Not to make your mood morose, but it's not new news that we are in unique and challenging times. It is in these times that we can bury our head in the proverbial sand or look up and seek some creative solutions.
First let’s look at what is going on. According to the PPIs (Producer Price Indexes) - and your wallet! - prices have been going up. Nothing new there. The Associated General Contractors of America (AGC) put out a PPIs chart with the recent edition of their Construction Inflation Alert. There are some hard numbers to consider. Steel mill products have increased by 127% since December 2020. Steel pipe and tube 78%, fabricated structural metal products up to 60%, diesel fuel almost 57%, asphalt 46%, and lumber tripled. These are items that have had some of the most significant increases.
Lead times for materials are another issue. It has been reported that lead times for roofing materials are 8-10 months, structural steel 6-8 months, and in our industry some materials we could once get in 6 weeks, are now taking 3 months.
Necessity is the mother of invention. The times we are in necessitate that we think beyond the norm to get the job done. We are required by our circumstances to get out of the box and think differently.
One of the things we see happening in our industry right now is General Contractors and Owners are procuring materials up front and storing them onsite or in a climate-controlled warehouse to curtail costs. Construction Dive quoted Boston-based Suffolk Construction’s South Region President, Peter Tuffo, as saying it is cheaper to move materials twice if you have to “than no work to put in place for that month.”
If more contractors are looking for warehouse space, guess what? That creates another issue – finding warehouse space. One real estate broker in Atlanta is reaching out to empty big box retail centers to solve this problem. We’ve all driven by an empty or near empty shopping center, why not maximize and utilize the space? This is a creative solution that is a win win.
In response, some manufacturers have started to curtail buying all materials up front, unless they have a long-standing relationship with the party or they are requiring more information and proof about projects. It’s not just what you know but who you know sometimes.
As a result of our long-standing relationships with manufacturers, we are in a better position than others to help contractors. We leverage what we can because, after 88 years in business and lots of plaques on the walls, our professional affiliations know and help us. Sometimes it is all about the personal touch.
Where we can, we are also helping our customers find alternates that have less lead times or are more cost effective. One of our goals in our relationships with contractors is to be part of the solution. If we can save your day, we will gladly wear the cape.
So as we work together in these tenebrous times, let’s remember there is always a light at the end of the tunnel. It will only run you over if you lie on the tracks, so get up and see things differently.
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