During the 1980s recession, a commercial development firm with the name BOHICA started in Houston. The name of the firm was a mystery until we discovered the origin of the name. The principals of the firm told me that it meant “Bend Over, Here it Comes Again”.
Funny in a weird sort of way, but if you are a residential or commercial developer, contractor or sub today I have one word for you – BOHICA.
By now many suppliers, contractors and subs have received 2014 price notification letters from the major gypsum producers like American Gypsum, CertainTeed, and National Gypsum. The letters, addressed “To all our Customers”, state that there will be a 20% price increase beginning January 1, 2014 for all gypsum products, and that the price will hold throughout the 2014 year. That sounds familiar since around this time last year we wrote that there were 25 and 30 percent increases over the last two years as supplies diminished and demand grew. While the industry is not recovering as fast as originally predicted, the prices are growing faster than the economy.
As we have previously reported, there is a class action price-fixing lawsuit over the 2012 price increases filed against the top nine gypsum producers in the United States. That lawsuit has been recently consolidated into the Pennsylvania US District court.
An industry spokesman said at a meeting earlier this year that a negative resolution of the lawsuit against the producers might mean that the “once a year” price increases might become a thing of the past. That might not be a good thing for the industry as job pricing and possible price gouging might emerge as the demand increases across the board. (Pun intended.)
With increasing demand and major producers like Lafarge bailing out of their North American gypsum business, there are even emerging rumors of possible allocations before the end of 2014.
BOHICA folks. These factors create even more uncertainty for the business as if it weren’t already tough enough to bid projects for construction in two or three years. In the meantime, factor in another 20% in your estimates and bids for 2013 projects.
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