flexiblefullpage -
billboard - default
interstitial1 - interstitial
Currently Reading

Soaring prices and delivery delays for lumber and steel squeeze finances for construction firms already hit by pandemic

billboard - default
interstitial1 - interstitial
Market Data

Soaring prices and delivery delays for lumber and steel squeeze finances for construction firms already hit by pandemic

Association officials call for removing tariffs on key materials to provide immediate relief for hard-hit contractors and exploring ways to expand long-term capacity for steel, lumber and other materials,


By AGC | February 17, 2021

Price increases—some to record-setting levels—and long delivery delays are causing hardships for construction firms that are also experiencing challenges in completing projects with crews limited by illness or new work site procedures resulting from the pandemic, according to an analysis by the Associated General Contractors of America of government data released today. Association officials urged the Biden administration to review and rescind a range of trade tariffs in place, including for Canadian lumber, that are contributing to the price increases.

“The extreme price increases, as reflected in today’s producer price index report and other sources, are harming contractors on existing projects and making it difficult to bid new work at a profitable level,” said Ken Simonson, the association’s chief economist. “While contractors have kept bids nearly flat until now, project owners and budget officials should anticipate the prospect that contractors will have to pass along their higher costs in upcoming bids.”

Prices for materials and services used in construction and contractors’ bid prices both declined at the beginning of the pandemic but have diverged sharply since last April, Simonson said. A government index that measures the selling price for materials and services used in new nonresidential construction increased 2.5 percent from December to January and 10.7 percent since April. Meanwhile, the producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—increased only 0.2 percent over both the latest month and the nine months since April.

“The government data was collected more than a month ago, and numerous sources indicate price increases have continued or even accelerated since then,” Simonson added. “For instance, the Framing Lumber Composite Price compiled by the publication Random Lengths hit an all-time high last week. Several steel product prices are also reported at record levels, and copper futures are at an eight-year peak. Meanwhile, delivery delays are affecting both imports and domestically sourced construction inputs.”

Association officials said that while there are a range of reasons driving price spikes for key building materials, tariffs on numerous materials, including lumber and steel, are contributing to those cost increases. They urged the Biden administration to rescind these tariffs to provide immediate relief to construction employers caught between stagnant bid prices and rising materials costs. They also urged the administration and Congress to explore new ways to expand capacity for a host of key construction materials by reviewing regulatory impediments to expanding logging and steel production, for example.

“Left unchecked, these rising materials prices threaten to undermine the economic recovery by inflating the cost of infrastructure and economic development projects,” said Stephen E. Sandherr, the association’s chief executive officer. “Widespread harm is caused by maintaining tariffs on products that so many Americans need to improve their houses, modernize their infrastructure and revitalize their economy.”

View producer price index data. View chart of gap between input costs and bid prices.

Related Stories

Market Data | Dec 5, 2021

Construction adds 31,000 jobs in November

Gains were in all segments, but the industry will need even more workers as demand accelerates.

Market Data | Dec 5, 2021

Construction spending rebounds in October

Growth in most public and private nonresidential types is offsetting the decline in residential work.

Market Data | Dec 5, 2021

Nonresidential construction spending increases nearly 1% in October

Spending was up on a monthly basis in 13 of the 16 nonresidential subcategories.

Market Data | Nov 30, 2021

Two-thirds of metro areas add construction jobs from October 2020 to October 2021

The pandemic and supply chain woes may limit gains.

Market Data | Nov 22, 2021

Only 16 states and D.C. added construction jobs since the pandemic began

Texas, Wyoming have worst job losses since February 2020, while Utah, South Dakota add the most.

Market Data | Nov 10, 2021

Construction input prices see largest monthly increase since June

Construction input prices are 21.1% higher than in October 2020.

Market Data | Nov 5, 2021

Construction firms add 44,000 jobs in October

Gain occurs even as firms struggle with supply chain challenges.

Market Data | Nov 3, 2021

One-fifth of metro areas lost construction jobs between September 2020 and 2021

Beaumont-Port Arthur, Texas and Sacramento--Roseville--Arden-Arcade Calif. top lists of gainers.

Market Data | Nov 2, 2021

Construction spending slumps in September

A drop in residential work projects adds to ongoing downturn in private and public nonresidential.

boombox2 -
native1 -

More In Category




halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021

 


Magazine Subscription
Subscribe

Get our Newsletters

Each day, our editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Subscribe

Follow BD+C: