Booming construction, limited supplies drive prices upward

by Paul Flemming

SBJ Staff

Imagine an ice cream parlor on a hot August Sunday afternoon. Patrons crowd the store and spill out the door into the 97-degree sun. Customers wanting fudge ripple, mint chocolate chip and plain old vanilla are asked to take a number from the dispenser on the counter to determine their place in line.

Imagine further that there's not enough ice cream to accommodate everyone. And before customers are allowed even to take a number for service, they must show receipts proving they've bought cones in December from this very store. Today they'll only be allowed to buy as much frozen concoction as they have a track record of buying throughout the year.

And, of course, the price for a single dip is about twice what it was when you bought the same cone last year.

That imaginary scenario is a reality for construction-industry businesses in the market for wallboard and clay brick.

"We're on tight allocation" for wallboard, said Norman Hill Jr., part owner of Allied Manufacturing Company Inc.

"On allocation we're getting 60 to 65 percent of what we need, roughly," said Warren Louderbaugh, manager of Meek's Insulation and Drywall. "Some contractors wait a week to 10 days to get their drywall."

In other areas of the country the wait is longer, up to a month.

"I had a customer from Texas who came through on vacation. He saw we had it and stopped to haul it back," said Glenn Hatz, manager of the Meek's yard in Nixa. "It was gold to him."

Allocation means sources for wallboard are limited for everyone throughout the supply chain. Manufacturers are not taking on new customers and sell only what customers have contracted for in the past.

"Board manufacturers, they won't sell to you if you haven't bought from them before," Hill said.

"The only way we've been able to keep up is because we bought quite a bit and had a pretty large allocation," Louderbaugh said.

Contractor suppliers follow the same practice.

"Our organization is allocated just so much. It's not near what it takes to take care of our customers. We're trying to hold all (of our wallboard) for our contractors," said Bob Scott, manager of Herrman Lumber Company on South Glenstone. "The trucks (of wallboard) we get in are committed to our regular customers. If somebody were to walk in off the street, you can't buy it."

The short supply of wallboard comes thanks to various contributing factors, chief among them the eight-year-long bull housing market. Recent mild winters have not helped either, as construction (and demand for construction materials) has continued unabated throughout the year, not giving manufacturers a breather to build up inventories.

The Mid-America Lumbermens Association June newsletter noted that factors within the wallboard manufacturing sector also account for the shortage.

"Three major producers went through bankruptcy proceedings[[In-content Ad]]