NAPA in-person meetings resumed this week after an 18-month COVID hiatus. XBE is an active NAPA member and had multiple team members in attendance. We sponsored the opening night reception, participated in multiple committees, and had a table in the hallway with the most popular swag at the event (nice pens and Binaca spray).
The event was in Nashville, so there are plenty of fun stories to tell, but this newsletter is going to be all business.
Here are the 5 most important takeaways that we believe might be interesting to the XBE community:
1. The expected impact of the emerging "infrastructure bills" on road construction is $110 Billion over 5 years.
Jay Hansen, Executive Vice President for Advocacy at NAPA, did an excellent (and enthusiastic) job reviewing the infrastructure bills and what they mean to our industry. There were many interesting and helpful details in his presentation (see link below), but I found it particularly helpful to see the breakdown of where the funding increase will go.
I encourage you to download and read his full presentation.
2. The impact of proposed "Buy America" changes would be very significant to the industry, but there is a pathway to exclusion that has momentum.
Jay also provided a short history lesson on "Buy America" and explained its likely impact on the asphalt industry if passed. According to estimates that he cited, 10% of liquid asphalt cement used in the US is imported (mostly Canada). The percentage is much higher along the east coast where there is only one refinery of note (in New Jersey). While there is progress being made to receive an exclusion on the requirement, this is an area worth watching closely.
More information is available in his full presentation (same as linked above).
3. The industry's demand forecast is quite good with input cost inflation providing some short-term headwinds.
George Reddin, Managing Director of FMi Capital Advisors, provided an excellent presentation about the outlook for US construction generally and construction materials specifically. Of course, we all know how much stock to put in forecasts, but the statistics were solid and up-to-date, and the rationale was sound. In particular, I found the chart about input cost inflation vs. bid prices to be notable - it's important not to get caught up too much in the short-term ups and downs, but they're real enough to demand attention. Finally, he included some good information about M&A activity in the space that's worth reading.
You can download his full presentation here.
4. Reminder that there are readily implementable technologies available (that might not be in use!) that will lower the carbon footprint of asphalt manufacturing.
There was a great document presented during the Committee for Engineering, Application & Practice session. It’s an analysis of the cost/benefit of various techniques for reducing asphalt’s carbon footprint (mainly in manufacturing). All of the items are worth review, but I was particularly interested in stockpile moisture mitigation, reduced production mixture temperatures, and cold and in-place recycling as opportunities that might be under-leveraged.
You can download the matrix document here.
5. You can manage safety leadership by following a careful roadmap.
I had a great conversation with Jeremy Ramberg, Director of Shared Services of Lehman-Roberts, about their safety program. He shared with me a great document (linked below) that summarizes their roadmap to improving safety culture. While it all looked familiar, I was impressed with the details. In particular, check out the facets of their leading indicators, their focus on managing the leadership metrics first, and the use of crew observations to pull in management.
Of course, the real highlight of the event was seeing so many XBE community members. As we grow, the value of the network grows even faster. We love to see it!
Founder & CEO, XBE