Steel prices still affecting U.S. building industry
Stories on steel prices are popping up in the media again, although I suspect that's not news to many people in the sheet metal industry.
I recently saw a story in the Sacramento Bee on how the University of California-Davis changed plans for its 10,000-seat stadium to minimize the use of steel as a cost-saving measure.
The paper also reported that the rising cost of the raw material has forced Honda Motor Co. Ltd. to hike prices on its cars, the first time in a decade the famously cost-conscious automaker took such an action.
U.S. auto suppliers are lobbying the International Trade Commission to eliminate duties on certain types of imported steel, saying the fees are partly responsible for the bankruptcies and layoffs in steel-consuming industries like theirs.
Many sheet metal contractors are facing similar situations. At a time when many companies are still struggling to find enough work, those involved in duct fabrication are being forced to raise prices or try to absorb the steel-price hikes, which the Sacramento Bee reported have hit 90 percent in parts of the country.
Snips readers may recall we've covered this story, reporting on price increases from major HVAC manufacturers and the effects on small contracting shops. And although I haven't heard as much grumbling from contractors lately, the issue hasn't gone away. In his December 2004 feature "History Repeating," Snips associate editor James J. Siegel reported many contractors expect the price of the building material to be causing headaches for some time.
How best to deal with it is a matter of contention. Some, like the Air Conditioning Contractors of America's president and CEO, Paul Stalknecht, cautioned contractors against trying to absorb the volatile price hikes.
"It all comes down to contractors building ‘service' companies that can easily pass along the cost of the commodities they must purchase because the value they add is worth it," Stalknecht said. "Contractors who try to absorb higher prices out of fear of low-balling competitors will be at a severe disadvantage."
The Sheet Metal and Air Conditioning Contractors' National Association is helping members put clauses into their contracts that will give them some wiggle room when it comes to their bids and steel prices.
I'm always interested in how readers are dealing with steel prices or how they're affecting their businesses. Write me at BNP Media, Snips magazine, 2401 W. Big Beaver Road, Suite 700, Troy, MI 48084. You can also e-mail me at email@example.com. Include the name of your company and how long it's been in business. Responses may be published in a future issue.
On a different subject, thanks to those of you who have written or called with your questions or comments about Snips. It's always good to get feedback from readers, whether it's positive or negative - hopefully, mostly positive. And thanks to readers who have responded to letters from contractors looking for obscure products. It seems our readers can find almost anything. Nick Carter, Snips' former editor and publisher, in particular, usually knows where to find a tool or machine.
As always, thanks for reading, and keep writing.