same point of where they are here and ’23. I know everybody’s a little bit leery here is we’re going to get into ’24, and there’s a big election, obviously. That always has an impact, or a potential impact, at least in people’s minds in terms of how they want to go about doing business. Are they going to put money out there? They’re gonna hold it back? I think we’re already hearing some of that, and we’re still in 2023. I think we have an idea of who some of the candidates are, but yeah, it will be interesting to see what happens with those rates.
As far as I can tell, in terms of people spending money on equipment, it seems like that’s taking place. But again, we get into the first quarter and I think we might see a little bit more hesitation we’ve seen in the past, in presidential election years. So, something to keep an eye on, but what else did it Ken offer that was of note that our listeners might want to hear about?
JK: As perhaps negative as the interest rate outlook might be for next year, obviously, with with increased inflation with interest rates going up to combat said inflation, I asked him about if he had any recession fears going into 2024. As 2023 kind of seem to be the year of yes, it will. No, it won’t. Yes, it will. No, it won’t. And again, depending on who you talk to you got someone that says, “There’s not going to be a recession,” and then you have the next guy you talk to that says, “We’re in one right now.” So it’s hard to really get a definitive idea. But you know, he mentioned he believes that we’ll be able to avoid a recession in 2024.
That being said, there are still some vulnerabilities that he pointed out. Obviously some of the global conflicts going on. Depending on if the Fed can get inflation down to 2 percent in 2024. You know, so there’s obviously a lot of stuff that’s going on that sort of out of our control nationally that could impact what’s going on recession wise, but he believes that we’ll be able to avoid one in 2024. We’ll see if that’s ultimately how it plays out. Looking at some of the sectors that we deal with here, non residential, residential and non building. He kind of touched initially on the residential aspects saying that the decline hasn’t been as long or as bad as it was before, which was a spot of good news. As you know, residential was sort of seeing a bit of a downturn as non residential had really been spiking over the last couple years along with nonbuilding seeing some success as well from the IIJA. What he did note was that while multifamily has had a record number of units being built, permitting is down 30 pecrent year over year. So he anticipates a big downturn in multifamily coming next year, going along with warehouse retail and office kind of being one of the down, or some of the downturn areas in residential.
At the same time, with increased funding from the IIJA expecting to continue coming this year, he forsees infrastructure, manufacturing plants, data centers, some of the core areas that have been driving residential the last couple years to start coming up. And the warehousing thing isn’t much of a surprise seeing a downturn there, because we’ve heard coming into 2023 and throughout 2023 that that was gonna slow down because Amazon realized they kinda overbuilt the market. So, that’s not so much a surprise, but good to hear that he does anticipate infrastructure funding to continue coming out. And he kind of noted, and I think I’m personally guilty of this that, you know, he kind of said, once it was signed in 2021, he said people kind of thought the funding was going to just come like that. And obviously, that wasn’t the case. He mentioned that there were some different project types that have been seeing more funding, while some have been seeing less. But he anticipates sort of more funding to continue coming this year. And hopefully that’s the case as, obviously, we need as much help as we can for our infrastructure in this country right now.
KY: Yeah. Infrastructure – or the nonbuilding, as we see some of these organizations like Dodge Construction Network characterize it – the infrastructure in 2024 is really gonna hold the industry together and or move it forward. Hopefully both, but the latter. It’s interesting to kind of look at the latest construction starts numbers from Dodge the other day. It seemed like they had numbers available through September, and non residential starts through nine months of the year was down just as residential was. Like you said, Amazon, they put as many of those warehouses out there as they could until they couldn’t anymore. You know, Walmart was another big player in that space as well. I think the percentages those were up the last couple of years was was in the hundreds of plus percentages.
But, it’s a good thing we have infrastructure to fall back on in 2024. I think that’s what a lot of our Pit & Quarry readers are falling back on. The reason why they have some optimism, and like you said about those IIJA funds, been seeing reports from public producers, hearing sentiments, too, about how that money is finally getting out there, real projects are getting funded. That’s another positive thing. Another takeaway I had of late from another producer, Sunrock, whom I visited with a couple months back. He had interesting take on IIJA and the highway funding that we traditionally put out. He’s saying we’ve been doing a really good job of keeping up with the core infrastructure, you know, around cities and metro areas, but we could be doing a much better job on the secondary system. As you get away from the cities, those roads he argues, they’re deteriorating. I think you’d probably have a hard time arguing against the Sunrock executive. But again, ’24 is probably gonna be another year of infrastructure holding us together, and that’s the area of growth that we’re gonna see. So we’ll keep an eye on non residential and residential here to come.
JK: Yeah, and just one last takeaway that I had from my talk with with Ken, that he … Again, he had a lot of good insight. You can check out my conversation with Ken in our in the Road to Prosperity videos that we have up on our website now. There are probably another one or two that are going to be coming here in the coming weeks, so you can check that out on our website. Sort of looking at each of the different topics we touched on, one of the last things we talked about, he mentioned the workforce. Again, something we’ve already talked about a little bit here. He hit on something that we’ve heard a lot about where there’s starting to be such a high number of retirees, you know, the older generation is aging out and we don’t have that younger generation to replace them. And I kind of asked him, I was like, you know, “What is there to be done?” You know, because I mean, places are trying to get into schools. You’ve got places like CW Matthews trying to do more sort of fun things with the signing days and finding ways to energize the younger people. It’s an issue that we’ve dealt with for a long time, and it doesn’t seem like there’s any easy fix on the horizon, unfortunately. So, it’s gonna be interesting to see what 2024 brings from a workforce standpoint. And I’m definitely interested to see what steps or what changes or adaptations producers make in the coming year to either retain or attract some new workers.
KY: Well, business has still been pretty good this year, in ’23, for Pit & Quarry readers, for aggregate producers. They’re resilient. They pretty much do whatever they got to to get the job done and to get to the finish line on whatever it is they need to push to the finish line. So, I’m right there with you. ’24 It’s gonna be interesting, always intriguing when you got a presidential election and how people plan for that. So, we’ll be keeping an eye on it. But another show in the hopper here. Gonna get another one out for you before the end of the year, so look for Episode 4 in the coming weeks. But I wanna say thanks again to our show sponsor, Sykes Supply. Be sure to visit Sykes Supply at sykessupply.com/podcast for your power transmission, conveying equipment and power tool needs – and much more. So for Jack Kopanski, I’m Kevin Yanik. Thanks for tuning in.
JK: See you next time.
