The ‘CLOSE TO MARKET’ Mantra

Dedicated to Digging for Truth, Blasting the Myths, and Etching Reality in Stone.

We’re calling b*!!$@!t.

A recent news release from the Aikensville pit applicant, Capital Paving Inc. stated:

With already constrained government budgets and the continued loss of good quality, close to market aggregate reserves, it will be extremely difficult and costly to Ontario taxpayers to repair the province’s aging infrastructure if aggregate is required to be sourced from farther away”

 According to the State of the Aggregate Resources of Ontario Study (SAROS):

Historically, the most common reason for incorporating “close to market” policies has been to ensure aggregate materials were available to the areas of need as economically as possible.”

 The “close to market” mantra also appears in the Provincial Policy Statement (PPS) and Green Belt Act.

 But what exactly are the implications? …and…Does it really matter?

 In a conversation with a person in the Ministry of Transport a few years back a curious citizen asked a question. They wanted to know what the Ministry, or should we say the taxpayers, were paying for gravel for our road construction projects.

The response was that the questioner didn’t know what he was talking about.

The Ministry rep proceeded to explain that they do not get a breakdown of costs for a job, but just a quote to complete the entire project.

 The lowest price usually wins the bid.

 So, the Ministry gives no consideration as to where the aggregate comes from, whether sourced near or far!

 When bidding on a project, a Contractor considers many other variables that can produce a higher, or conversely, a lower quote.

 Variables such as:

Are the workers unionized?

What type of equipment is required?

Does the proposed project fit with other jobs underway?

What profit margin is the operator willing to work with?

Whether the contractor owns his own pit to pull resources from?

And so on….

 So, in essence, we could have aggregate material for a ministry job traveling past competing pits that are closer to the project, because the supplying pit operator has decided to provide a better price, and accept lower profits than a “close to market” operator.

 The aggregate industry pushes the “close to market” agenda.

But do they have any evidence that it actually benefits the taxpayer who pays?

Does it really save money … or just pad profits?

Does it reduce air pollution?

Is there any independent study showing the savings from using “close to market” materials?
Is there an Industry study showing that “close to market” is being utilized advantageously?

Would a contractor supply close to market materials if they were more expensive than materials he could purchase cheaper at a pit further away?

 Unless the Ministry of Transportation actually enforces “close to market” usage, the entire concept becomes a joke!

 

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So, should the Ministry mandate and legally enforce “close to market” usage?

 That would create quite a conundrum!

 By legally mandating “close to market” usage, the Ministry would be reducing competition by forcing the purchase of aggregate product from a smaller number of producers. There may even be a situation where only one operator in an area produces the required product; but being “close to market” they would be the only viable source.

Which places that operator in a monopoly situation, driving the cost of product up, not down!

 The “close to market mantra” does nothing but provide a reason for Pits and Quarries to open their operations ever closer to rural residential areas of Ontario.

 Who benefits the most?

The pit and quarry operators who can push the concept that we require the product from the backyards of Ontarians with rural residences.

 Who loses?

Any homeowner who is close enough to the pit or quarry to have their health and value of their home jeopardized.

 The “close to market” mantra may sound good, but what we really need are politicians and bureaucrats who make decisions that are sound, based on studies, evidence and fact.

 Not B#$$&%$t.

 

 

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3 thoughts on “The ‘CLOSE TO MARKET’ Mantra

  1. Reading your posts tend to leave me a bit confused. I never really know where you stand.
    Do you want more state control or less? More market or less? Is your main concern the corrupting power of politics or the powerlessness of society that is getting subjugated to that power?
    As for the economics:
    The fact that a particular decision has many elements, does not make any of them irrelevant. They all weigh in to some extent.
    The heavier the stuff you are selling is, the more the distance you have to haul it factors into its price.
    Cost matters.

    1. Our posts are submitted by several authors. Generally we want less state control but there are situations where the state, through agencies such as the justice system, needs to exercise control over corruption and abuse of state power (self control?). The more power politicians have the more they are susceptible to corruption and influence peddling. As for economics, yes cost matters, which is why we advocate for Full Cost Accounting. Haulage cost is only one of many costs that pertain to the aggregate industry and heavy bulk goods are most economically transported by rail and water, not trucks.
      Thank you for your input!
      W. Stone

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