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The prices for most construction materials have seen significant increases this season. How have higher materials costs affected your business and your area's building market in general?

District Voices

Published September 1, 2004  |  September 2004 issue

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In this particular case, many of the jobs were probably bid before the materials costs went up so that it does affect our jobs. One of the fortunate things about the Upper Peninsula is that we have some work right now that we didn't have in the past. We have some university work going on, and some health care work. So our construction, I guess, is stable. It's not up; I don't think it's down as it is in some of the other parts of the country. ... In some cases the contractors are eating the cost, and in some cases I think the suppliers are working with the contractors. But I think for the most part the contractors are eating the costs.
Tony Retaskie, Executive Director
U.P. Construction Council—Escanaba Mich.
(Represents contractors and construction labor union members)

In some cases the materials costs can determine whether a person who is planning to build a newhome is likely to qualify, because of the percentage increases that we're seeing across the board for materials. And there have been issues in some cases where materials costs are impacted by supply ... there has been short supply and the prices have gone up.But in some cases materials aren't even available. I know we were running really short on steel and drywall, and lumber was an issue. It definitely determines what's happening in the home building industry. Thankfully, the interest rates were very favorable while this was happening so that kind of balanced things out a little bit, although now theinterest rates are creeping up.
Bryce Johnson, Executive Vice President
Home Builders Association of Fargo-Moorhead—Fargo, N.D.

In my personal opinion we haven't noticed a whole lot of difference. Obviously [we face] the higher cost, and we've had to change our bidding system. We end up giving 30 days out on a bid, opposed to 60 or 90 days. ... Anything with metal went up extremely, like chain-link fence, gutters ...[by] just leaps and bounds. The other stuff is going up but not at such a rapid rate. It seems like we had a little lull in the spring; people were getting a little scared again and now it has picked up. I think as long as the financing stays low, people are remodeling. And we do more of the restoration of the higher-end homes too; we do a lot of the $200,000 kitchens and stuff like that.
Bob Kaufman, Owner
Artisan Restoration—Minneapolis, Minn.

Honestly [higher costs] really put a halt to [construction activity]. I would say, in this area, [construction] is probably about 30 percent down for us, which has taken quite a bite out of it. I can see it picking up in the future, because people are starting to adjust to the new prices, but I don't think it'll be as solid as it was last year. We're a flooring and cabinet distributor, and we don't see as many upgrades now. People are sticking to the base grades trying to stay in their allowances, and it's definitely made an impact as far as that goes. With fuel costs fluctuating quite a bit, prices for the industry [are] going up in general. Carpet alone, we've seen six increases already this year. So, try to price those out right, eh? ... We've had to eat quite a bit. Dan Beckman, Manager
Mar-Cal Products Inc.—Onalaska, Wis.

Right now, other than making it difficult for the contractors to bid the jobs, we haven't really experienced any drop in the numbers as far as construction goes. In fact, we're anticipating that we're going to have a record year in Sioux Falls for construction.
Stephen Metli, Director
City of Sioux Falls Planning Department—Sioux Falls, S.D.

We hear a lot of grumbling from owners. However, they normally bite the bullet and proceed with their projects out of concern that prices will continue their meteoric rise.
Eric Hulteng, President
Hulteng Inc.—Billings, Mont.

(Commercial construction firm)

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