For some sealcoating contractors, 2004 was a year of frustration marked by unexpected difficulty in obtaining sealer and even mid-season price increases. But despite the fact that many of the factors contributing to 2004 frustrations will still exist, the sealcoating industry expects a more stable industry this year.
"I do think 2005 will be a better year than 2004," says Drew Bachman, sales manager, North American Operations for Koppers Inc., a supplier of RT-12 to the sealer industry. "Now, to what degree is hard to say because there are so many factors involved."
In fact, it was likely a convergence of factors in 2004 that lead to a "perfect storm" in the sealcoating industry resulting in delivery delays, price increases, and even some temporary shortages. Yet some contractors didn't even know it was raining.
What sealcoating contractors experienced depended on their region, the amount of sealer they contracted for, their relationship with their sealer supplier, and their supplier's relationship with its RT-12 supplier, among other things. In short, the sealcoating industry experienced a few months of instability unlike anything it had seen since the 1980s.
The closing of two crude coal tar distillation facilities, mechanical problems at some production facilities, logistical problems transporting product, fuel and energy surcharges, a fast-growing economy, and even reduced aluminum imports all contributed to the shake up.
But the long-term impact of 2004 varies depending on who you talk with. Some think the impact is likely to be minimal, a small bump in what for the most part for years has been a smooth and stable industry. Others see 2004 as a demarcation point that will force the industry, its contractors, and their suppliers to take a hard look at themselves and retool their operations to better protect their business.
"2003 was not an issue but 2004 was a very difficult year and it wasn't just for us," says John Craun, vice president and general manager for carbon products, Reilly Industries, an RT-12 supplier. "My sense is that things were very tight on the supply side industry-wide. I don't see this kind of year being repeated, but it does teach us some things about how the industry might be changing as it moves forward. My sense is 2005 will be a year in which the producers of coal tar sealer and RT-12 work much more closely on issues of supply surety and logistics."
Not surprisingly, raw material suppliers and sealer producers become skittish when it comes to discussing pricing and production issues, but without discussing specific figures they do offer some insights into what happened and what contractors can expect this year. And virtually everyone agrees contractors can expect some increase in sealer pricing this year — but probably nothing more than a "typical" price increase, which some think is actually overdue.
A different industry
The advent of sealcoating began long before the first issue of Pavement was published 20 years ago. In fact most industry experts point to the early 1950s as the first time the industry attempted to produce a product designed to protect and help extend the life of existing asphalt pavements. That original sealer material is a distant cousin of the materials available to contractors today, which must meet a variety of governmental specifications. Industry associations, notably the Pavement Coating Technology Center and the Asphalt Sealcoat Manufacturers Association, have gotten into the act as well, testing mix designs and application procedures to ensure their product is used as effectively as possible.
So today's sealcoating material, whether based on asphalt or refined coal tar, is produced within fairly strict guidelines that include a variety of secret fillers and performance-enhancing additives based on each sealer producers own proprietary sealer recipe. But the raw material the sealer producers use — RT-12 for refined coal tar sealers or asphalt emulsion for asphalt-based sealers — is similar because it is purchased from a narrow list of suppliers. And it is this raw material, and the material from which it, in turn, is produced, that has the greatest impact on the sealer the contractor buys.