Pit & Quarry, December 2014

of Moving Ahead for Progress in the 21st Century or MAP 21 through May 31 2015 and authorized an additional 11 billion of transfers to maintain solvency of the Highway Trust Fund The U S Geological Survey says crushed stone production grew more than 9 percent in the third quarter of 2014 and construction sand and gravel was up nearly 8 percent What will we see in 2015 In addition to a return of the AGG1 Aggregates Academy Expo this time in Baltimore the big news is the pending mega merger of global heavyweights Lafarge and Holcim The companies are discussing a union that would create one company whose combined annual sales are about 43 billion The new company would be called LafargeHolcim and the deal is expected to close in the first half of 2015 This proposed merger is a once ina lifetime opportunity to deliver substantially better value to customers AGGREGATE PRODUCTION Preliminary estimates courtesy of Jason Christopher Willett USGS Crushed stone up 94 Q3 2014 vs 2013 and up 77 nine months of 2014 vs 2013 Construction sand and gravel up 77 Q3 2014 vs 2013 and up 76 nine months of 2014 vs 2013 with more innovation a wider range of products and solutions and more sustainability and enhanced returns to shareholders says Rolf Soiron Holcims current chairman LafargeHolcim will be uniquely positioned to take advantage of growth in developed markets and the worlds fastest growing economies by supplying the materials that will enable the construction industry to meet the challenges of the future As a part of the merger approval process the companies are required to divest certain assets and Reuters reports that Holcim is expected to have chosen buyers for those assets by the end of January 2015 Holcim says it expects to complete the deal by the middle of next year Construction on the rise In its 2015 Dodge Construction Outlook Dodge Data Analytics formerly McGraw Hill Construction predicts that total U S construction starts for 2015 will rise 9 percent to 612 billion a larger gain than the 5 percent increase to 564 billion estimated for 2014 The construction expansion should become more broadbased in 2015 with support coming from more sectors than was often the case in recent years says Robert Murray chief economist and vice president for Dodge Data Analytics The economic environment going forward carries several positives that will help to further lift total construction starts Financing for construction projects is becoming more available reflecting some easing of bank lending standards a greater focus on real estate development by the investment community and more construction bond measures getting passed SPECIAL REPORT While federal funding for construction programs is still constrained Murray says states are now picking up some of the slack Interest rates for the near term should stay low and market fundamentals occupancies and rents for commercial building and multifamily housing continue to strengthen Based on research of specific construction market sectors the 2015 Dodge Construction Outlook details the forecast as follows Single family housing will rise 15 percent Its expected that access to home mortgage loans will be expanded lifting housing demand However the millennial generation is only gradually making the shift toward homeownership limiting the potential number of new homebuyers in the near term Multifamily housing will increase 9 percent Occupancies and rent growth continue to be supportive although the rate of increase for construction is now decelerating as the multifamily market matures Commercial building will increase 15 percent slightly faster than the 14 percent gain estimated for 2014 Office construction has assumed a leading role in the commercial building upturn aided by expanding private development as well as healthy construction activity related to technology and finance firms Hotel and warehouse construction should also strengthen although the pickup for stores is more tenuous Transportation spending also on the rise Energy prices remain relatively low overall inflation is low unemployment is holding around 62 percent GDP is still a bit unsteady and growing slower than wed like to see but it increased at an annual rate of 42 percent in the second quarter of 2014 says FMIs 2014 Q3 Construction Outlook Report Select market predictions include Transportation Transportation construction continues at a solid pace with 7 percent growth in 2014 Residential Multifamily construction is still expected to grow at a healthy pace of 13 percent in 2015 after reaching a near record pace in 2014 The inventory for new homes increased to six months in July showing some weakness in sales but housing starts in July were 217 percent above July 2013 levels Office Dropping unemployment rates and rising GDP have provided a lift in the office forecast now expected to reach 8 percent growth in 2014 and grow an additional 7 percent in 2015 Large metropolitan areas like New York City will benefit the most as vacancy rates drop to 106 percent compared with national vacancy rates hovering around the 16 to 17 percent range www pitandquarry com December 2014 PIT QUARRY 15