Rock Products

AUG 2017

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56 • ROCK products • August 2017 www.rockproducts.com Aggregates Industry Almanac Economic Impact of the Industry Employment in 2016 for the aggregates industry was just over 100,000. Many of these jobs are highly skilled, local and well paying. Wages in the industry for hourly labor are on par with manufacturing jobs. 16 The industry is also highly competitive, with over 4,000 private companies and govern- ment agencies in operation. Production occurs in all states, although half of the value of the industry is accounted for by Texas, California, Pennsylvania, Florida, North Carolina, New York, Virginia, Ohio, Illinois, Georgia and Missouri. The first three states in this list account for one-quarter of the industry's value. The cost of transporting aggregates is very high, so the need for operations in every state is a necessity. Bhagwat (2014) estimates that transportation costs are (mildly) non-linear in distance but across a wide range of distances average about $0.22 per mile. 17 The delivered price of a metric ton of sand and gravel doubles at about 23 miles and doubles for crushed rock at about 45 miles, a finding matching that of the ear- lier study by Robinson and Brown (2002). 18 In light of these high transportation costs, it is little surprise that 90 percent of aggregates are consumed within 50 miles of the place of extraction and that imports and exports are near non-exis- tent, amounting to only about 1 percent of production and consumption. 19 The vast majority of import and exports are with Canada and Mexico. 20 To a large extent, the aggregates industry is a local business, its jobs and production activity well insulated from globalization. Components of the Aggregates Industry Table 2 decomposes the broader industry into its two pri- mary components. Value of the crushed stone component ($16.3 billion) is nearly twice that of crushed sand and gravel ($8.8 billion), in part due to greater consumption (1,320 to 1,010 million metric tons) and in part to a higher price per ton ($10.98 to $8.80 per ton). Employment is twice as large in the crushed stone component, which is proportionate to the differences in production. The two components have nearly identical labor intensities. According to the USGS, there are an estimated 4,100 compa- nies and government agencies supplying construction sand and gravel, with about 6,300 operations across the 50 states. The largest producing states, accounting for just over half of all production, include Texas, California, Minnesota, Washing- ton, Michigan, Colorado, Arizona, North Dakota, Wisconsin and Ohio. Natural aggregates are largely used as inputs to other products, and the USGS estimates that about 45 per- cent of construction sand and gravel was used as concrete aggregates, 25 percent for road base and coverings and road stabilization, 13 percent as asphaltic concrete aggregates and other bituminous mixtures, 12 percent as construction fill, among other products such as blocks, bricks, pipes, plaster and gunite sands, and snow and ice control, filtration, golf courses, railroad ballast, roofing granules, and other miscel- laneous uses. The 1.3 billion metric tons of crushed stone was produced by 1,430 companies. These companies operate 3,700 quar- ries, 82 underground mines, and 187 sales-distribution yards across the country. The largest producing states are similar to those for construction sand and gravel: Texas, Pennsylva- nia, Missouri, Florida, Ohio, Illinois, Kentucky, Indiana, North Carolina and Virginia. These states accounted for more than half of the total production. Most of the domestic crushed stone is limestone and dolomite (70 percent). Other sizable materials include granite (13 percent), traprock (6 per- cent), with smaller shares of sandstone, quartzite, marble, volcanic cinder and scoria, calcareous marl, slate, shell, and miscellaneous stone. The bulk of the crushed rock is used as construction material (76 percent), and largely for road construction and maintenance. Other types of use include cement manufacturing (11 percent), lime manufacturing (7 percent), and assorted uses including chemicals, agricultural uses, and miscellaneous other applications and products. Aggregates Production Over Time Figure 1 illustrates a time series of aggregates production over the period 1991 through 2016. The solid line shows the value of the aggregates industry and the dashed line is Gross Domestic Product (GDP). 21 The value of aggregates produc- tion is shown to have a sizable growth during the housing bubble of the mid-2000s, and growth has been strong in recent years as the housing market has recovered. While the industry's value does not appear to be strongly related to

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