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ISA Hosts ‘Thirst for Knowledge: Staying Ahead of Material Escalation’

by: Jack Quigley
Expert panelists gathered at Blind Owl Brewery to provide valuable insight into recent supply chain trends and their effects on construction projects of all kinds.
Expert panelists gathered at Blind Owl Brewery to provide valuable insight into recent supply chain trends and their effects on construction projects of all kinds.
(Left to right) Barry Flynn, Epic Insurance; Mark Baker, Barth Electric; Mike Cecil, Barth Electric; Jhennifer Sanchez, bo-mar Industries; Adam Lee, bo-mar Industries; Rick Hamilton, Spohn Associates
(Left to right) Barry Flynn, Epic Insurance; Mark Baker, Barth Electric; Mike Cecil, Barth Electric; Jhennifer Sanchez, bo-mar Industries; Adam Lee, bo-mar Industries; Rick Hamilton, Spohn Associates
(Left to right) Cory Faulkner; Ann Armstrong, DIRTT; Brandi Floyd, Inter PSI
(Left to right) Cory Faulkner; Ann Armstrong, DIRTT; Brandi Floyd, Inter PSI
(Left to right) Richard Kraft, Patriot Engineering; Rob Barnes, The Hagerman Group; William Beach, CMS Corporation
(Left to right) Richard Kraft, Patriot Engineering; Rob Barnes, The Hagerman Group; William Beach, CMS Corporation
The first day of June marked the first in-person event for some industry professionals in two years as ISA hosted a Thirst for Knowledge panel discussion/bocce ball tournament at Blind Owl Brewery, covering the latest on supply chain issues currently affecting most projects across the U.S.

ISA’s hybrid event featured panelists Jeremy Adkins, Wurster Construction; Patrick Drewry of Drewry Simmons Vornehm; Eron Ferrell, Outside Sales at Foundation Building Materials (FBM); Tyler Kodros, Outside Sales at Ferguson; Eric Pagels, Senior Project Manager at the Hagerman Group; David Peterson, Executive Vice President and COO at ERMCO; and Alex Watkins of Steel Services.

In a presentation that focused on the adverse impacts caused by material shortages and price escalation on the construction industry, panelists discussed real-life experiences they’ve had with suppliers from this past year, offered historical context on supply chain issues, and gave ISA members guidance on what they can expect from suppliers moving forward.

Steel Escalation
During the pandemic, Watkins said steel mills could not produce as much steel as in years past – an outcome of COVID-19 that the construction industry is just beginning to see affect operations.

“Our prices for steel go into effect at the time when the mill decides to deliver it, which makes it hard to communicate our company’s prices to clients,” Watkins said.

Steel suppliers are changing their prices daily; a quoted price from yesterday no longer applies today, forcing Watkins and his colleagues to maintain constant communication with clients and suppliers to ensure prices are accurate and acceptable for all parties.

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Watkins said these rapidly fluctuating prices for steel are causing communication issues inside projects because stakeholders must try to agree on a quoted price for a product that – as of June 2021 – will likely take months to ship.

Lumber Escalation
Ferrell jokingly compared the price chart for lumber to a heart attack EKG.

“Off the charts,” Ferrell said of the recent 300 to 400 percent escalation in lumber prices.

Making matters worse, Ferrell said quoted prices from lumber mills are changing even faster than steel rates.

“Unlike the steel guys, we don’t a day’s quote,” Ferrell said. “That price is good until you hang up the phone.”

Ferrell said 2-inch by 4-inch by 9-foot studs, which sold for less than $4 per a year ago, today sell for $15 a piece.

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Ferrell said every year, his company tracks the cost of materials to build one multi-family, 90,000-square-foot, four-story building and compares material prices year-to-year. In 2020, the wood framing needed to build that building (wall panels, floor trusses, roof trusses, loose lumber) cost about $856,000.

In June of 2021, that exact same material list costs $1.84 million.

Once a lumber order hits the port, Ferrell said “container bounties” are now being paid by desperate contractors willing to pay double or triple the price of the agreed upon rate, leaving original buyers out of luck.

“It’s a real problem not only with price escalation, but just in availability and being able to procure product and provide answers to clients about when we can provide product,” Ferrell said. “We’re hopeful that were on the cusp of getting a break, but it’s just too unprecedented to know.”

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Komatsu Dealer Program
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