When the dust finally settles on funding America’s infrastructure needs for the foreseeable future, one of the key areas to watch is how various resources may impact the cost of doing business.
The current supply and demand for infrastructure materials, for example, may be impacting your bid opportunities, delivery dates, and pricing models for precast concrete products. As with other sectors of the economy, the leading drivers are labor challenges and material shortages, with inflationary overtones underscoring the optimism of a postpandemic market.
Compared with other infrastructure providers, precast concrete prices have moved up modestly to 4.1% versus plastic construction products at 8%, steel, pipe, and tube at 10.1%, copper and brass at 30.9%, and lumber and plywood at 56%, according to Cumming Corporation, an international project management and cost consulting firm. Expect prices to continue their upward trajectory over the next several months, including precast concrete.
“Steel prices jumped significantly toward the end of 2020 and the beginning of 2021, in some cases as much as 25% to 50% in raw material value,” says Daniel Pomfrett, MRICS, Vice President at Cumming Corporation and lead author of Q1 2021 Cumming Insights: Construction Market Analysis. “While this does not translate to a 25% increase in the overall cost of supply and installation, it is of course significant. As we hit midyear we do expect a normalization of material price increases and those that have plateaued at the beginning of the year will close the gap over the next three to six months.
“Moving forward, the key will be the supply chains and in particular their capacity and ability to deliver materials across state and international lines, as even now with a slowdown in construction we are seeing pressure with both costs and delivery schedules starting to increase.”
Graph Source: Cumming Corporation
For precast concrete customers, the changing landscape may present real challenges. When your projects depend on submitted bid prices for products delivered by specific dates, some contractors could face longer completion times and higher pricing if a manufacturer encounters procuring raw materials and increasing labor challenges.
Jensen Precast is actively working with suppliers and customers alike to ensure the least possible disruption in the flow of products and services, while focusing on keeping prices down as much as possible. With manufacturing facilities across Arizona, California, Hawaii, Nevada, Oregon, and Washington, the company is leveraging its multistate resources to meet regional project needs.
“We’re starting to see cost increases for materials we use in manufacturing our products,” says Thomas Morales, Jensen Precast Director of Sales Operations. “We’re trying to keep prices as low as possible and hold quotes as long as we can. There comes a point, though, where after 30 days we may have to adjust quotes based on material costs and project installation dates. Everything is more fluid now, so we’re asking customers to expect possible fluctuations in pricing and delivery dates.”
Here are five tips to help you navigate your Jensen Precast orders:
- Request price updates for quotes older than 30 days
- Provide as close to accurate “need by” dates versus the “as soon as possible” default
- Inform your customers up front that prices are dynamic and subject to change
- Place orders with enough lead time to adjust for possible supply chain delays
- Reach out to your Jensen Precast representative to manage project expectations
“It’s a balancing act for a lot of the industry right now,” says Josh Myers, Jensen Precast Vice President of Operations. “Some of our vendors are experiencing supply issues, so of course that impacts us and our customers. We can’t always get the quantities of raw materials we want to stay ahead of the game, as we normally would. It has caused some delays and disruptions in customer schedules, but fortunately these are isolated case so far. We’re working hard to keep manufacturing at the highest capacity possible. We want to make sure what we bid on we deliver on by the date expected.
“Of course there’s the overall industry labor issue too, which always fluctuates somewhat every year. We’ve been fortunate to have a great team of dedicated workers to keep our output close to capacity. We still have some holes to fill at some of our plants, so we’re ramping up our recruitment efforts. At the same time we can’t control the labor and supply challenges of our vendors, so that’s something we’re watching as it may impact the prices for raw materials. We’ve been able to balance most things so far and remain cautiously optimistic about where things are heading.”
Contact your Jensen Precast Representative with any questions you may have about products, prices, and what’s next. For new customers, visit jensenprecast.com/locations/.