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“Producers will first move in the smaller portable
plants (in the 150- to 225-ton-per-hour range) for the utility paving like
crossovers and shoulder strengthening and then move in the larger portables
for the high-production mainline paving,” says Mark Spicer, director of
plant sales for Terex Roadbuilding’s Asphalt Plant Group. This way the
producer does not tie up its high-production plant with low-volume paving.
Companies operating an asphalt plant that supplies
mix to multiple customers are looking at these smaller plants to improve
efficiencies. These producers often find themselves holding their own trucks
in line to supply mix to their external customers first. When a mix design
change is made for a customer, sometimes a mix QC check must be conducted,
further sacrificing potential production tonnages. These established
producers are buying the super portable plants so they can dedicate one
plant to a single project, maximizing production of a single mix design.
Producers also are using these smaller plants to
expand beyond the highly competitive metropolitan markets. “It’s in the
rural areas where trucking costs have made it cost-prohibitive to profitably
pave the lower tonnage jobs,” explains David Emerson, general manager of the
Terex Roadbuilding Asphalt Plant Group. “With these super portable plants,
established producers can profitably move close to a small job, lowering
trucking costs and overall expenses.”
But it’s not just the established producers who can
profit from these asphalt plants in the 150- to 225-ton-per-hour range.
Paving contractors currently buying asphalt for their paving jobs can be
successful with the super portable plants as well. By turning producer,
paving contractors can significantly increase operating efficiencies, gain
more control over the supply, and have a product that can be sold to other
paving contractors.
These portable plants come at a price and offer the
flexibility that makes it easier than ever to get into asphalt production.
Contractor turned producer
At first glance, the prospect of making the move
from asphalt contractor to producer can seem daunting. There are a number of
steps that must be followed, which may take owners outside of their comfort
zone and expertise. But for contractors capable of consistently producing as
little as 50,000 tons per year — and in certain markets even less than
35,000 tons — the rewards will significantly outweigh the risks.
Several considerations must be weighed even before
looking at an asphalt plant. Contractors have to find a main property
location and consider the areas where the plant may operate. This will
divulge critical operational factors like environmental, land-use, and
transport restrictions that have to be met.
If not already established through the paving
business, the contractor will have to set up trucking provisions to
transport the material from plant to jobsite. Additionally, since the
contractor has the ability to produce asphalt, it should line up other
contractors to help boost the bottom line.
Ensuring the availability of a steady supply of
aggregate is one of the most critical, but often overlooked steps when
buying the first asphalt plant. “In many markets, most of the aggregate
supplies will be tied up by the larger asphalt producers,” explains Emerson.
“Contractors just starting to produce asphalt have to make sure they have a
reliable, nearby aggregate source that won’t dry up during peak paving
season.”
Finally, plant permitting is probably the most
well-known step required in locating a plant. It can be a long and arduous
process with many twists and turns, which lasts for 6 to 12 months or
possibly longer.
However, Spicer offers this solace. “Since the plant
is on wheels, most of the time, it is easier to get a portable plant
permitted.” Once a permit is granted for the main location, depending on the
state, obtaining subsequent permits for the different temporary plant
operating locations is much easier, if required at all.
From breakeven to profits
For many contractors willing to go through the
process, one of the first questions will be “what is my breakeven point?”
This is important information a contactor will need for the leasing company.
Unfortunately, this number is as varied as the different market conditions
that exist throughout the United States. One thing for certain, however, the
breakeven point is not as high as it was.
Traditional portable plants in the 300-ton-per-hour
range cost approximately $1.8 to $2 million for plant components and
controls. Furthermore, these portable plants can consist of up to 15 loads
to move, requiring approximately a week to relocate and calibrate for
production. This limits the project size for which a contractor will move
the plant. According to Spicer, “depending on market conditions, the minimum
project size for profitably moving these plants is in the 30,000 ton range.”
Today’s super portable counterflow plants, which are
equipped to make state spec mixes, cost approximately $900,000 to $1.05
million, about half the cost of traditional portables. The design enables
base plants to be moved in as few as four loads, so plants can be quickly
relocated for jobs requiring less than 10,000 tons of asphalt.
Emerson offers an example of a contractor paving in
a major metropolitan market in the South where consolidation among the major
asphalt suppliers drove up the price of asphalt. “As a result of the
consolidation, the price of asphalt nearly doubled, and the contractor was
paying a $30-per-ton premium,” says Emerson.
Given these market conditions and a $1-million plant
cost, this contractor could breakeven after producing slightly less than
34,000 tons of asphalt. The plant could potentially be paid off within a
year.
Although these market conditions do exist, it is
only one extreme example, and it takes into account only the cost of the
asphalt plant. Spicer offers a more conservative scenario that covers a more
common situation that a paving contractor would face. “A paving contractor
can pay a hefty premium to purchase asphalt from a producer,” comments
Spicer. “To purchase a plant, the contractor would also need about 2.5 acres
of properly zoned land. Between the cost of the plant and land, the company
will pay about $1.5 million.”
Assuming this cost for land and the plant and using
a relatively low $5-per-ton asphalt premium, a paving contactor can still
repay its initial expenditure within five years. The company would have to
produce 60,000 tons of asphalt annually, either for its own use or through a
combination of internal and external customer sales.
“An asphalt plant runs an average of 180 days per
year,” adds Spicer. This being the case, that plant would have to produce,
on average, 330 tons per operating day for a five-year return on investment.
By securing financing through a lender experienced
in leasing asphalt plants, the contractor will have a number of options
available to match plant payback to organizational needs. “Terex Financial
Services has flexible plans that can lower the lease payment in the
beginning, when the producer is getting established,” says Emerson. The
lease payments increase during the time when the producer anticipates making
more money.
The intangibles
When analyzing breakeven points and return on
investment, the hard costs for the plant and land tell most of the story.
However, there are many intangible benefits of owning an asphalt plant that
should also be considered.
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| Counterflow drum technology runs cleaner
and may be easier to permit than parallel flow asphalt plants. |
First and foremost is efficiency. No longer will the
paving contractor have trucks waiting for asphalt in long lines during the
height of the paving season. Also, paving crews won’t have to wait for
trucks delayed at the plant or in traffic on long commutes, since the plant
can be located closer to the job. This will allow a contractor to lay more
asphalt per day and complete more projects per year.
Trucking costs will be significantly lowered. With
shorter haul distances, contractors can use fewer trucks to deliver more
asphalt to the site. “If a truck or paving crew has to wait for asphalt,
that’s money out the window,” explains Spicer. “Contractors will experience
at least a 50% better truck utilization through producing their own
asphalt.” With average trucking costs of $60 to $70 per hour, the typical
contractor can save up to $1,500 per day on trucking costs alone.
Paving contractors can position their companies for
growth within the market or expansion to other market areas by taking
control of the asphalt supply. Experts caution contractors not only to look
at current projects but also for growth opportunities when purchasing a
plant.
They advise contractors to buy a plant with a
controls package that is PLC-based, so it is easily expandable if plant
components are added in the future. Also, make sure the package offers the
ability to make any state spec mix design, so as not to limit the types of
projects for which the plant can supply mix.
A final tip the experts give, regardless of the type
purchased, is to buy a plant that can be permitted in the markets it will
operate. Environmental regulations will vary, so a plant may be able to
operate in one market but not meet regulations in another. And make sure
that the plant can meet all regulations while running RAP in the mix
designs.
“There are certain states and Canadian provinces
where it’s nearly impossible to permit certain types of plant designs
because of emissions,” says Spicer. “It’s frustrating and costly for a
producer to have a job opportunity denied because the company cannot get the
plant permitted.”
Counterflow
Technology Migrates to Super Portables
 Responding
to changing market influences and a desire for plants to run cleaner than
the staple technology of the time, asphalt plant manufacturers developed
counterflow drum mixer plants nearly two decades ago. Since then, various
forms of inside-the-drum and separate drying and mixing drum counterflow
technologies have been available for high production stationary and portable
plants in the 300-plus ton-per-hour ranges.
Until recently, however, this technology has not
been readily available for the super portable asphalt plants. More commonly,
the low-load plants in the 150-ton-per-hour production range were available
in parallel flow designs.
Mark Spicer, director of asphalt plant sales for
Terex
Roadbuilding’s Asphalt Plant Group, patent owner of the first-ever
developed counterflow technology from Standard Havens, explains the
migration of the technology from larger to smaller plant designs as a market
shift. “The market has been moving towards these lower production plants for
a few years,” explains Spicer. “A decade ago, the primary portable market
was the 300-plus ton-per-hour plants, but now the super portable market is
increasing.”
Counterflow plants differ from other technologies in
the heating and mixing of the aggregate. With counterflow inside-the-drum
mixers, aggregate enters at one end of the drum, while the burner is
positioned at the opposite end. The aggregate is heated, reducing moisture
content, as it moves towards the flame. Liquid asphalt injection and/or RAP
mixing occur behind the flame, protected from the high burner temperatures.
Any hydrocarbons resulting from the mixing process
are pulled through the flame and are incinerated prior to exiting the drum.
This allows the counterflow drum plant to run with fewer emissions.
Additionally, the temperature of the air exiting the drum is lower than that
of the asphalt mix exiting the opposite end. “This puts less stress on the
baghouse and improves bag service life,” says Joe Musil, senior engineering
fellow for Terex Roadbuilding.
Some hurdles had to be overcome by asphalt plant
manufacturers when designing the super portable counterflow plants. Various
technology patents require the use of separate drying and mixing drums,
which adds to the number of loads and set-up/tear-down complexity and time.
Single drying and mixing drums can be longer and heavier, so transport
lengths and weights had to be carefully examined during the design process.
However, the growing complexity of mix designs,
tougher emissions standards, and stringent quality demands of
performance-based contracts are changing the way producers are mixing and
contractors are laying asphalt. With the added flexibility and cleaner air
quality offered by counterflow drums, the market continues to evolve to
where these super portable plants are able make any mix design that the
higher production plants can, just wrapped in a smaller package. |
