Supply struggles continue in construction industry

Concrete is no longer in short supply, but metals, particularly copper and steel, have seen dramatic price increases that industry officials expect will be in place for some time.

Rock solid

The concrete market – one of the most volatile building material markets in recent years – is now one of the more stable.

The same issues that created shortages in 32 states for cement – the main ingredient in concrete – as recently as August 2005 are now leading the way to a more solid concrete market. New Orleans, the entry port for 80 percent of the country’s cement supply, is mostly back on line after hurricanes Katrina and Wilma, helping to ease supply issues.

“What we’re seeing now is that cement supplies are not going to be an issue at least over the next 12 to 18 months,” said Tom Baird IV, director of sales for Springfield-based Conco Cos.

“While we feel that the economy is still going well, it’s not moving as fast as it was recently, so there’s been a slight decrease in demand,” he added.

The coming months should see continued strength in the concrete industry – enough strength, in fact, that one local company has expanded its presence.

Regional Ready Mix, started in April 2005 by former Conco sales and marketing director Randy Hawkins, opened a second office in June in Branson. The new office, Hawkins said, is a year ahead of schedule and is in response to increased demand from that region.

“Housing starts have slowed down slightly, but development of lots for houses has not slowed. The banks and the developers are anticipating a lot more new starts in the spring,” Hawkins said, adding that work on new roadways in the Branson area should also increase over the next year or two.

Metal troubles

The same stability does not hold true for the copper market.

Prices of the metal – used in electric wiring, pipes and plumbing fixtures – tripled in the spring and summer of this year and now are holding steady at about $3.40 per pound.

That’s bad news for home builders – the Copper Development Association says the average 2,100-square-foot, single-family home contains 440 pounds of copper.

“A lot of the projects that you thought you could get done, having priced them at the beginning of the year, now you have to go back and reprice because of copper,” said Rich Kramer of Rich Kramer Construction, adding that some customers have had to hold off on new commercial construction projects because of the increased cost.

The reasons for the increased cost are familiar ones: increased worldwide demand and inadequate supply to keep up with the new demand. The result, however, is the need for unfamiliar security measures by local companies that use the material.

“We used to have a scrap copper bin out back, outside,” said Jim Tracy, an estimator for Price Electric Co. “One night, somebody came across, cut the fence and totally wiped it out. So now, copper anything is stored inside, locked up. If you leave it outside, it’s gone.”

Nationally, deaths have been reported in cases when thieves were electrocuted when trying to remove copper from construction job sites.

Steel has seen price increases as well, according to Kramer, though those price hikes have not been as dramatic. Kramer said steel prices haven’t moved significantly since the summer of 2004, when steel-manufactured buildings jumped by 50 percent and steel framing by some 300 percent. Carbon steel was selling for about $600 per metric tonne as of July of this year, according to Management Engineering & Production Services Ltd.

“Metal building prices dropped back about 10 percent at the beginning of 2005, but they’ve regained that,” Kramer said. “That increase in 2004 is real – it’s here, and it’s not going away.”

A gradually slowing residential building market could help ease the pressures somewhat, but most builders think that slowdown will be offset by continued commercial growth, along with new residential demand in the Branson area.

As for the future of the copper market, it’s anyone’s guess.

“We get an update every Monday on where we’re at, but beyond that we don’t have any idea what’s going to happen,” Price Electric’s Tracy said, adding that the company now only buys copper on an as-needed basis for fear of being stuck with high-priced copper if costs eventually come back down. “Nobody will guarantee us anything.”[[In-content Ad]]