Asphalt ROI: Part 5 of a 6-Part Series
Market size, location, long-term expenses and features all affect the ROI you might get from a new asphalt plant. But, just how fast might you see that return? ROI scenarios vary from one extreme to the other. While some asphalt producers will produce enough to cover the plant cost within a year, it may take others several years.
Remember, moving your paving company into asphalt production will give you greater efficiency controlling your own asphalt supply. Add in the fact that your company is now producing a product to sell, and the ROI typically will occur quickly. Every plant will be different, but the majority of new asphalt plants will realize a return in just a few years.
Most contractors who are able to consistently produce around 50,000 tons per year, or even less for some, will find that the benefits will quickly outweigh the costs. A number of money-saving factors contribute to bring about a relatively fast ROI.
For instance, the excessive downtime truck drivers and paving crews experience while waiting for the hot mix is costly. Owning an asphalt plant eliminates the waiting. Trucks will no longer have to wait in long lines, which are especially long during peak paving months. The paving crews won’t be held up waiting for the truck to return with hot mix. Contractors will be able to lay more asphalt faster, allowing them to complete more projects faster.
Less transport time will also contribute to increased efficiency in some cases. Rather than having to commute to a competitor’s plant, a contractor with a portable plant can place it where it’s most convenient for him. Shorter hauls also mean fewer trucks will be needed to get a sufficient amount of asphalt to the crew. The combination of these factors usually results in at least 50-percent better truck utilization for a paving contractor who enters the production market. That can easily add up to $1,500 per day when figuring average truck costs of $70 to $75 per hour.
In some cases, asphalt suppliers in a particular area will consolidate. This can result in a cost increase of nearly twice the original price. A paving contractor who produces his own asphalt will no longer be forced to comply with competitors’ asphalt prices or have to accommodate to their schedules.
The benefits are measurable and clearly show how much productivity can increase and costs can decrease by owning and operating an asphalt plant.