As construction rebounds, concerns have arisen about the availability and prices of building materials in the near future, according to the Sacramento Business Journal.
Michael Strech, president and CEO of the North State Building Industry Association, said higher prices might be inevitable in some cases, but many builders will be watching for price gouging by suppliers taking advantage of scarcity. He says he has heard scattered reports from builders who see delays in lumber materials getting to job sites.
According to Jeff Nobers, vice president of Pennsylvania-based 84 Lumber, strand board, a replacement for plywood, was made at 63 mills in North America in 2006. He says that only half as many are around today, and new production isn’t expected until sometime this quarter. He says that some factory operators, even if demand is up, may hold back on ramping up their own production until they are sure the recovery will last and it makes sense to hire employees for the long term.
Mitch Wagner, 84 Lumber’s vice president of purchasing, says this quarter may also mark the toughest period. In the second half of 2013, more production is expected to happen, possibly narrowing the gap between demand and supply.
However, a Wood Resource Quarterly report of the Global Forest Industry for the First Quarter 2013 says lumber production in the U.S. during the first two months of 2013 saw production levels go up by 9.5% as compared to the same period in 2012, and that U.S. lumber prices increased by almost 85% from late 2011 to April 2013.
Nobers and Wagner say they’ll be pushing a campaign launched in January to get more builders to buy from U.S. companies. From February to June, hardwood exports have tapered off 3%.
“Before, they had to look at importing,” Nobers said. “From 2007 to 2010, price was all that mattered. Now, buying domestically can help ensure reliability and put money into local economies.”
The crunch is being noticed nationwide, according to Ken Simonson, chief economist for the Associated General Contractors of America. Materials such as lumber are in short supply in some regions, he says.
“The building industry plunged so much that a lot of the lumber mills and gypsum plants shut down,” says Simonson. “Over the course of the year, I expect you’ll hear more about the effects of that.”
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