by William M. Kelly
Chapter 8: The Economic Impact of the New York Mining and Construction Materials Industry
The NYSGS contributes to the annual U. S. Geological Survey Minerals Yearbook publication series, specifically, Volume II, Domestic. Consequently, the NYSGS is informed of the conclusions of the USGS regarding the value of the mineral resources extracted from New York each year. This and occasional informal estimates of the value of New York’s mineral production are the only source of definitive information about the economic contribution to the state’s economy by the mineral-production and -consumptive industries. The State of New York does not now routinely collect data on mineral production, value, or use within its borders, nor has it done so since the early to mid-twentieth century. While economic impact studies of the mineral industry and related activities are common (if not annual publications) in such western states as Alaska, Arizona, California, and Nevada, such investigations are rare in the east. Only one eastern state, Florida, has recently published even a partial study of the economic impact of its mineral industry. No such study has ever been undertaken for a state in the northeast in modern times.
In order to gain a better understanding of the mineral value and volume produced, labor income, employment, and fiscal impact in the mineral and related industries, the NYSGS entered into a contractual relationship with the Center for Governmental Research in Rochester, New York, to design and perform such an investigation. Drs. Rochelle L. Ruffer and Kent Gardner of the Center for Governmental Research (CGR) were the project directors. In addition to simply examining the mining industry, the dominant users of New York’s mineral products were included in the investigation. These are the manufactures of portland cement, ready mix concrete, and hot mix asphalt, which comprise the construction material industries. Drs. Ruffer and Gardner worked with NYSGS and other state agency staff and members of the industries of interest to determine the combined economic impact of New York’s mining and construction materials industries.
By an online and paper survey, nearly 200 New York companies involved in mining; manufacture of cement, ready mix concrete, and hot mix asphalt provided detailed data to CGR for analysis. These data included number of operations, total annual production, total sales with separate figures for sales to public works projects, production costs, number of employees, and annual payroll for full-time and part-time employees. Using a standard economic impact model the CGR extrapolated the available data to produce a report that encompassed the entire industry. The text of that report by R. L. Ruffer and K. Gardener is reproduced in its entirety in Appendix 1.
The mining industry in New York, as reported for economic impact purposes, is comprised of only those industries extant at this writing. The mined commodities are: cement, clay, crushed stone, dimension stone, garnet, gypsum, industrial sand, peat, salt, sand and gravel, talc, till, topsoil, wollastonite, and zinc/lead (sphalerite/galena). The crushed stone, cement, and sand and gravel industries are by far the dominant producers of mineral value and volume in New York. The primary users of the output of these three industries are the hot mixed asphalt and ready mixed concrete construction industries. It is these aggregated mining and construction industries that were queried to determine the economic impact of New York’s mining and construction materials industry. Close-up determination of the impact of these industries on New York’s economy required consideration of data such as production, employment, and payroll. Both the direct and indirect (spillover) economic impacts were included. Conclusions were determined for total jobs, wages, sales, personal income, and corporate taxes as a range with a low and high estimate.
The Center for Governmental Research (CGR) reported that sales of the mining and construction materials industry were between $3.3 and $3.5 billion in 2007. The industries paid $1.2 to $1.3 billion in wages and supported 28,000 to 30,000 jobs in New York. The industries contributed $87 million to $101 million in fiscal payments to New York. It must be noted that this is a minimum figure. Data for additional fees and taxes paid by members of the industries were not recoverable. For example, payments for motor fuel tax paid by the mining industry are captured but it is not possible to capture the expenditures for motor fuel tax by the many industries that support mining. Consequently, the value reported for this category is low. However, it is demonstrated that the economic impact to the economy of New York is at least $4.6 and $4.9 billion annually.
The commodities produced by the mining and construction materials industries are fundamental to the lifestyle and well-being of all residents of New York. The materials are used in construction of the state’s infrastructure, housing and commercial buildings, ice and snow control, and other uses. Availability of the commodities depends on the existence of a mine or processing facility within an economically feasible distance of the market for the commodity. As Figures 1, 27, and 30 show, mines, hot mix asphalt plants, and ready mix concrete plants are currently widely and relatively uniformly distributed in New York. However, there are societal pressures resistant to the establishment of new mines and manufacturing facilities or the renewal of permits for existing operations in large parts of New York. In order to investigate the economic impact of either not establishing new mines as resources at existing mines that are exhausted, or the denial of mining permit renewals at currently operating mines, CGR modeled the economic impact of the loss of mines on one specific sector of New York’s infrastructure, that is, the New York State Thruway. Transportation costs are a significant portion of the delivered priced of crushed stone used in highway construction. Sources of crushed stone must be close (approximately 30 miles) to point of use to avoid excessive cost of haulage. CGR compiled the locations of all mines used as sources of material by the New York State Thruway and then randomly removed one-quarter and one-half of the mines. Costs were then recalculated for material transportation, based on current fuel prices. The analysis demonstrated that if 25 percent of mines were not available to supply crushed stone to Thruway construction projects, transportation costs would increase by 42 percent or $1.6 million annually. If 50 percent of mines are unavailable, costs would increase by 52 percent or $2.2 million annually. This analysis is illustrative but does not address the costs on all construction projects statewide. For example, no attempt was made to estimate the increase in the cost of raw materials due to the decreased availability of those materials because of the lack of mining capacity. However, this analysis does indicate the magnitude of increased cost in one important aspect of the availability and use of construction materials. Similar costs would be imposed on any construction projects operating under similar constraints on availability of resources.
Location of mines of all types in New York. (Source: NYS Department of Environmental Conservation, Division of Mineral Resources.)
Location of hot mix asphalt plants that serve New York. Note that some are located outside state borders but still serve the New York market. (Data: New York State Department of Transportation.)
Location of ready mix concrete plants in New York. Note that this map only shows facilities with NYS Department of Transportation approval. Some plants are located outside New York boundaries but feed into the New York market.