Michigan Aggregates Association

Take Five: MAA’s Doug Needham shares his views on the aggregates market in Michigan

AggMan understands that the aggregates business is made up of local businesses throughout the nation. As such, we are focused on providing insights into these local markets, as well as national markets, in print and online.

We contacted Doug Needham, P.E., president of the Michigan Aggregates Association (MAA), who was kind enough to give us his take on the latest in aggregates industry in Michigan.

1) How would you characterize the state of the aggregates market in Michigan?

Needham: Michigan’s aggregate market is very strong. Michigan has been blessed with high quality aggregate that is essential for not only our infrastructure, but also key components in a number of other industries including steel, chemical, and glass production.

2) How is Michigan addressing transportation funding?

Needham:

a. On November 3, 2015, the Michigan legislature passed a series of bills (HB 4738, HB 4736 and HB 4370) that will generate an additional $1.2 billion for Michigan’s roads and bridges by 2021. This additional funding will be generated by:

i. Increasing motor fuel taxes on diesel motor fuel from 15 cents per gallon and the tax on gasoline motor fuel from 19 cents per gallon to a single rate of 26.3 cents per gallon on all motor fuel along with annually adjusting the tax rates for motor fuels based on consumer inflation (using the U.S. Consumer Price Index), with increases capped at 5 percent per year, effective January 1, 2022.

ii. Increasing the vehicle registration tax rates for passenger cars, vans, light trucks, and large commercial trucks by approximately 20 percent across the board.

iii. Earmarking a portion of income tax revenue currently allocated as General Fund/General Purpose (GF/GP) revenue to the Michigan Transportation Fund for distribution to state and local road agencies (bypassing the Comprehensive Transportation Fund). The earmarks would be as follows:

1. $150 million for FY 2018-19

2. $325 million for FY 2019-20

3. $600 million for FY 2020-21 and subsequent fiscal years

b. While we are grateful for this additional funding, it is enough to only slow the rate of deterioration. Finding a long-term solution that will adequately fix our deteriorating roads and bridges remains a hot topic as we enter the 2018 election cycle.

3) What are the big opportunities for producers in Michigan (DOT projects, commercial construction, etc.)?

Needham: As Michigan rebounds from the 2008 recession, aggregate and construction companies that were able to weather the storm are very busy not only fixing our aging roads, bridges, and underground infrastructure, but also in the private sector rebuilding, expanding, and building new industrial and commercial buildings. Michigan, with all of our natural resources, is prime for expansion as the nation continues down the path of economic prosperity.

4) What are the big obstacles for producers in Michigan (legislation, neighborhood groups, etc.)?

Needham: One of the major obstacles facing Michigan’s producers is gaining access to reserves. As Michigan ramps up our infrastructure rebuild, we are faced with increased local resistance at opening and expanding mining operations. This concern was expressed during our recent testimony to the Governor’s 21st Century Infrastructure Commission. The Michigan Aggregates Association expressed that expanding land development, along with increased resistance from local communities, have impacted the ability to access many of the aggregate reserves. As a result, there are areas that have projected a deficit of permitted aggregate material in the near future (10-15 years). In response to our testimony, the Michigan Department of Transportation initiated a study and corroborated industries concerns. The Michigan DOT found a projected shortage of the permitted sand and gravel reserves (15 years) that are primarily located in the southern half of lower Michigan. The report also revealed that the sand-and-gravel reserves, which are especially critical to the western and northern suburbs of Detroit, have dwindled to 12.7 years and that even a modest acceleration in construction activity could deplete those reserves in as little as a decade.

5) What would you like your peers to know about aggregates production in Michigan?

Needham: Michigan producers pride themselves in meeting the demands of their customers while providing a safe and productive workplace. Safety has been, and continues to be, our industry’s number one priority. We stand ready to rebuild Michigan’s infrastructure and are working diligently to entice competent and enthusiastic individuals to work in this great industry.