August 2019 Newsletter

August 2019 Newsletter

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New South News

Dear Friends,

As I compose this letter many companies in our industry are starting on their 2020 budget. This means that forecasters are now releasing their projections for next year. Most of the projections are calling for a slight slowdown. Dodge Data and Analytics, one of the oldest and most respected forecasters, is calling for a1% decline in total construction revenue next year. They break this out by each segment of the construction market. They are projecting some segments to be up, some to be down, and overall, they’re calling for a 1% decline. That is negligible to me, so I hope they are correct.

The relatively dry summer has been good for the construction business so I’m surprised to see that there continue to be very few price increases. See below for a more in-depth look.

Finally… the consistent dry weather of late July and August have really helped keep the construction industry rolling. Construction jobs and material movement is in full swing while everyone tries to catch up from the slow start to 2019. I’m not sure if all the delayed work can be made up completely by the end of the year, but the stretch of dry weather is certainly helping.

Rebar again remained flat from the prior month. Ample availability coupled with multiple manufacturers chasing work in the southeast has put a hold on any major price increases from the mills. Scrap pricing posted up $20 for August and finished at $282 per ton. The increase on scrap does not appear to be initiating any price increases from the mills on finished rebar but should act as a stabilizer for pricing moving forward in the market.

Domestic reinforcing mesh has followed the same path as rebar and continued to stay soft. There has been an influx of manufacturers moving into the southeast and this has caused an increase of available inventory. The regional mills have had to stay very competitive to retain their usual summer volume and have succeeded in most cases at keeping manufacturers from outside the region at bay. This has caused some inventory issues at the individual mill level, but again, overall reinforcing mesh inventory in the southeast is strong.

The lumber market looks to be rebounding after last month’s mill shutdowns by a few domestic and Canadian producers. Much like July, pricing is very dependent on species and size. Large 6’’ x 6’’ timbers are incredibly tight and in short supply. A recent check on availability showed that most mills wouldn’t even provide a current price or availability date at this time. Other sizes such as 2’’ x 8’’ lumber have had their recent lower price hit the bottom and are beginning to climb back up. Material is slower to move with the recent shorter supply and lead times are extending out to two to three weeks depending on species, grade, and size. Now would be a good time to stock up on your lumber as we expect pricing to increase over the next few months.

As with most of our commodity items, specialty and chemical construction items stayed relatively flat this past month. There were no major price increase notices from manufacturers since our last newsletter.

Contractors’ bid prices increased 0.6% from June to July, while materials and services input costs rose 0.2% for the month, based on the latest producer price indexes (PPIs) that the Bureau of Labor Statistics (BLS) posted on August 9.

Click here for the latest update on the construction economy from Ken Simonson, the chief economist of the AGC.

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Associate Profile

Savannah Holm
Systems Support Analyst, Greenville, SC

Our associate profile this month is of Savannah Holm, a Systems Support Analyst working out of our Accounting Office in downtown Greenville. Savannah was born in DeSoto, Missouri. She graduated from Potosi High School and she earned her Bachelor of Science degree in Computer Science at Central Methodist University. Savannah and her husband enjoy traveling, hiking, watching baseball, photography, and painting. Savannah worked at a few other companies before joining us in September 2018. Anyone needing tech support will attest to her calm and patient demeanor. She has been a great addition to our team.

Our management article this month is entitled, Avoid Failure by Preparing for Problems. I really got a lot out of this article, especially the concept of “premortems”. Instead of doing a postmortem after things go wrong, ask yourself before the project starts, “What can go wrong?” and then take the actions necessary to keep them from happening. A simple concept but one I’d never heard of before reading this article. I think this idea is especially applicable to the construction industry.

August’s Management Article

Avoid failure by preparing for problems

By Dan Rockwell

Do premortems. A postmortem is too late.

Gary Klein introduced the idea of premortems. A premortem is reverse positive thinking. Instead of imagining success, imagine failure.

What might go wrong:

A year from now, imagine your project is a colossal failure. What contributed to imagined failure? What did you fail to do?


Your business is becoming more profitable. A year from now, your business is failing. What did you fail to do that caused the failure? How might you prevent future failure?

You’re ready to launch a new initiative. A year from now, this initiative crashes. What went wrong? What process or system will make success more likely?

You’ve made progress at overcoming ineffective leadership behaviors. A year from now, you’ve slipped back into ineffective behaviors. What are some possible reasons you slipped back?

Get real:

Prepare for negative outcomes that are likely.

You might say, this project will fail because the earth is hit by a meteor. You don’t need to prepare for that contingency.

Example: check-in initiative

You schedule check-in meetings with team members. Imagine your check-in initiative is a complete failure. What went wrong?

  1. You stopped listening and started thinking you had all the answers.
  2. The conversations turned into gripe sessions.
  3. Actions were planned, but there was no follow through.
  4. You canceled check-ins because of busyness.

Which of the above negative outcomes is most likely?

How will you prevent a negative outcome?

How might a premortem be useful?

What might go wrong during a premortem meeting? (This is a premortem on premortems.)

In closing, I hope the forecasters are correct about 2020. I, for one, will be very happy with just a 1% decline. Fingers crossed.

Best regards,

Jim Sobeck
President & CEO 864-263-4377 (Direct Line)
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Author of The Real Business 101: Lessons From the Trenches
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