This takes me back to when I had to align my satellite dish on my roof, what a fiasco!  I thought I was going to get a nose bleed I was so high.  I could see 8 states from my roof, the wind was gusting at 3 mph I could barely hold on, I almost dropped my ratchet and saved it with my pinkie.  Averting disaster and saving tons of lives on the ground.  Many depended on me to get the dish aligned that day , so they could watch American Idol.

Cement/Concrete/Aggregates

Liquid asphalt prices have been responding to higher crude oil prices; ENR’s 20-city average price for PG-58 asphalt oil rose another 0.1% this month following a 0.8% hike in February and a 1.2% hike in January. The combined increases pushed asphalt prices 3% above March 2010’s level. While not an alarming increase, the uptick continues to build off previous increases of 4% in 2010, 8% in 2009 and 2% in 2008. These increases, in turn, helped solidify the double-digit price hikes of 27% in 2007, 18% in 2006 and 13% in 2005. Overall, asphalt prices have averaged an 11% annual increase over the last seven years.

Pipe

Prices for construction pipe products posted mixed results this month. While prices for concrete and ductile iron pipe gained 0.4% or less, prices for PVC water and sewer pipe fell about 0.1%. However, year-to-year price increases are still relatively strong, with an average annual increase of 7.6% for three types of ductile iron pipe, 5.3% for three types of corrugated steel pipe, 4.3% for five types of PVC pipe and 2.5% for four types of reinforcedconcrete pipe (see table). Last October, the Bureau of Labor Statistics’ producer price index for plastic pipe products was up 2.0% for the year.

Lumber/Drywall

The housing market declined 4.1% between December and last November, leaving the housing market 6.8% below 2009’s depressed level. The weak demand hit lumber and plywood prices this month: ENR’s 20-city average price for the most commonly used species of 2 X 4s declined 2.1% this month, while prices for plywood declined 1.6% for the month. This month’s decline in lumber prices rolled back most of last month’s 2.3% increase, leaving prices 2.3% above a year ago. February’s decline in plywood prices also rolled back increases during the previous month, dropping prices 3.2% below 2010’s level.

Steel

Prices for reinforced concrete bar were rolled back 2.1% this month after jumping 3.5% in January, according to ENR’s 20-city average price for grade-60 rebar. Despite the adjustment, ENR’s rebar price remains 5.3% above a year ago. February’s price decline may be a precursor of further declines. The price forecasting firm IHS Global Insight predicts prices for rebar will post an average decline of 1.8% during the first quarter of 2011, marking the third straight quarterly price decline tracked by the firm. These combined declines leave rebar prices 1.8% above a year ago but nearly 42% below the record high set in 2008.

Source – McGraw Hill Construction

First off, I would like to thank toolsinaction.com for giving me the opportunity to write a blog / article on this site. Not only do I have fun doing some type of work around the house, I am an estimator for a large commercial construction general contractor for one of their regional offices in the southeast United States. For now, I will keep the name anonymous until I get some type of permission from my employer. In this day and age you can’t be too careful about your employment! Now for a snapshot of the construction industry…

With private money virtually “shut-off” in the commercial sector due to banks not making high risk loans to private developers along with State and Local taxes cut to the bone it’s no secret the construction industry is suffering as a whole. No tax money equals no public sector building (schools, fire stations, public universities, community centers, libraries, etc.). Not to mention a battered housing market with residential builders hardly building anything. The stimulus package that was passed by the current Federal Administration mainly focused on roads, bridges, and infrastructure. Most of stimulus money for construction has been spent.

However, this article is not just about “Doom and Gloom”. I will focus this blog and many of my future writings on what I see currently in the industry, what I see forthcoming, and maybe I’ll throw in a prediction or two. One of the few sectors in the construction industry that is building work is the Federal Sector. This not only includes the infrastructure that was previously noted but includes many projects for the Veterans Affairs otherwise known as the VA. Work the VA is currently offering for bid is mainly hospital building and renovation. Also, we are seeing some work for VA cemeteries which includes some new cemeteries, additions to existing cemeteries, and some renovation work.

Due to the lack of State and Local funding from tax cuts don’t look for many schools or other State/Local funded projects forthcoming anytime soon. It’s not a Liberal point of view or a Democrat point of view, it’s just reality at this time.

Some good news on the housing front is I am hearing rumors that the large production home builders are purchasing land. Although this may sound hard to believe, there is no time like the present to purchase real estate. Many of these large builders will purchase with CASH, therefore, no financing is required. Investments being made by large developers on land deals show that recovery may be slightly closer than we think.

Private money is virtually shut-down for large projects. Probably when the housing market improves developers that follow residential communities (retail work, malls, etc.) will be able to secure financing.

My prediction for recovery? It’s as good as anyone else’s prediction and probably very similar: Once the housing market improves via short sales and foreclosures come off the market followed by a decrease in the NATIONAL unemployment rate. This is the only way recovery will happen…

S.M. CPE

The economy is still struggling and there is still uncertainties in the market place.  Certain segments are expanding while others are shrinking due to a wide variety of factors.  Below we wanted to cover some of the major construction cost for jobs.

Cement/Concrete/Aggregates

The price for portland cement dropped 1.2% this month, according to ENR’s 20-city average price. That dip rolled back a late-summer price increase and left ENR’s national price just 0.9% above a year ago. There may be further price declines based on the Bureau of Labor Statistics’ producer price index. By last August, the PPI for cement products was 4.2% below a year ago. In the same period the PPI for ready-mix concrete prices was down 2.0% for the year, compared to a 1.2% annual decline for ENR’s 20-city average price for 3,000 psi concrete. ENR’s asphalt paving costs dropped 1.0% for the month.

Pipe

Prices for most construction pipe products showed little gain in November but still posted significant increases over a year ago. Prices for corrugated steel pipe held steady this month but remain 4% to 8% above a year ago. Despite falling 0.6% this month, prices for ductile iron pipe are still 10% above November 2009’s level. Prices for PVC water pipe are bouncing around following last August’s 3% decline. In September, PVC water-pipe prices rebounded 0.5% before being rolled back 1% in October. This month, PVC water-pipe prices inched back up 0.3%. The end result leaves PVC water-pipe prices 2% above a year ago.

Lumber/Drywall

Lumber and plywood prices have lost nearly all the gains made in the first quarter of this year, when record-low prices reacted to a hint of a rebound in housing. However, as the housing market fizzled, lumber and plywood prices fell. In October, the Eugene, Ore.-based wood products pricing specialists, Random Lengths, reported its composite mill price for framing lumber was down 29% from its April 2010 peak, leaving it just 8% above 2009’s level. Random Length’s composite-panel price index in October was down 38% from 2010’s peak April price and up just 7% from a year ago.

Steel

Prices for concrete reinforcing bar are starting to be rolled back, following strong gains. During the first half of the year, ENR’s 20-city average price for grade-60 rebar jumped 7.9%. Prices held steady between July and September before falling 0.6% this month. However, ENR’s rebar price still remains 7.1% above October 2009’s level. Rebar prices tracked by the forecasting firm IHS Global Insight, Washington, D.C., were up 10.1% over the third-quarter average price for last year. Global Insight predicts prices will fall 3.4% this quarter, followed by another 3.0% decline in the first quarter of 2001.

Understanding material cost is very important.  Considering how tight profit margins are know, it is important to stay up to date.  Professional Power Tool Guide wanted to give you a quick run down of what is happeing in the market place.

Cement/Concrete/Aggregates

 
Ready-mix concrete prices held steady this month after falling 1.4% the previous month, according to ENR’s 20-city average price for 3,000-psi concrete (see chart). The dip left prices just 0.4% above a year ago. ENR’s prices are playing some catch up with the Bureau of Labor Statistics’ producer price index for ready-mix concrete, which has been falling for much of the year. In August, the concrete PPI rebounded 0.5% after falling 0.1% in July and 0.5% in June, which leaves the concrete PPI 2.0% below August 2009’s level, when it posted a year-to-year gain of 2.2%. The August PPI for cement was down 4.2% for the year.

Pipe

Steel prices have remained stubbornly high, putting upward pressure on both ductile iron pipe and corrugated steel pipe. DIP shows the largest annual price increases, averaging about a 10% gain, according to ENR’s 20-city average price. CSP prices are up between 4% and 8% during the same period. The Bureau of Labor Statistics’ producer price index for fabricated pipe and fittings also reflects these higher prices. The August PPI for fabricated pipe jumped 2.4% for the month, following a combined increase of 6.3% during the previous four months.

Lumber/Drywall

In August, the residential building market was running at an annual rate of $249 billion, according to the U.S. Dept. of Commerce; this rate was down from last April’s annual pace of $274 billion. The slowdown was enough to take the steam out of lumber and plywood prices, which both have fallen sharply in the last few months. In October, ENR’s 20-city average price for the most commonly used species of 2 X 4 lumber fell 1.3%, bringing it close to last year’s levels. In October, plywood prices fell 1.3%, dropping 2.7% below 2009’s prices. In August, the Bureau of Labor Statistics’ producer price index for lumber was down 9.1% for the year. 

Steel

Prices for concrete reinforcing bar are starting to be rolled back, following strong gains. During the first half of the year, ENR’s 20-city average price for grade-60 rebar jumped 7.9%. Prices held steady between July and September before falling 0.6% this month. However, ENR’s rebar price still remains 7.1% above October 2009’s level. Rebar prices tracked by the forecasting firm IHS Global Insight, Washington, D.C., were up 10.1% over the third-quarter average price for last year. Global Insight predicts prices will fall 3.4% this quarter, followed by another 3.0% decline in the first quarter of 2001.

The economy has pretty much hit everyone hard.  But what usually happens in this type of economy is more price changes for materials.  Sometimes the trends tend to adjust rather quickly.  We wanted to give you a quick update on some of the major construction material trends.

Cement/Concrete/Aggregates

Ready-mix concrete prices declined between 0.5% and 1.4% this month, according to ENR’s 20-city average price. This dip wiped out July’s 1.2% hike and a 0.1% increase in August, bringing prices back to last June’s level. The decline left concrete prices averaging 1.6% above September 2009’s level, which is down from August when concrete prices averaged annual gains of 2.7%. Portland cement prices managed a 0.3% increase this month, following a 0.2% increase in August. The back-to-back monthly increases helped to keep portland cement prices 1.7% above a year ago, up 0.2% from August’s annual pace.

Pipe

Prices for construction pipe products are showing varied results ranging from steady increases for ductile iron pipe to a sharp rebound for reinforced concrete pipe to a large roll back for PVC water pipe. However, overall prices for many pipe products remain well above last year’s depressed levels. The largest year-to-year increase is 10.8% for 1/2-in. copper water tubing, followed by 10.2% increase for 8-in. DIP. Corrugated steel pipe prices are up between 4% and 7% from August 2009, according to ENR’s 20-city average price. PVC water and sewer pipe have the most modest increases, ranging from 2% to 5%.

Lumber/Drywall

Lumber prices are starting to stall after an initial rebound from record lows earlier in the year. ENR’s 20-city average price for the most commonly used species of 2x4s jumped 8% between last February and May, following housing’s rebound, also from record lows. However, lumber prices have cooled as the rebound in housing began to falter, resulting in lumber prices falling 4% in the last three months. This year, the mill price for framing lumber dropped from $357 a thousand bd ft last April to $252 this July, according to a composite price index published by Random Lengths, Eugene, Ore

Steel

Structural-steel prices inched up another 0.5% this month, keeping prices 4.4% above a year ago, according to ENR’s 20-city average price for channel, wide-flange and I-beams. However, prices may be moving down soon, according to the construction materials forecast firm Global Insight, Washington, D.C. Global Insight predicts that structural steel prices will fall 1.5% between the second and third quarter of this year to $727 per ton. Prices are expected to fall another 10.6% to $650 a ton by the first quarter of next year before bottoming out, says Global Insight.

Here are the figures for the month of January 2010. Let’s put our tools to use and build, build, and build!!

Feb 17 Building Permits - The number of building permits issued in January fell from December to a seasonally adjusted annual rate of 621,000. Permits are still up 16.9% year-over-year. While multi-family building permits plummeted 26%, single-family permits were up 0.4% during the month.

Housing Starts – Construction of new homes climbed to an annual rate of 591,000 during January, up 21.1% from a year ago. The rise was attributed to decreased new home supply. Export and Import Prices – Import prices increased in January by 1.4%, largely due to higher fuel prices. Prices for non-fuel imports rose 0.4% for the month. Export prices rose 0.8% in January following a 0.6% rise in December.

According to the Commerce Department’s announcement on 1/20/2010,  557,000 new home construction projects broke ground last month, down 4.0 percent from November’s upwardly revised data. Meanwhile, almost 11.0 percent more building permits were filed for last month, offering some rather obvious conflicting views with respect to current trends.

 The housing market, like any other market whether it be the bond, stock, commodity, labor,…etc, has been greatly impacted by the general lack of leverage available to facilitate the economy’s needs in a efficient manner. Hopefully, as the economy releverages itself through a prolonged period of lower long-term interest rates, the statistics on housing starts and building permits will gradually improve.  In our opinion, it will take a significant amount of time before the appropriate amount of leverage is established. Don’t give up hope, we will see the need to use our tools again in a big way!

 

Building Permits – Building permits increased to a 584,000 annualized pace, the highest level since November 2008, from 551,000 in October. While this marked a 6.0% month-over-month increase, permits are still down 7.3% from year-ago levels.  – Housing starts rose 8.9% from October to a seasonally adjusted annual rate of 574,000 in November, but remain down 12.4% on a year-over-year basis. In October, housing starts fell unexpectedly as builders halted construction ahead of the original end of November expiration of the federal tax credit for first-time home buyers

Let’s hope the numbers remain positive so we can buy more great tools and keep on working!

The nation’s construction industry should see modest gains next year, according to the WSJ. This could be due to a rise in single family houses, apartment buildings, and highways and bridges. The increase in these areas will offset drops in commercial and manufacturing property. New development in commercial construction will be dragged down by high unemployment and tight credit markets. 2009 was tough for construction, with the value of starts expected to plunge 25% to $419 Billion.

Next year, starts are expected to climb 115 to $466.s billion, according to McGraw-Hill. Construction starts indicate future construction spending and often correlate strongly with actual spending.

Single family housing should come in at $162.s billion, a 30% boost to 560,000 units, provided that mortgage rates remain low, the $8000.00 tax credit for first time buyers is extended and programs to ease the foreclosure crisis help homeowners, the survey states.

Well do you remember 2008 work, expect more of the same in 2009 with some exceptions.  Both residential and non residential is expected to remain weak.  With non residential not sliding as much.

Now no one is sure, but some speculate that the government’s stimulus package could help recovery in the later half of 2009.  Obviously there is still a problem with the overall economy.  One major factor is the credit market.  Some  contractors who plan on buying equipment this year or starting new projects are finding a hard time raising the funding in order to move forward.  Some banks are reluctant to loan any money out being fearful of defaults.

Certain areas of the U.S. are expected to perform a little better than others.  Take Atlanta for example.  Atlanta, like most, has poor economic conditions and a surplus in poverty.  There is plenty of demand with aging infrastructure, but there is a lot of difficulty in getting loans.  There are no condominiums started in the midtown area, but there is a need.  With the need of new condo’s comes a need of new retail to help support the condos.  Mandarin Oriental Hotel and Residence is a project that is supposed to start this year.  It will be a 53 story hotel with seven residence.  This will be one of Atlanta’s tallest buildings.  There are other buildings going up also.  Atlantic Station Office building broke ground this year.  This is a 25 story building.  Overall we were able to find around 20 new major construction projects and and about 10 significant renovation projects in Atlanta alone.

Certain parts of the U.S. will see a flat market, while others will have a decline.  We had a hard time finding any good reliable information on what parts of the country are expected to perform better than others.  All we do know is some regions will not be hit as hard.

We did notice when we went out to Las Vegas for the International Home Builder’s show there were about 8 buildings on the strip that are still being built.  However we really saw no active building and about three that had small crews working.

Good news at last! New housing starts and permits unexpectedly rebounded in February! The Commerce Dept. said housing starts leaped 22.2% to a seasonally adjusted rate of 583,000 units from 477,000 units in January. This was the biggest percentage rise since January 1990 and also marked the first increase since last April!

New building permits, which guide us for a sense of future home construction, rose 3% to 547,000 units, from 531,000 units in January. That also marked the first advance in permits since last April.

Hey, we’ll take any good news that may signal our tools are going to start to get used again! Keep the move in the right direction baby!

We thought it would be neat to highlight recent construction news above and beyond just economics. So from time to time we will highlight the latest in the different areas of construction. This time we wanted to talk about equipment.

At the World of Concrete in 2008, Case showed the CX130B conventional excavator, but showed a new version in the 20,000 to 40,000 pound weight range. The new version has a longer carriage that offers an increase of 15% in lift capacity over the current CX130B, thanks to nearly one foot of additional track lenght, now stretching to 12 feet 4 inches. The operating weight of this fabulous machine is 28,400 pounds. The longer-carriage unit offers a boom lenght of 15 feet 2 inches and a choice of arms maxing at 9 feet 11 inches, for a maximum dig depth of 19 feet 10 inches.

The bucket digging force is 21,357 pounds. This case model features a “green plug”- an oil pan plug with a built in check valve that allows used engine oil to run through a tube and be easily reclaimed by technicians.

A real neat piece of heavy duty equipment that just caught our eye!

New-home sales fell to a record low in January. The Commerce Department reported Thursday that sales fell 10.2% to a seasonally adjusted annual rate of 309,000. This is the worst number on record since 1963. It was a weaker number that economists had expected, which was 330,000. One bright spot was the Northeast, which saw sales rise in January from the previous month.

It falls into place that with nationwide sales continuing to fall, existing inventory increased to a record high. The Government said it would take 13.3 months at the current sales pace to exhaust supply.

The Obama administration’s plan to spend $75 billion to keep up to 4 million U.S. homeowners out of foreclosure should start to stabilize the situation, hopefully! We like the $8000.00 first-time home buyer tax credit. It should help to lure home buyers back to the market when prices stabilize. The fact is that right now builders are stopping home construction because foreclosures dump more properties on the market, creating unbearable gluts of supply.

As economics 101 states, in the long run, the reduction in new projects should aid the housing market’s recovery as fewer properties for sale help increase competition and stabilize prices. This is probably still a ways off from materializing though. Keep your chins and tools up!!

The marathon seems to continue on as housing starts can’t seem to find stability in this extremely weak economy. The Commerce Department announced that the overall pace of housing starts contracted yet again in January, extending its current streak of month-over-month declines to seven. More specifically, 466,000 new houses broke ground in January compared to the 550,000 started in December. Below even more historical levels, activity in the housing sector is currently growing at a rate acutely below that of its potential. Looking ahead slightly, trends in building permits offer little reprive as 521,000 permits where pulled last month for future construction.

While it seems the housing industry is still in the state of shock, housing activity does have the distinct potential to rebound rather quickly as the economy re leverages itself over the long-run. As constuction workers in this industry know right now, the two key themes are patience and survival!

Let’s keep our chins up!