Rising, unpredictable costs of building commodities like engineered wood, combined with delayed or limited availability of products such as shingles and vinyl siding, are creating serious headaches for those in the construction industry.
“Most of what we consider commodities we can’t even get our hands on,” said Marshall Helmers, manager of Worthington’s Lampert Lumber.
“It’s taking two to three times as long to get certain items — OSB, treated lumber, treated deck boards, wide lumber — and some things have tripled in price.”
While the estimates Helmers provides contractors are normally valid for two to four weeks, that isn’t currently the case.
“We don’t hold estimates for even a week right now — we just can’t,” said Helmers.
“It’s required constant communication with our salesmen about what’s coming up with jobs, and we’ve been able to keep the jobs rolling but it takes way more communication about what’s usually a simple process because we spend so much time finding it, getting it and re-pricing it.”
Yes, COVID-19 is a key culprit in this dilemma; the hard shutdown earlier in 2020 served to create increased demand while limiting available supply.
“All these people stuck at home, not at their usual workplaces, looking around their houses, not spending as much money going to Twins games or other vacation venues, and they decided to do home improvement projects,” observed Kyle Johnson, owner/president of Johnson Builders & Realty.
“One of the most common home projects has been new decks, which require treated lumber,” he added.
“There are definitely headaches, but the good news is that we’re busy.”
Jeremy Whipple, owner of Worthington Building Materials, Pipestone Building Materials and Minneota Building Materials, is dealing with the tight supply chain on his end.
“Anything that’s run through factories is what’s hard to get, because factories being shut down or not running at full capacity helped create a shortage,” said Whipple.
“Lumber has been up roughly 300% since June,” he declared. “This is unprecedented, and in the 21 years I’ve been doing this, it’s something I’ve never seen. It’s affecting the entire industry, and the repercussions are still rippling through the economy.”
Cost increases are, necessarily, passed on to the consumer. What that means for someone building a new house or garage is a budget shock.
“For instance, the material for a garage we priced out on July 15 was $17,300, but when we bought it on Aug. 24 that cost was $22,500,” said Whipple as he reviewed particular figures.
“And if you’re building a $250,000 house, it might cost closer to $300,000 now due to the price increases — but if you can only borrow $250,000, you can’t build it.
“It makes it more complicated to do business.”
Helmers notes it isn’t only lumber that’s costing more at present.
“There have been small increases in other areas,” said Helmers. “Shingles have gone up slightly, and composite decking, and vinyl siding will be taking an increase in a couple weeks.
“It’s been stressful, but the construction folks understand what’s going on.
“Other than that, it’s been pretty straightforward, and construction has been plenty busy — and that’s good for business.”
Whipple says the price of OSB has doubled in less than six months (May to mid-September), and as further illustration, he offers the example of two-by-four-by-eights.
“Historically, they’ve cost between $2.50 and $3.75,” Whipple observed.
“Right now, that standard board sells for $8.99 — that’s insane.”
Other factors contributing to the limited availability and higher costs of construction necessities are natural disasters including the Iowa derecho in early August, the ongoing western wildfires and the southeastern hurricanes, with a resulting need for rebuilding in those areas due to the loss or extensive damage of numerous structures.
“Usually, factories get caught up during the winter because the northern [construction] market slows down during those months,” said Whipple.
“I’m hoping for a re-set this winter, but if cost is a major project consideration, you might want to wait until next year.”
Johnson was similarly reflective.
“Cost fluctuation is difficult,” he said. “For the jobs we’re currently working on, we’re trying to order as many things in advance as we can, but that’s not always the best because as projects evolve, customers may change their minds.
“Demand for shingles has increased a lot, but shingle manufacturers are not even making specialty shingles right now — all production has gone into 30-year, standard color shingles,” Johnson continued.
“There’s a lot of work out there, but the question is if we can get all the materials to do it.”
Consumers are being affected on a somewhat smaller scale, as well.
At Worthington’s Schwalbach Ace Hardware, assistant manager Cory Holmes says the store has cycled through shortages of items like PPE (personal protective equipment including face coverings, gloves and various disinfectant products), insecticides — and canning jars.
“Usually, a smaller percentage of the population puts in gardens, but when we went into lockdown everyone thought, ‘Oh, I’ll plant a garden.’ People didn’t think ahead about what they’d do with the produce,” said Holmes.
“If they’d bought jars and lids in May, it would have been fine, but everyone waited until September and there’s been five times the demand.
“If you own stock in Ball or Kerr, you’re probably doing pretty well.”
And while Schwalbach Ace has seen an enormous increase in the demand for paint, their supply to date has held steady.
“We’ve been doing a record year for paint, but we have plenty of it,” Holmes said with a grin.
So while workers at all points of the construction industry may be popping Advil more often to make it through this roller coaster period somewhat less painfully, they’re striving to remain optimistic.
“Hopefully things will come back to normal next year,” said Whipple.
Suggested Johnson, “We have to count our blessings, work around the adversity and keep plugging.”