Rock Products

NOV 2017

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22 • ROCK products • November 2017 www.rockproducts.com The Q&A Forum KRAUSE: We see producers planning but even more importantly, going ahead and purchasing. Optimism seems strong that business levels will continue to improve. The enthusiasm and hope of an Infrastructure bill has worn off, but regular commercial and residential construction looks to be sustainable and allows companies to plan ahead. It looks to be a common cycle of the aggre- gates industry. We see some operations adding some new pieces to make the site more efficient or replacing a higher maintenance piece of equipment. Other operations are opting to a completely new and larger operation than what existed. This is true in those growth areas of the United States like Texas and the Southeast. We are also seeing a trend toward buying sooner so that the operation is ready for the next season. Some of that might have to with some longer delivery times from suppliers and some has to do with making sure the plant is at full operation for the next season. POMPO: The aggregate market right now is at or above last year's produc- tion, with the exception of a few being way up. Producers are skeptical of the future. They do see a light at the end of the tunnel but want to make sure the outlook gets a bit brighter. Equipment is a huge investment for producers and if the industry slows, their payments don't. There are some producers who are investing and have good future business prospects to allow these investments. MCLAUGHLIN: Aggregates are the largest segment of our business and the one we focus on the most given our product offering. We offer products for both the small and larger producers and can offer complete, stationary track and wheel systems. Producers are investing in new equipment in 2017, however, we are also seeing many utilize our distributor's extensive rental fleets. We have participated in several large North American companies' capital expendi- ture programs, and feel 2018 could be a much larger year for new equipment purchases. WEISS: Through various means, we monitor equipment utilization and we've seen a trend of increasing utili- zation – which translates into greater demand on the aftermarket side. Our customers are increasing their capital expenditures for new mobile equip- ment, and the indications show further increases going into 2018. Producers are investing in new equipment both stationary (including plants and oper- ations) and mobile fleets. Future capital improvements remain on the radar as demand and efficiency needs increase for most customers. CLARKE: We continue to see increased demand for Kleemann in our dealers' rental fleets as well as retail sales. Crushing and screening continues to be a rental-oriented market. Many contractors will rent machines before converting the asset to a purchase for several reasons, including workload balance. LEPP: In the aggregate market, we've seen an increase in capital projects – a sure sign of confidence in the economy. President Trump promised $1 tril- lion in infrastructure funding, but so far that has been bogged down by disagreements over public money vs. private investment and other logistical logjams. How confi- dent are you that we will see a solid plan in the coming year? What do you base your answer on? GARRISON: I'm not confident that a plan will emerge this next year. Many of us at Superior attended the National Stone, Sand and Gravel Association Legislative & Policy Forum/Fall Board Meeting in Washington, D.C., in September. We had eight meetings with congressmen and senators about a potential road bill being passed. The feedback we got did not look very promising. Healthcare and tax reform are taking precedence for the Trump administration right now and the fact that 2018 is an election year for the House of Representatives makes it highly unlikely that anything major will get pushed through for infra- structure next year. SPAKE: As I understand it, this is a multi-layered problem. Yes, I agree ste- reotypical political disagreement is part of the overall delay, even within par- ties. This is the third administration that has attempted to cut through the red tape of multi-year permitting delays. And what about the funding – who, how and when? Overall, I believe infra- structure should be the cornerstone of the current administration, one that promised to strengthen the economy and add and improve jobs. Talk about a vertically integrated economy – this investment should (eventually) leave a legacy of prosperity if prioritized and managed properly. I can't see the polit- ical hurdles being cleared this year, but maybe next. If there is one area our elected officials should find consensus and urgency, this is it. LEPP: We have confidence in the continued infrastructure work that President Trump is pushing forward. Across this country, badly needed work is well underway and we believe the voters will push to continue these improvements. WEISS: Administration officials and congressional leaders have made it clear that a robust infrastructure plan will follow the important effort to reform the tax code. Caterpillar, along with our customers, dealers and busi- ness allies, are engaged with policy makers to deliver a plan that will fix our John Garrison, Superior Industries

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