Contractors Feel Materials Cost Pain
It’s no secret that now isn’t exactly a boom time for construction, whether in the public or private sector. However, it appears the industry must prepare for yet another blow, at least according to numbers just released by the Associated General Contractors of America.
Over the course of January, the prices for many essential construction materials increased while the amount contractors charge for projects remained flat.
AGC Chief Economist Ken Simonson pretty much sums it up: “The last thing contractors need after two years of depression-like conditions is to pay more to make less. With margins continuing to shrink, few contractors are likely to benefit even if construction demand picks up this year.”
Prices for materials used in construction jumped 0.9% in January and 4.9% during the past 12 months. The basis for the jump was derived from five key construction materials, and I imagine many of you have noticed the upticks firsthand. They are:
1. Diesel fuel—up 3.2% in January, 17.7% for the year
2. Steel mill products—up 2% in January, 11.5% for the year
3. Hot rolled boars, plates, and structural shapes—up 2.2% in January, 14.3% for the year
4. Steel pipe and tube rose—up 2.8% in January, 17.8% for the year
5. Prefabricated metal buildings—up 5.2% in January, 12% for the year
How are you compensating for this increase in materials costs?