The road to just about everywhere is paved with Vulcan's materials. The company is one of the largest producers of construction aggregates in the US. Vulcan produces and distributes aggregates (crushed stone, gravel, and sand), asphalt mix, ready-mixed concrete, and cement at more than 300 facilities in more than 20 states, as well as the Bahamas and Mexico. Its aggregates are primarily used to build and maintain infrastructure such as highways, bridges, railways, airports, utilities, and other public works projects; they're also used in residential, commercial, and industrial construction. Aggregates account for about two-thirds of Vulcan's sales.
In late 2011 rival Martin Marietta Materials made a hostile bid for Vulcan, which rejected the $4.8 billion stock offer. Vulcan's management said the attempt undervalued the company and was timed to come in at a low point in the cyclical construction business. A Delaware chancery court later placed a four-month moratorium on Martin Marietta taking steps to acquire the company.
Vulcan's strategy has involved building its aggregate reserves in metropolitan areas where growth spurs demand for construction materials. The Southeast, Texas, and California are its primary markets. The company has acquired more than 280 quarries since 1991 and has nearly 15 billion tons of proved or probable aggregate reserves.
Beginning in 2008, the economic downturn led to a housing crash in states such as Florida and California and slowed commercial construction activity. The dwindling demand impacted Vulcan's sales volumes and earnings. As a result the company focused on controlling costs and reduced its workforce in 2008, 2009, and 2011. To raise capital, the company raised price points on some of its products and is divesting assets in non-strategic markets. The company is also deemphasizing the residential construction market, which typically utilizes fewer aggregates than roads and other infrastructure projects.
The measures helped Vulcan return to profitability in 2011. The decline in demand for the company's products leveled off, as well, as the economy showed signs of recovery. Meanwhile, stimulus spending by the federal government on infrastructure and highway projects helped Vulcan's aggregates sales. Vulcan expects that the multi-year nature of highway and infrastructure projects will continue to offset the downturn in construction and drive recovery.
State Farm Mutual Automobile Insurance owns about 10% of Vulcan Materials, which traces its roots to 1909 and the founding of Birmingham Slag Company. It went public and adopted its current name in 1956. – less