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No, Virginia, There Really Isn’t a Santa Claus in Construction Materials

It's that time of year, and it is sure not Christmas in Virginia, Texas or Florida.

The economy is growing at 3.1 percent. That is the good news. The recent hurricanes in Texas and Florida flooded or destroyed thousands of homes and buildings. That is not good news for the country. Demand for construction materials for reconstruction has spiked and that is on top of an already robust marketplace. What response would you expect from the materials manufacturers in light of improving conditions? If you said, “Raise prices.” You would be correct.

The major companies have recently sent letters to their suppliers to let them know that effective immediately or effective the first of January, we will all have additional material costs to pass through just when many of us thought that we might be able to recover from the losses that we suffered during the recession with the additional business in the marketplace.

To make matters worse, in case you haven’t heard from your folks recently, there is a big labor shortage, not just skilled labor, but all levels. The hurricanes in the Gulf and the fires in the west have exacerbated that problem. And when there is a labor shortage, we have to raise our pay in order to hold on to our full crews or risk them going down the street to the competition. Supply and demand economics are at play.

In those markets where the hurricanes wreaked havoc and destruction, the mitigation phase is still underway with FEMA and Red Cross trucks blanketing the area. There are some owners who have completed the mucking and drying out that are rebuilding. Those projects have sucked any excess labor out of the market. The short-term demand is substantial. One sub - contractor in Houston that I spoke with told me that he was having to limit the geographic area where he was working after getting upwards of 70 calls a day from folks across the region wanting his help.

Back to the price increases, we are not talking about “fly by night” suppliers, we are talking about mainstream suppliers of building materials.

The price increases vary across a wide range. Examples as shown on the Marjam Supply Company eshowroom website include:

Continental Building Products – Effective January 1, 2018

  • All Wallboard Products – 20%
  • All Joint Compound Products -7%

CertainTeed Gypsum will increase prices effective January 2, 2018

  • All Regular and Easi-lite ¼”, 3/8”, 1/2” products by 15%
  • All other products by 20%

BASF is increasing their prices by 5% across all their business lines.

National Gypsum announced two increases for 2018.

  • Gypsum Wallboard (Entire product line, including all specialty wallboard and glass mat products) an increase of 15%
  • Interior Finishing Products - (Entire product line) increased by 7%
  • Cement Board Products (Entire product line, including cement board tape and screws) -10%
  • Plaster Products - (Entire product line) - 7%