4 minute read
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One Thing At A Time
These are truly unprecedented times. Not only are interest rates on their way back up again (so says my mortgage bank), it seems the swollen price of everything else has put a bruise on the balance sheets of everyone's budgets. Material prices remain high despite lumber falling 23% in June. For JONATHAN KOZLOWSKI, context, according to an analysis of the U.S. Bureau
EDITOR JKOZLOWSKI@ of Labor Statistics Producer Price Index by the ACBUSINESSMEDIA.COM National Association of Home Builders, this volatility has "added $14,345 to the price of a new single-family home and $5,511 to the market value of an average new multifamily home."
According to the Associated Builders and Contractors analysis of the same data, non-residential construction input prices have increased by 1.8%. for June. This marks a 20% increase from a year ago. But there's hope, albeit a little, with ABC's Chief Economist Anirban Basu stating that this might be marking what he called peak inflation.
I recently spoke with James Baty II, executive director of the Concrete Foundations Association. Despite this small step forward, he called this "the most challenging market since 2007." The combination of unit price issues, volume supply, and the threat of a recession may have softened, but unexpected impacts like the radical loss of labor in every market due to COVID have made the construction industry tough day in, and day out.
“[Concrete contractors] are constantly facing this issue of ramping up volume and price adjustments because the concrete industry was delayed in their price adjustments. Now they've been aggressively taking 4 and 5% increases consecutively over the last two quarters,” says Baty. Keeping up to date with price increases has been the crux of the issue. On one hand, bids out to customers 60-90 days in advance are outdated as material prices might have risen since.
So, what are you supposed to do? I wish there was a single silver-bullet solution but there won't be. The only thing anyone can do is plan ahead and accomplish one thing at a time. It's more like a shotgun spread of ideas with each adding another element to the mix. (Oh, I'm mixing metaphors now.)
I've been told on multiple occasions that this industry has been tough to change. While true in some cases, I would actually argue against. It's slow because the solution needs to be right. In a short period of time, we've seen more attention towards more environmentally friendly products like PLCs, plant-based coatings, software technologies giving contractors an edge in purchasing smarter, and more. It's one thing at a time.
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Advisory Board
Kim Basham
KB Engineering Cheyenne, Wyo.
James Baty II
Concrete Foundations Association Mt. Vernon, Iowa
Jim Cuviello
Cuviello Concrete Polished | Stained | Crafted Stevensville, Md.
Chris Klemaske
T.B. Penick & Sons, Inc. San Diego, Calif.
LinkedIn.com/company/ Concrete-Contractor-Magazine
Dennis Purinton
Purinton Builders, Inc. East Granby, Conn.
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