A publication of the California Construction and Industrial Materials Association
The State of Our Industry Presented By:
Pierre G. Villere President, Managing Partner Allen-Villere Partners
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Table of Contents
Pent-Up Housing Assessment Thousands of Starts
ELAY” D T A E R G E H “T
The State of our Industry – From “The Great Recession” to “The Great Delay”
1,000 500 0
Pressure Mounts on Legislature to Craft Transportation Funding Solution
2016 winter Issue
Managing Cybersecurity: What the Mining Industry Should Know and Do
2015 CalCIMA Education Conference Recap
Stay on Track with CARB Requirements – Medium Off-Road Fleet Compliance
Caltrans New Materials Testing Policy: What Does It Mean For Your Company? On the cover:
Photo courtesy of Kerry Hoover Pierre G. Villare of Allen Villare Partners at CalCIMA’s Education Conference Nov. 15-18
The Conveyor is a publication of the California Construction and Industrial Materials Association. The views expressed herein are fixed expressions of the contributing writers and not of CalCIMA. All rights reserved. CalCIMA 1029 J Street, #420 Sacramento, CA 95814 (916) 554-1000 www.calcima.org www.distancematters.org
Published By Construction Marketing Services, LLC P.O. Box 892977 Temecula, CA 92589 909) 772-3121 Publisher Kerry Hoover email@example.com Editor Brian Hoover firstname.lastname@example.org
Design Aldo Myftari, Juben Cayabyab Editorial Contributors Gary W. Hambly, President & CEO, CalCIMA Charley Rea, Director of Communications & Policy, CalCIMA Stephanie Pridmore, Director of Business Operations, CalCIMA Suzanne Seivright, Director of Local Governmental Affairs, CalCIMA
Evan D. Wolff Maida Oringher Lerner Preetha Chakrabarti Willa B. Perlmutter Crowell & Moring, LLP The Conveyor is published quarterly each year by Construction Marketing Services, LLC All rights reserved. Reproduction in whole or in part without permission is prohibited.
The Conveyor • 2016 Winter Issue
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The State of our Industry From “The Great Recession” to “The Great Delay” By: Brian Hoover Pierre G. Villere is the president and managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry, specifically focused on the ready-mixed concrete, construction aggregates, and concrete products industry. Villere has spent the past three decades serving the middle market companies in their mergers and acquisitions, restructuring, and financing needs. He sits on numerous committees and task forces and has made multiple presentations on various aspects of the industry to dozens of state and national trade associations and currently writes a monthly column for the Concrete Producer magazine. Villere was a guest speaker at the California Construction & Industrial Materials Association (CalCIMA) Education Conference recently held in Monterey this past Nov. 15-18. The following represents some of what Villere had to say at this conference. “While the rest of the U.S. economy is back to full throttle, the construction industry has transitioned from ‘The Great Recession’ to ‘The Great Delay’,” says Villere. “Economists from many organizations keep pushing back their projections, as they have for the past couple of years, delaying the timing of a breakout recovery in construction.” According to Villere, the good news was that U.S. construction spending rose to the highest level in more than 6
seven years this past July, climbing 0.7 percent from the prior month to a seasonally adjusted annual rate of $1.083 trillion, the highest level since May 2008. Remarkably, spending was up a 26 percent annual rate in the three months leading up to July. This was however tempered by the housing market that lagged behind predictions, throttling back a recovery. Villere points out that household formations are beginning to respond in correlation to job formation. Specifically pointing to the fact that consumer’s sense of job security, and eventually, wage power, will grow, leading to greater housing starts. “An overcorrection in housing starts occurred during The Great Recession and that is now being remedied with expectations of housing starts approaching 1.5 million in 2016, still below the peak of 2 million starts prior to the recession.” According to the index of builder confidence, single-family homes rose to a seasonally adjusted level of 62 in September, with any reading over 50 generally seen as positive. This index averaged 52 throughout 2014, so in general builder confidence is up. “According to analysts, total construction spending is expected to double over the next 10 years, with single-family home construction tripling over an eight-year period, which is an astounding statistic from our perspective,” says Villere. “Total commercial building is expected to go from a low of $6.5 billion in
Pierre G. Villere President, Managing Partner Allen-Villere Partners
2011 to $21 billion in 2019. Total state highway expenditures are expected to remain constant from a low of $9.3 billion in 2011 to as high as $13 billion before settling back down to around $11 billion by 2019.” But the construction recovery seems to have taken a pause in 2015, as according to Villere, the year finished flat when compared to 2014. “The famous three “L”s are responsible for this pause, and labor, in particular, will continue to be the challenge for our industry, and construction in general, in 2016,” says Villere. “Residential construction will continue to drive the recovery, with commercial and midrise building benefiting as a result.” The Conveyor • 2016 Winter Issue
Villere points to the three “L”s that can affect the housing market: lots, labor and lending. There seems to be enough land available, however, regions like California’s coastal area are very expensive and homebuilders maximize profits by simply erecting more housing units on each plot of land. So while availability isn’t an issue, desirability many times is. Lenders have loosened their grip a bit, where financing was much more restricted just a few years back. However, Villere says that where a 700 credit rating once represented the norm, today’s median credit rating is closer to 750, making it more difficult for some to purchase a home. As we move on to the third “L”, Labor, it is clear that this is an area of uncertainty. According to Villere, 40 percent of the California construction labor force were either recalled to their previous employer or eventually found another construction job after the recession. Approximately one-third began work in another industry, after an employment gap of around one year. “Approximately onequarter of displaced construction workers had no observed subsequent employment by the end of 2013, five to seven years after displacement,” says Villere. “These individuals presumably have left the labor market, although they could be working informally or be selfemployed.” So is there a labor shortage? The facts say yes. In a survey conducted last July by Associated General Contractors, 86 percent of commercial builders said they were having trouble filling hourly or salaried positions, up from 83 percent in 2014. This shortage has pushed up labor costs, which has resulted in higher home prices, which in turn curtails building activity and economic growth. Ultimately, the answers may The Conveyor • 2016 Winter Issue
lay in education and industrywide efforts to better promote the benefits of working in this industry. Many high schools have phased out shop classes and vocational programs, while parents are steering their graduates to earning a four-year degree and with an emphasis toward white-collar careers. “The labor shortage does not seem to be easing up
yet published, however, it is confirmed that this number exceeds 2 million units sold. The trade group expects yet another increase in 2016, bringing sales back to numbers last seen in 2006. “Cars are a big ticket item, and involve a multiyear payment commitment,” says Villere. “Consumers don’t make those commitments unless they feel good about their family’s
much and some of our clients are indicating that it is getting tighter,” says Villere. “Many are also of the opinion that the only foreseeable solution may be tied to immigration reform.” Villere points to another economic indicator that shows tremendous consumer confidence at this time. According to the California New Car Dealers Association, more than 1.8 million cars were sold in California during 2014, which was up 8 percent over 2013. Nearly 478,000 units were sold in the first three months of 2015, with new vehicle registrations topping 1 million during the first six months of 2015, an 11.5 percent gain over the same period a year earlier. End year results are in but not
employment and financial stability for the next few years.” Villere also presented his thoughts on the future of the California ready mixed concrete industry at the recent CalCIMA Educational Conference. We like to use ready mix concrete as a measure because it is a great proxy for construction aggregates, cement pull through and other key raw materials used in the construction industry,” says Villere. “If you overlay, on a chart, the millions of tons of aggregate that is consumed in California, or the U.S. for that matter, each year, along with ready-mix concrete volumes, you 7
cover story will see that those two lines follow each other almost identically.” Allen-Villere Partners had originally predicted that growth in the ready mix industry may put a strain on working capital and deferred, CapEX, followed by supply shortages of everything from mixer trucks to personnel and eventually cement itself,” says Villere. “We have since tempered our view, due in part to the unknown effects that the global (China) economy may have and other indicators, like cheap gasoline that have cast a shadow over our modest pace of recovery.” According to Villere, the industry turned the corner in 2013, with an increase in volumes to 300 million cubic yards. “Our industry’s recovery will continue to be gradual, at mid-single-digit rates of growth, for the next few years,” says Villere. “This change in our view has tempered our position on shortages in raw materials, rolling stock, and equipment essential for the next growth cycle as we had previously predicted. The gradual pace of recovery will allow materials and equipment suppliers to plan for things like cement imports and assembly line expansions, assuring a more steady supply to our industry. By 2020, we expect that ready-mixed concrete volumes will have recovered to the 2005 peak, taking a full 15 years for the industry to recover from the Great Recession.” According to Villere, construction put in place is the best it has been in years. Construction spending in 2014 reached a seven-year high of $1.094 trillion with the current PIP run rate at 94 percent of the all-time high. Other positive signs include a booming bond 8
Pent-Up Housing Assessment Thousands of Starts
1,000 500 0
U.S. total constuction spending at a seasonally adjusted annual rate (trillions)
$1.4 4 2 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 2005
market, with U.S. bond sales by companies with good credit ratings hitting $103 billion this past October. “Many economists believe that corporate bonds are a better leading indicator for the economy than most of the other market metrics,” says Villere. “This marks a sign of investors’ faith in the resilience of the U.S. economy.” Villere goes on to point out that the ready mixed concrete production has continued to grow from a high of 458.3 million cubic yards in 2005 to a low of 257.7 million cubic yards in 2010 and back up to 324.6 million cubic yards in 2014. “I believe that we will continue to see volume growth with around 330 million cubic yards in 2015 and expectations of slightly more in 2016,” says Villere. According to Villere, the top line selling price took the biggest jump ever in 2014, adding $4.81 to
the selling price over 2013. “The industry returned to profitability as we predicted, swinging to a $2.23 net profit from a ($1.03) loss in 2013. Overall we predict a continued slow, yet stable recovery in the California ready mix industry,” says Villere. “Influences, like population growth and household formation, will continue to drive construction in California, which alone represents around 8 percent of the nations entire construction economy. Companies that hope to keep up with demand should perform a 360-degree review of their organization, with an emphasis on creating a working environment that promotes and creates content, long-term employees.” For more information on Allen-Villere Partners, please visit their website at www.allenvillere.com or call (985) 727-4310. The Conveyor • 2016 Winter Issue
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The Conveyor â€˘ 2016 Winter Issue
Pressure Mounts on Legislature to Craft Transportation Funding Solution
Written by Gary W. Hambly, President & CEO, CalCIMA
lready facing the challenge of finding common ground on how to craft legislation to deal with the staggering 77 billion dollar short fall in deferred maintenance for the state’s transportation infrastructure, legislative leaders were dealt with a further blow when the California Transportation Commission (CTC) announced that they were forced to slash funding for the state’s transportation program by three-quarters of a billion dollars over the next five years. The immediate effect of this action by CTC will mean that in almost every county in California, projects that were slated to proceed to development will need to be cut or delayed indefinitely. The reason for the cuts is due to the decline in revenue that is being received by the state from the gasoline excise tax. Set at 18 cents per gallon a few years ago, the priced-based portion of the gas tax has dropped to 12 cents per gallon this year as a result of lower fuel costs. Alarmingly, the CTC is projecting that the gas tax could fall another 2 cents per gallon in the coming fiscal year which will cut available transportation improvement funds by an 10
Gasoline Excise Tax Revenue has Declined From 18 Cents Per Gallon a Few Years Ago to 12 Cents Per Gallon this Year. CTC is Projecting that the Gas Tax Could Fall Another 2 Cents Per Gallon in 2016. Every Penny Reduction Decreases Revenue to Fund State and Local Roads by Around $140 Million Per Year.
additional $280 million dollars per year. Every penny reduction in the gas tax decreases revenue to fund state and local roads by about $140 million per year. For a complete list of projects go to www.calcima.org/pdf/STIP_ Delay.pdf. Over the last several years the legislature has been struggling to develop reforms
to the transportation funding program and increase revenues to adequately fund current and future transportation infrastructure requirements. Last year the Governor convened a special session of the legislature to focus attention on the urgent need to address this crisis in funding but this effort has yet to yield results. As the pressure mounts on the legislature to work together to develop a compromise that will result in significant new transportation revenues matched with meaningful reforms to the state’s transportation program, legislators are currently weighing the merits of three competing proposals:
“We have no choice but to maintain our transportation infrastructure. Yet, doing so without expanded and permanent revenue source is impossible. That means at some point, sooner rather than later, we have to bite the bullet and enact new fees and taxes for this purpose. Ideology and politics stand in the way, but one way or another roads must be fixed,” Governor Brown’s State of the State address 2016. The Conveyor • 2016 Winter Issue
The Governor’s plan revenue through 2 annual has been incorporated in vehicle registration fees his 2016/17 budget and ($35 road access change, Proposals in place to generate proposes to generate $3.1 $35 annual registration fee) billion annually in revenue a smaller gas and diesel $3.1 Annually through a combination through a combination of tax increase (12 cents of new revenue sources including new revenue sources (fuel per gallon gas and 22 for increase in registration fees tax and registration fee diesel). Both measures increases), Cap and Trade would also implement proceeds for transit and significant program are works in progress, each limited new low carbon reforms. through transportation programs contemplates increasing vehicle Through the balance of registration fees and fuel taxes and Caltrans cost saving this legislative session the as the principal source of increased Governor and legislature will be efficiency enhancements. The plan also includes several reform revenue. The projected $6.4 billion seeking to forge a compromise measures sought by members of annual revenue from Frazier’s for their proposals that can be bill would be derived from a $38 the legislature. supported by enough members annual registration fee and a to gain approval for a package 22.5 cent per gallon increase in of revenue enhancements and Legislature’s Proposals gasoline and 30 cents per gallon meaningful reforms that begins Currently, there are two to address the state’s crumbling in diesel tax. It also includes comprehensive transportation transportation infrastructure. funding and reform bills pending recapturing the $1 billion truck Failure to act and act quickly in weight fees which is currently in the legislature, AB 1591 by will have serious consequences being lost to the general fund. Assembly Member Frazier and for the future of the State’s Beall’s bill is projected to SB 1x1 by Senator Beall. While economy. generate $4.3 billion in annual at this writing both of these bills
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What the Mining Industry Should Know and Do Contributed by Crowell & Moring, LLP Mining companies, like most owners and operators of the nation’s critical infrastructure, are becoming increasingly vulnerable to cyber-attacks as they streamline operations by automating more equipment and running facilities and assets from hundreds of miles away with the aid of sophisticated technology. Necessary reliance on industrial automation and control systems to monitor and control physical processes and proprietary data and other sensitive information and networks puts companies at risk. As recent incidents demonstrate, threat actors, including nation states and so-called political “hactivists,” are becoming increasingly sophisticated. What’s more, disgruntled or careless employees or business partners are better able to disrupt a company’s systems and networks. Rising concerns about these evolving risks and threats have prompted the Executive Branch and various government entities to consider legislation, develop voluntary standards, encourage cyber information sharing, and issue guidance on cybersecurity best practices and mitigation tools. These standards and guidance, including cybersecurity guidance issued by the Securities and Exchange Commission, often trigger disclosure obligations and may result in litigation. 12
Emerging Cybersecurity Risks and Threats Reliance on enterprise networks increases vulnerability to cyber attacks Many mine operators have centralized the gathering, analysis, and dissemination of critical information, including financial and other proprietary information. Financial transactions are typically conducted over the internet and core proprietary information is stored in centralized networks. This centralized information management has given sophisticated threat actors, including those from overseas, increasingly easier access to sensitive information to facilitate cyber-attacks. In April 2015, President Obama called these developments “a national emergency” and allowed the Treasury Department to freeze assets and bar other financial transactions of entities engaged in cyber-attacks that pose “a significant threat to the national security, foreign policy, or economic health or financial stability of the United States.” Political and anti-mining activists opposing the mining industry also now have a new tool in their arsenal.
Aggressive activists have turned to hacking as they attempt to disrupt mining companies’ activities, expose confidential information, and create, at minimum, complicated public relations fiascos, possibly motivated by a desire to shame or embarrass, if not outright disrupt the operations of, such companies. Further, insider threats pose an increasing problem as tech-savvy disgruntled employees gain greater access to a company’s internal IT systems, giving them easier access to sensitive information. Government agencies are increasingly recognizing cybersecurity as a significant issue The federal government and many government entities are taking note of the increasing frequency and severity of cybersecurity threats to the nation’s assets and resources and are developing frameworks encouraging and providing opportunities for the private sector to address such concerns. In 2013, President Obama issued Executive Order 13636, directing the National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce, The Conveyor • 2016 Winter Issue
to work with stakeholders to develop a voluntary framework for reducing cyber risks to critical infrastructure. Released in 2014, the framework provides “guidelines, and practices to promote the protection of critical infrastructure. The prioritized, flexible, repeatable, and cost-effective approach of the framework helps owners and operators of critical infrastructure to manage cybersecurity-related risk.” Recognizing the potential for the framework to inform regulatory programs and to establish a standard of care for industry, some critical infrastructure owners and operators are using the framework or similar constructs to review their cybersecurity posture and to benchmark performance.
Steps to Consider in Managing Cybersecurity Risks and Threats Comprehensive and coordinated risk assessments and compliance reviews led by security personnel and legal counsel whose efforts can help direct compliance efforts and preserve privilege and confidentiality for confidential business and proprietary information and data are good tools to manage risks. The Conveyor • 2016 Winter Issue
These efforts can help inform the development of legally compliant cybersecurity policies and procedures, operations, and incident response plans (including restoration, mitigation, and contingency plans) and testing and exercise regimes. Identify and classify data and systems, develop cybersecurity policies and procedures, and establish governance structure A cybersecurity risk assessment and compliance review typically begins with identifying and classifying the company’s sensitive and regulated data and systems and reviewing and updating cybersecurity policies and procedures to protect that information. The NIST cybersecurity framework may provide a useful tool for developing a risk-based approach. A company should then consider establishing a governance structure for responsibility and oversight for those policies and procedures and implementation of protective controls. Develop incident response plan, data breach tool kit, and vendor management agreement With this groundwork, a company should be better equipped to prepare for a cybersecurity event. Typically
successful preparation activities will include development of an incident response plan and a data breach tool kit. It is also important to develop and implement vendor management agreements to help reduce the risk of vulnerabilities through third-party IT systems. Perform testing and training Engaging a third-party network consultant to perform a privileged security assessment should also strengthen a company’s readiness to defend against a cyber-attack. Training personnel and third-party vendors who may have access to sensitive information and systems is also critical in ensuring the cyber resiliency of organizations. Participate in information sharing opportunities Increasingly, companies in the private sector recognize that their ability to combine data from many companies, and with the government, enhances their cyber defenses. Industries that share cyber-threat information can aggregate data from a larger pool of resources providing opportunities to spot and counter trends. Recognizing that information sharing between industry peers and with the government is 13
essential in preventing cyber-attacks, at the end of last year, Congress passed the Cybersecurity Information Sharing Act of 2015 (“CISA”) which encourages voluntary cyber threat information sharing opportunities between industry and government by providing liability protections and allows companies to respond to some of the threats themselves.
Summary Cybersecurity threats have the potential to exploit the increased complexity and connectivity of critical infrastructure systems, placing a mining company at risk. A cyber-attack can drive up costs and have significant reputational, safety, economic, and security
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impacts for a company. The pace and complexity of the threats are growing, making it increasingly incumbent on mining companies to consider adoption of flexible, dynamic,
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2015 CalCIMA Education Conference – Recap CalCIMA Conference Informs Industry Written by Stepahine Pridmore, Director of Business Operations, CalCIMA Themed, Rebuilding California: Can We Deliver?, the 2015 CalCIMA Education Conference in Monterey last November supplied industry members with talks from the Department of Conservation director, David Bunn about building community acceptance of local mineral extraction, and a talk from the California Transportation Commission regarding the California transportation crisis. We also heard to about the state of the construction materials industry, as reported on the cover of the winter issue of The Conveyor. As always, our attendees heard a wide variety of talks, and took advantage of the many exhibits and networking opportunities.
With 50 speakers covering 37 different talks, there was something for each of the 250 + attendees who came from 14 different states to be a part of California’s premier educational event for the construction materials, industrial minerals and ready mixed concrete industries. The conference was kicked off with a keynote address from Teichert CEO Mary Rotelli and ended with the US Mine Safety and Health Administration’s (MSHA) assistant western district manager, Paul Belanger presenting Excellence in Safety Awards to CalCIMA’s hard-working members. Air, water, environmental, permitting and reclamation issues were all discussed, as
were operational issues from belt conveyor dust control, mine plans and drilling to drones. We even had live hawks flying across the Windjammer Ballroom in a talk about depredation of pest species. Other highlights were the golf tournament, awards banquet and exhibit hall. The tournament held at a Pebble Beach Course, the Del Monte, was a bit chilly but fun for all participants. The awards banquet featured entertainment by Cowboy Entertainer, Dave Stamey who pleased the crowed with his stories and guitar. We look forward to working with CalCIMA Education and Events Committee to make the 2016 Education Conference just as successful.
CalCIMA Education Conference Exhibitors; Trimble Loadrite, AggReCon West, Graniterock and Sespe Consulting, Inc.
Scenes from the Conference (left to right): Tom Powell, CEMEX, Stephanie Pridmore, CalCIMA, and Courtney Orozco, CalCIMA, share a laugh after announcing contest winners; Safari Depredation Co.’s hawk; Cowboy Entertainer, Dave Stamey; and golf winners, including Charley Rea, CalCIMA, Danny Deveraux, CalPortland, and Brian Yorke, Yorke Engineering.
The Conveyor • 2016 Winter Issue
Awards for Outstanding Member Efforts At the 2015 CalCIMA Conference, time was taken to recognize members for their contributions to the industry. Charlie Wensley, President of Builders Concrete/Viking Ready Mix, received the Benjamin J. Licari Distinguished Member Award for outstanding lifetime service to the industry. Charlie, who retired at the end of last year has served CalCIMA and the industry in many capacities over the years, including as
Board member, legislative chairman, and as a frequent spokesperson for the industry. Bradley Johnson, Harrison, Temblador, Hungerford, & Johnson, received the Spirit of the Industry Award for detailed review of legislative language regarding AB 1142 (Gray). Terry Tyson, Lehigh Hanson, and Mike Herges, Graniterock, received the President’s Award for accomplishments in leading the CalCIMA Safety & Health
Committee, including truck safety training and relationships with the Mine Safety & Health Administration. Scott Cohen, Sespe Consulting, received the Associate of the Year Award for continuous service to the association’s Environment and Safety & Health Committees.
Winners of the CalCIMA Association Awards (left to right). First on the left, is Charlie Wensley, Builders Concrete/Viking Ready Mix, receiving the Benjamin J. Licari Distinguished Member Award from the award’s namesake, Ben Licari. For the next three (left to right), CalCIMA President/CEO Gary Hambly presents to Scott Cohen, Sespe Consulting, for the Associate of the Year Award; Mike Herges, Graniterock, and Terry Tyson, Lehigh Hanson (not pictured) for the President’s Award; and Bradley Johnson, Harrison, Temblador, Hungerford, & Johnson, for the Spirit of the Industry Award.
Thank You to the Education Conference Sponsors! • • • • • • • • • • • • • •
Applied Industrial Technologies Baldor Electric Company Benchmark Resources CEMEX Downey Brand LLP Golden Queen Aggregates Golder Associates, Inc. Granite Construction Graniterock Gresham Savage Nolan & Tilden Haley & Aldrich Harrison, Temblador, Hungerford & Johnson Hunton & Williams LLP Jeffer Mangels Butler & Mitchell LLP
The Conveyor • 2016 Winter Issue
• • • • • • • • • • • • •
Kespry Kleinfelder Lehigh Hanson Region West Lilburn Corporation Mitchell Chadwick LLP Rural County Representatives of California (RCRC) Sespe Consulting, Inc. Stoel Rives LLP Teichert, Inc. Trimble Loadrite Vulcan Materials, Western Division WRA, Inc. Yorke Engineering, LLC
EVENTS CalCIMA Elects 2016 Officers & Board Amidst the talks and networking at the Conference, CalCIMA members gathered to elect the 2016 officers and Board of Directors. The new Chairman is Barry Coley with Escondido Materials. The new Vice Chair will be Bill
Williams, BoDean; the new Secretary will be Melanie O’Regan, CalPortland; and the new Treasurer will be Aaron Johnston, Graniterock. New Board members include Dana Davis, Teichert Materials; Shelby Olsen, Omya California,
Inc.; Russ Caruso, United Rock Products; and Lloyd Burns, Western Aggregates, LLC. Associate Member positions on the Board are Bill Campbell, Applied Industrial Technologies and John Hecht, Sespe Consulting, Inc.
2016 Officers & Board of Directors Chair..................................................................... Barry Coley............................................................. Escondido Materials Vice Chair............................................................. Bill Williams................................................................... BoDean Co., Inc. Secretary.............................................................. Melanie O’Regan....................................................................CalPortland Treasurer.............................................................. Aaron Johnston......................................................................Graniterock Past Chair............................................................. Thomas Powell...............................................................................Cemex
Bill Albanese........................................Central Concrete Supply Brian Anderson................................................Vulcan Materials Lloyd Burns....................................... Western Aggregates, LLC Bill Campbell....................................................Applied Industrial Russ Caruso............................................. United Rock Products Dana Davis...............................................................Teichert, Inc. Toby Goyette............................................... Syar Industries, Inc. John Hecht.............................................. Sespe Consulting, Inc.
John Holliday.......................................... Holliday Rock Co., Inc. Gary Johnson................................... Granite Construction, Inc. Shelby Olsen.............................................. Omya California, Inc. Steve Payne.................................... Elementis Specialities, Inc. Charles Roudebush.............................. Robertson’s Ready Mix Michael Ruddy.................................. Allied Concrete & Supply Brian Serra............................................................Lehigh Hanson Michael Toland......................................... Spragues’ Ready Mix
CalCIMA Members Know How to Golf The 2015 CalCIMA Golf Tournament was played at the Del Monte Golf Course, the oldest course west of the Mississippi. It turned out that many of the golfers were experienced hands, too. The winning team was Danny
Deveraux, CalPortland, Brian Yorke, Yorke Engineering, and Charley Rea, CalCIMA. They were followed closely by runner-ups Cliff Thorpe, Baldor Electric – Dodge, and Tony Fuentes and Chris Iaccio, Cemex. Individual skills were
also evidenced in the longest men’s drive by Sam LoForti, Haley & Aldrich, longest women’s drive by Kelly Hambly, CalCIMA CEO spouse, and closest to the pin by Mark Hill, Cemex.
From left to right: Photo 1: Chris Iacco - Cemex, Cliff Thorpe - Baldor–Dodge, Tony Fuentes - Cemex | Photo 2: Paul Bollard - Bollard Acoustical Consultants, Ed Luce - Vulcan Materials Western Division, Nicolas Serieys - Alta Environmental, Jim Schwartz - Haley & Aldrich, Inc. | Photo 3: Melanie O’Regan - CalPortland, Bill Campbell - Applied Industrial Technologies, Steve Zsembik - Baldor–Dodge, Tom Powell - Cemex.
The Conveyor • 2016 Winter Issue
From left to right: Photo 4: Mark Hill - Cemex, Lori Cathcart - Kleinfelder, Joe Turner - Kleinfelder, Bill Williams - BoDean Co., Inc. | Photo 5: Malcolm Weiss - Hunton & Williams LLP, Ivan Tether - Tether Law, Bill Albanese - Central Concrete, Mari Albanese - Bill Albanese’s Spouse | Photo 6: Bruce Steubing - Benchmark Resources, Samuel LoForti - Haley & Aldrich, Inc., Jim Little - Hanson Aggregates West Division, Dan Openshaw - N.A. Degerstrom, Inc.
Safety Excellence Recognized CalCIMA gave out its 2015 Excellence in Safety Awards at the recent conference in Monterey. The awards recognize outstanding accomplishments by mines, plants, and individuals. The Outstanding Safety Leadership Award was presented to Gerardo Valencia, safety coordinator at Lhoist’s
Natividad Plant near Salinas, and to Brad Riechers, plant and loader operator at Graniterock’s Southside Sand & Gravel plant. These were the winners in the mine and plant categories: Lehigh Southwest Cement’s Tehachapi Plant in the cement category; Lhoist’s Natividad Plant in the industrial mineral
category; Lehigh Hanson’s San Luis Obispo Plant in the ready mixed concrete category; Graniterock’s A.R. Wilson Quarry in the large aggregate mine category, and Lehigh Hanson’s Oakland Tidewater Plant in the small aggregate mine category. Congratulations to the winners!
The 2015 CalCIMA Safety Awards were presented by Paul Belanger, assistant western district manager for the Mine Safety & Health Administration. Accepting Excellence in Safety Awards were (left to right): Christine Granquist for Lhoist’s Natividad Plant; Eric Riddiough for Lehigh Hanson’s San Luis Obispo Ready Mix Plant; Peter Lemon for Graniterock’s A.R. Wilson Quarry: Jean-Claude Royer for Lehigh Southwest Cement’s Tehachapi Plant; and Brad Riechers, plant operator for Graniterock’s Southside Quarry, and Gerardo Valencia, safety coordinator for Lhoist’s Natividad plant, accepting Outstanding Safety Achievement Awards.
The Conveyor • 2016 Winter Issue
Stay on Track with CARiB Requirements Medium Off-Road Fleet Compliance Written by Suzanne Seivright, Director of Local Governmental Affairs, CalCIMA Medium fleets are required to meet California Air Resources Board’s Off-Road Diesel Vehicle performance requirements by January 1, 2017. Here’s a brief overview of the requirements medium fleets should understand about off-road compliance – and how getting ahead of requirements can result in a more efficient, compliance friendly fleet. California Air Resources Board’s (CARB) Off-Road Diesel Vehicle (Off-Road) regulation aims to reduce particulate matter (PM) and nitrogen oxide (NOx) emissions from engines over 25 horsepower (HP). The requirements and compliance dates of this regulation varies by a fleet’s size. To determine fleet size, all HP of off-road, mobile [not portable] vehicles under common ownership or control in the fleet must be added up. Small fleets are less than or equal to 2,500 HP. Medium fleets are between 2,501 to 5,000 HP, and large fleets are over 5,000 HP, or are state and federal government fleets.
Idling Limitations Five minute idling limitations and requirements to implement a written policy became effective and enforceable in 2008. Some exceptions to these requirements apply inclusive but not limited to idling of vehicles to accomplish work for which the vehicle was designed and idling to bring a vehicle to operating temperature. CARB doesn’t mandate the language that needs to be included in an idling policy, however has made a guidance document available for fleets.
reporting requirements, fleets are required to submit annual reports via the ‘Responsible Official Affirmation of Reporting (ROAR)’ which certifies that the reported information is accurate and the fleet is in compliance with the regulation. Information that will need to be reported is inclusive of engine hour meter readings for the previous calendar year for vehicles designated low-use, and any changes made to the fleet
Reporting and Labeling Since 2009, all fleets have been required to report their vehicles to CARB via their Diesel Off-Road Online Reporting System (DOORS). Once a fleet reports their vehicles to CARB, a unique engine identification number (EIN) is assigned and the fleet is required to label its vehicles with these EINs within 30 days of receipt. This information is imperative for future compliance in order to clearly determine that a fleet owner receives credit for every effort made to meet or exceed performance requirements. As part of the
since the last report. Medium fleet’s first reporting deadline is March 1, 2016. CARB has posted a training video pursuant to ROAR reporting on their website to support fleets with this endeavor. Performance Requirements Following idling and initial reporting deadlines, medium fleets are required to meet performance requirements by January 1, 2017. By this date, a medium fleet must demonstrate that it has either met the Fleet The Conveyor • 2016 Winter Issue
Average Target or the Best Available Control Technology (BACT) compliance options. Fleets can meet either of the compliance options by repowering vehicles with newer and cleaner engines, retiring older vehicles, adding vehicles that have newer and cleaner engines, designating vehicles as permanent low-use (a vehicle is used less than 200 hours per year), and/or by installing approved diesel particulate filters (DPFs). The fleet average target compliance option implements a fleet index as an indicator of a fleet’s overall emissions rate, and is based on the fleet’s average NOx emissions which are determined by the HP and model year of each engine in the Photo courtesy of George Smith, Holliday Rock Co., Inc.
fleet. If a fleet’s average index is equal to or less than the fleet average target for a given year, the fleet has met performance requirements for that compliance year. The BACT compliance option requires a fleet to meet BACT rates each year. Under this compliance option, medium fleets are required to meet a BACT rate of 8 percent in 2017 and 10 percent between 2018 and 2023. CARB also established restrictions on fleets adding vehicles with older tier engines to their fleet. Effective in 2014, fleets The Conveyor • 2016 Winter Issue
may not add vehicles with Tier 0 engines, and large and medium fleets may not add vehicles with Tier 1 engines. Effective on 2018, large and medium fleets may not add vehicles with a Tier 2 engine to their fleet. The best way to view a fleet’s compliance status with the Off-Road regulation is to report the vehicles into the DOORS. This will not only fulfill the reporting requirements of the regulation, but will provide the fleet with information on compliance status and upcoming requirements. Cost The costs associated with compliance ultimately depend on a fleet’s chosen path to comply. Implementation of funding programs can allow fleets to reduce future compliance costs. Calculating how to stay ahead of the curve to take advantage of funding programs takes time, so you want to do it well before any deadline. These dollars may be available to fleets that are working to stay ahead of the Off-Road regulation, rather than those trying to catch up on the requirements. Being Ahead of the Curve Can Pay The most familiar funding program has been the Carl Moyer Program. This program provides grant monies for the replacement, repower, or upgrade of heavyduty vehicles, off-road vehicles, and locomotives given emissions reductions go beyond regulatory requirements by three years. The primary goal is to obtain
reductions of NOx, a significant contributor to ozone formation. For CARB’s fiscal year 2015-16, approximately $65 million is estimated available based on the programmatic revenues
for medium and small fleets. Because the initial compliance date is not until 2017 for medium fleets and 2019 for small fleets, they have a higher likelihood of accessing these funds before their respective compliance dates. Taking advantage of this funding program not only keeps your fleet ahead of the off-road regulation requirements, it also supports your mission to be a good environmental steward. So given your fleet is eligible, leap at the opportunity to apply for grant money! Stay on the Road to Compliance While the Off-Road regulation requires fleets to decrease their overall emissions, it allows fleets the flexibility to choose how they go about meeting requirements, so development of a compliance strategy is required. Fleets that fall out of compliance with the Off-Road regulation could face fines and penalties. For additional compliance assistance, use your resources at CalCIMA or contact CARB by phone at (877) 59-DOORS or by email at email@example.com.
Caltrans New Materials Testing Policy:
What Does It Mean For Your Company? Written by Charley Rea, Director of Communications & Policy, CalCIMA
Caltrans demonstrates concrete test methods at student fair.
Timely and accurate testing of materials for California highways and bridges is critical to the soundness of the state’s transportation network and efficiency in state expenditures. Unfortunately, there have been instances of delays in receiving failing acceptance test results from Caltrans. When failing acceptance test results are late, it means delays and increased costs for construction, and, even removal of materials after project completion. Industry concern culminated in a May 2014 letter to California State Transportation Agency, Secretary Brian Kelly requesting action on material test turnaround time. This resulted in Caltrans and industry putting together a work group to focus on understanding the causes and developing solutions to testing delays. A key first product of that group was the issuance last year of a Construction Policy Bulletin (CPB #15-1), which revises many Caltrans’ policies related to material testing. In essence, the CPB, titled Acceptance Sampling and Testing of Job-Produced Materials, changed many Caltrans testing procedures, timelines, and reporting from discretionary to mandatory. The CPB has the effect of updating Caltrans’ Construction Manual. 22
Calibration equipment used to test concrete at Caltrans Southern Regional lab in Fontana.
Testing equipment in Caltrans Southern Regional lab in Fontana.
These are among the changes for jobproduced materials:
and corrective actions taken when encountered. • Requires contractors to be notified within 2 business days of receipt from the laboratory of all acceptance test results. • Requires contractors to be notified that test results are available for inspection. • Requires that test results be maintained in project files for accessibility.
• R equires materials testing issues be discussed at preconstruction conferences. • R equires Caltrans’ laboratories to follow Construction Manual procedures for testing. • R equires acceptance test samples be shipped to a laboratory within 1 business day if the project is within 50 miles, or 2 business days if further than 50 miles. • R equires maintenance of chain-ofcustody throughout the process. • R equires use of an updated form CEM-3701, the Test Result Summary. The updated form requires specific information to track samples and timeframes, including the date of sampling, time in the laboratory, and when test results are provided to the contractor. • R equires that test timelines be monitored against an updated Table 6-1.2, which is the Time Required for Materials Acceptance Tests. This table was updated and re-issued with new timelines, most requiring test results within 5-7 business days back to the contractor. • R equires that any deficiencies be tracked
Although these new requirements were issued to Caltrans districts last spring, it can often take a while for new policies to be fully implemented at the project level. Industry members can assist by ensuring that district and project engineers, material engineers, and other personnel know about the new requirements, the new forms, and the new timelines. If industry members learn of instances where the new requirements are not being followed the issue should be elevated at the project level through the partnering process or dispute resolution ladder. If the issue remains unresolved, they may notify CalCIMA or Caltrans management. “Timely reporting of material test results is important to both Caltrans and industry to ensure we build roads and bridges of the specified quality and ensure their long-term performance. Constructing The Conveyor • 2016 Winter Issue
THE CONNECTED QUARRY
Caltrans technicians splitting aggregate samples at the Southern Regional Laboratory in Fontana.
Daily Materials Processing Report Daily Materials Processing Report Report Period
Report Period Yesterday Site Winstones Hunua Site ABC Co. Ltd. Extraction Extraction Extraction
2,654 9,527 Excavator Excavator 2 Dave's1, Loader
2,275 12,532 2,275 10,119 Belt 1 Jordy's Loader
these facilities in an efficient manner is to everyone’s benefit and will help maximize use of limited transportation funding on an aging infrastructure. The changes included in CPB 15-1 are consistent with the Department’s mission, vision, goals and values,” said Rachel Falsetti, Chief, Division of Construction, Caltrans. “We have appreciated Caltrans’ prompt response to addressing test turnaround time through the CPB. We need to be vigilant to ensure it is adhered to, while continuing to work in other areas to improve the accuracy and timeliness of test results,” said Ed Luce, Area Operations Manager for Vulcan Materials. The CPB can be found here - http:// www.dot.ca.gov/hq/construc/manual2001/ CPBindex.HTM
Loader 1,Loader Loader 2 Jordy's
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Scott Taylor Concrete testing instruction at a American Concrete Institute training class in northern California.
The Conveyor • 2016 Winter Issue
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Published on Feb 22, 2016
The California Construction & Industrial Materials Association's (CalCIMA) publication proudly serving the aggregate, ready mix concrete and...