Contractors are constantly looking at numbers. In 2021, materials prices have been rising across the board and supply shortages may have hit new home builders the most.
High material and supply prices can stop work and kill the profit margins small businesses need to grow and save for hard times.
As building materials prices rise and fluctuate wildly, it becomes of more importance than ever for small businesses to optimize their operations so they can complete projects quickly with highest profitability possible.
Materials, Supplies, Equipment Pricing
They are connected by commodity and labor prices. Supply chain squeezes are typically felt first, then leading to equipment prices raising – trucks, tractors, tools – in the long run.
Now is not the best time to need a new F-150, but people are still buying them up. Used equipment has already been cherry picked and is still priced at a premium.
Those inflated purchases can kill profit margins, and halting projects and cash flow.
Rising Materials Prices
Many contractors and home builders are experiencing holds for because they can’t get materials, or can’t afford to buy at the current price (or their customers can’t). Lumber prices are a perfect example:
Prices have dropped almost 50% off their 1 year highs. This means that by waiting a month you could buy the materials to frame a house at half or, or somewhere in between. This is what we are seeing as Lumber jumped almost 5% today. Add in the other price rises and you can see profit margins getting hammered down.
Concrete Production & Price Stability
Concrete is one of the most widely used construction materials and is produced everywhere. This helps insure stable supply and local availability.
Traditional concrete work is generally labor intensive for its distribution to use in building and manufacture. Large concrete projects require a lot of machinery. On the smaller scale, concrete mix is shipped in heavy, 50 pound bags that take quite a bit of muscle to mix.
Concrete manufacture is energy intensive and emits a lot of carbon dioxide, a greenhouse gas responsible for climate change. If an emissions tax were to be adopted as is likely in the long term, the price of Portland and construction cement would go up but not nowhere the amounts lumber has risen as shown bellow.
Material Benefits of Panel Masonry
ClifRock’s Material Prices have actually gone DOWN in the last year because we are growing – and are able to procure components of StoneRok Panel Mix and manufacture at lower costs in bulk.
Our Panel Masonry Construction System saves time and labor, allowing installers to complete jobs in days, not weeks, for a fraction of the cost of traditional masonry.
See Everything that can built by ClifRock for a fraction of the time and cost –> ClifRock Outdoor Living
Landscaping & Outdoor Living Business Supply Costs
Landscapers are hardworking and usually service highly competitive markets. High costs can really squeeze their typically tight margins and even lead to losses. Luckily, landscapers, contractors and other service businesses can pivot easily or raise their prices.
While grass will continue to grow, anyone can mow. With tight labor markets everywhere, the profits are in using the workers most productively. The less skilled and capital intensive a service is, the more enticing it is for an employee to run off and double their pay.
Construction, Home & Commercial Building Materials
While new home construction is finally starting to slow, it is still growing. Will increase if materials pricing and supply stabilize or drop, but lumber is already starting to bounce back.
Lumber Price Update
Lumber and commodity prices have been wobbling around the $600 mark through out July/early August. This is in part due to increased production and slight decrease of demand – the DIY home improvement projects have slowed down as people get back to work or on vacation.
It sits at $564.50 for a 1000 board foot future contract, or base price of lumber that contractors pay on August 4th, 2021. This determines what price contractors, home builders and other small businesses pay for lumber building materials.
Keeping Work Crews Working
You can’t, nor would you ever want to let a good worker go. You have to pay their salary or unemployment costs whether they’re completing a project or sitting in the shade drinking lemonade.
If they don’t have materials to build with, they are stuck. This is what drives commodity and materials prices higher.
With Panel Masonry, you can keep workflows smooth, with on-site panel fabrication or shop builds during inclement weather.
Limited Inventory SKU Count
Don’t let your shop get overrun with different materials and the leftovers of past projects. Yes, materials are worth money, but they have holding costs, take up space and mental bandwidth. Each type of inventory you business has to keep track of has a cost. Clifrock’s StoneRok Panel Masonry Mix does it all.
Manufactured in the United States – our panel mix shop footprint is the same size as a pallet. Our coloring and customization tools are multi-use, readily available and can be quickly shipped should you need more.
The above words are opinions and research written by Robert Tanguay, and are not investment advice. They are meant to create awareness and discuss current construction industry conditions.