Construction Aggregates (Sand, Gravel, and Crushed Stone) and Silica Sands in the Economy of Illinois
Subhash Bhagwat, Principal Economist for the Illinois State Geological Survey (ISGS), recently completed a report commissioned by the ISGS titled “Construction Aggregates and Silica Sands in the Economy of Illinois.” Below are the results of this groundbreaking study.
The nonfuel minerals industry in Illinois primarily produces crushed stone, sand and gravel, and silica sands. Historically, it has been a growing industry in the state. The primary market for crushed stone and sand and gravel is the construction industry, whereas silica sand has traditionally been used for the manufacture of glass and ceramics as well as in foundries. In recent years, specialty silica sand has found a growth market in the oil and gas industry to enhance production by pumping sand (termed “frac sands”) and water along with some chemicals under pressure to fracture geologic formations. However, the severe economic crisis of 2008 has resulted in a dramatic decline in the construction industry. Crushed stone production declined from 78 million metric tons in 2007 to 45 million metric tons in 2013; sand and gravel production likewise declined from 32 to 18 million metric tons; and portland cement production fell by two thirds. At the same time, both the production and price of silica sand increased significantly because of the rising demand for frac sand. Consequently, despite the declining value of traditional aggregates caused by reduced production, the total value of all aggregates in 2013 was about $1.1 billion, as compared with $1.2 billion in 2007.
The aggregate and silica sand industry plays a major role in the state’s economy. As the major consumer of construction aggregates and the employer of about 225,000 persons, the construction industry, which contributes almost 4% to the state’s gross economic product, benefits from the production of aggregates in the state. Although construction companies can, in theory, purchase aggregates from out of state, the high transportation costs in comparison with the price of the aggregates make it economically advantageous to purchase aggregates locally.
In addition to highlighting the value of aggregates produced and their role in the state’s economy as the input materials for downstream aggregate consumers, this first of its kind study provides a quantitative account of the economic multiplier effects of the aggregate and silica sand industry on jobs and earnings creation in Illinois. The U.S. Bureau of Economic Analysis (BEA) has published the latest estimates of multipliers for the year 2010, based on industry-by-industry data collection and the year 2002 as the reference year. This study finds, based on BEA data, that almost 4,900 persons are currently employed by aggregate producers and the businesses that directly supply goods or services to them. Their annual payroll of $280 million generates enough purchasing power to create between 8,800 and 9,800 additional jobs. The BEA data also indicate that an additional annual payroll of about $210 million was created in the economy of Illinois in 2010. Projection to 2013 indicates that the additional payroll creation may be as high as $410 million.