By Julia Lancaster
Two veteran businesses in Rockbridge County, Charles W. Barger & Son and Construction Materials Group, previously split the market for delivering concrete to construction projects in the area.
Both businesses now feel the financial impact of a third player.
Barger and Son has been a closely held company since 1930, producing aggregate from a limestone quarry operation just east of Lexington on U.S. Highway 60.
Harrisonburg-based Construction Materials Group, bought in 1990 by Conmat Group, a ready-mixed concrete producer with eight locations, also competes for customers in Rockbridge County.
Amanda’s Redi Mix LLC is the newest concrete company in the area. After starting in 2010 with one plant in Covington, Amanda’s added a second location last year in Buena Vista.
“We knew going into it that there were two other competitors, but we went there because we had existing customers and from a logistical standpoint it made sense,” said Justin Patton, the owner of Amanda’s Redi Mix.
Amanda’s second plant is on Green Forest Avenue in Buena Vista, on land bought from Fitzgerald Lumber & Log Co., Inc.
The concrete company has successfully infiltrated the regional market, driving competitors’ prices down 20 percent.
“We have been feeling this,” said Charles W. Barger, III, an owner and current president of Barger and Son, a local quarrying company. “We are off several percent now.”
Barger and Son was able to vertically integrate its concrete sector because it owns both sand and crushed stone plants, the most expensive components of concrete.
“We can operate for less, but they are selling concrete for less than we are. It just doesn’t add up,” said Barger.
Construction Materials Group supplies its own materials for concrete production as well, but Amanda’s does not. Amanda’s Redi Mix hauls sand and rock from Stuarts Draft in Augusta County.
“We have seen these kinds of things happen before, but in the meantime it is wreaking havoc in the market,” said Barger. “It’s great for people out there who want to buy some concrete, but it’s really not much fun for us.”
The low concrete prices are squeezing Barger’s profit margins, further contributing to the pressure Barger and Son has experienced since the 2008-2009 recession.
Before 2008, Barger and Son had 50 employees. But the business has suffered a 40 percent decline in revenues and is much leaner today, with 25 employees.
According to the Virginia Department of Mines and Minerals, as of 2012, Barger and Son used only 53 of the 98 acres it is permitted to quarry. The company has access to the materials it needs, but Barger remains hesitant to invest in the future.
“Companies like ourselves are flush with cash, and they are sitting on the sidelines waiting for a signal,” Barger said. “Right now we are sitting and waiting for the opportune moment.”
The declining prices in the local concrete market heighten Barger’s hopes about new Virginia tax legislation, which took effect in July. Last winter, the General Assembly passed a bill that would eliminate the retail tax on gasoline but add a wholesale tax. In addition, legislators increased the state sales tax from 5 percent to 5.3 percent, with the new revenue supporting road construction. The Virginia Transportation Construction Alliance, a group to which Barger belongs, supported the tax change.
Barger anticipates the tax changes will support the transportation and infrastructure development of Virginia. These projects—such as the northbound passing lane on Interstate 81 in Rockbridge County—strengthen the construction sector of his company.
Increased construction projects would lighten the burden of the declining concrete prices for Barger and Son.