December 2018 Newsletter

December 2018 Newsletter



New South Monthly News

Dear Friends,

It’s hard to believe we’re already at the end of 2018. It seems we were just doing our 2018 budget a few months ago and now the year is almost over. It has been a good year overall for the construction industry despite a very wet second half of the year. As I write this the stock market has given back all of its gains for this year but the economy is still rocking along, albeit a bit more muted than in the first half. Despite a minor slowdown in construction price increases continue to be announced. See below for more details.

As the year comes to an end, multiple manufacturers of construction products announced price increases taking effect in late December and in the beginning of the New Year. The sustained shortage of drivers and available trucks is putting a strain on the nationwide supply chain, and as a result, transportation costs are continuing to increase across the board. The rise in raw material costs from current tariffs and the above stated transportation issues are additional factors mentioned as reasons for announced price increases.

On a positive note, metal scrap has posted with almost no change from the November numbers. The mills were able stay slat flat on price through the month of December without succumbing to the prior two months’ increases on scrap prices. Import rebar demand has continued to dwindle as the tariffs and pricing volatility have almost eliminated any incentives to buy imported rebar. Imported rebar’s landed cost is almost, if not equal to, domestic bar currently. With the potential of higher tariff costs coming, we can expect the demand for import ed rebar to stay minimal moving into the New Year.
Ames Industrial, a leading supplier of tools and equipment, has announced a price increase effective February 1, 2019. Their main reasons behind the price increase are freight and driver shortage issues, increasing labor costs, packing material increases, and the pending tariff increase set for January 1st. Increases range from 4% to almost 20% across multiple product categories. New pricing will be effective on any order scheduled to ship after February 1st, 2019.

Zurn Industries has also announced a price increase beginning the first of the year. Zurn will increase the Zurn Linear Drainage and the Zurn Green Turtle lines by 5%, while increasing their Chemical Drainage by 10%. These increases will impact all orders shipping post December 31st, 2018. Zurn cites significant increases in raw material costs, rising utility and energy costs, transportation costs, and insurance and labor costs as the reasons for the increase.

Like many other manufacturers of waterproofing and air barrier products, GCP Applied Technologies will increase prices on most products by 6%. This will go into effect for all orders placed after December 19th. Any orders placed prior to December 19th will have to ship before January 1st, 2019 to be billed at current pricing. Also instituting a 6% price increase starting January 1st, 2019 is the Pecora Corporation. This increase will be on all products across the board. Increased raw material costs are again the main reason stated for the price increase.

York Manufacturing has announced a price increase set to take effect the beginning of 2019. York is estimating between a 1% – 8% increase depending on the product. Keeping with the theme, increased shipping and raw material costs are behind the price increase. 

Cementitious and chemical product manufacturers are also reacting to the increased costs of operation. CTS Manufacturing Company will institute a price increase on all of its packaged products. This price increase will be effective February 1, 2019. Roanoke Cement, another manufacturer of cementitious products, will increase pricing. The new pricing will be going into effect on April 1, 2019.  SpecChem, another leading chemical and concrete repair products manufacturer, has also announced a price increase effective January 2nd, 2019. Select products will increase from 5% to 10%. SpecChem also announced an increase on their truckload freight rates beginning the beginning of 2019.
Prosoco, a large manufacturer of chemical and restoration materials, will also increase prices. Prices on all products in all container sizes will increase by 3%. This increase will become effective on January 1st, 2019.

 Lumber pricing has softened some as mills are trying to move out sitting inventory before the end of the year. Mills typically do shutdowns and maintenance work during November and December, so expect availability to tighten some and pricing to move back up at the beginning of the year as a result.

The producer price index (PPI) for final demand in November, not seasonally adjusted, decreased 0.3% from October but increased 2.5% year-over-year (y/y) from November 2017, the Bureau of Labor Statistics (BLS) reported on December 11. AGC posted tables and an explanation focusing on construction prices and costs.

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

Our Associate profile this month is of Chris Kitchens. Chris is Inside Sales Coordinator at our Hardeeville, SC branch. He has been in the concrete, masonry, and erosion control business for 30 years. He was with our Charleston branch from 2014-2016 and he rejoined us in November, 2018. His son, Christopher, will graduate from The University of Alabama with a degree in criminal justice in 2019. In his spare time he likes offshore fishing and golf. We are thrilled to have Chris back on the team. He is well known in the industry and hit the ground running.

Our management article this month is entitled, Be a Fun Loving Leader. I thought this was timely given the season. I enjoyed this article and hope you will too.

December’s Management Article

Be a Fun Loving Leader
By Chip Bell

“Would you buy from you?” is one of my favorite questions. It reframes the perspective to focus on how prospects view you. I offer a similar question to all leaders: “Is it fun being led by you?”

Fun is the WD-40-like lubricant that makes cultures innovative and productive. It yields winning work environments in which leaders are gifted at letting go, turning on and ramping up.

As New York City police commissioner, Teddy Roosevelt walked the streets late at night talking with all citizens. According to biographer Doris Kearns Goodwin, this man of great wealth and privilege learned to connect with ordinary people and demonstrate empathy and authenticity. Dropping the arrogance and pugilistic style he had perfected as a boxer at Harvard, he was courageous enough to show compassion.

A New York police captain at Roosevelt’s funeral said, “It was not only that he was a great man, but, oh, there was such fun in being led by him.”

Roosevelt’s biographies state he hunted wild animals in Africa and, as a naturalist, started the U.S. Forestry Service. The Noble Peace Prize-winning president occasionally skinny-dipped in the Potomac River after a winter nature walk. Roosevelt was posthumously awarded the Medal of Honor for his heroism at the Battle of San Juan Hill. Elected at 42, he was our country’s youngest president.

Not only did he live while alive, he was a carrier of joy. He hosted Booker T. Washington at a White House dinner, appointed a Jewish person as a Cabinet member, traveled outside the US while in office and flew in an airplane.

Fun leaders are real
Herb Kelleher was the CEO who helped start Southwest Airlines. When I met Herb, we were together working the booth at the 1997 BookExpo in Chicago. Kevin and Jackie Freiberg’s best-selling book, “Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success,” had just been released. The Freibergs asked me to help with book promotion, so Herb and I spent time together. I knew his reputation for being a bit of a wild man. I had also heard stories of his innovative approach to building a culture of employees who loved Southwest; a sentiment that also engulfed their customers.

What I learned in the booth was that Herb was completely authentic! His excitement came from a genuinely ecstatic space, not a feature he donned like a mask to influence an outcome. He truly loved his role, his company, his associates and his customers, and it bubbled over in his dealings. His fun-filled manner communicated all things were possible and all ideas were welcome. You wanted to be in the aura of his captivating joyfulness.

So, what is the punch line for leaders? Focus on sharing control instead of taking control. Foster an environment of inclusion by letting everyone in on the running of the enterprise. People will care if they share.

Praise initiative and excellence, not just their results. Practice realness instead of “roleness” — always be authentic. Never allow any actions or attitudes that can risk eroding the self-esteem of others. Be your associates’ biggest champion. Always tell the absolute truth. Let your associates be who they are — the more diverse your work group, the better.

Fun leaders are light
I was about to teach a Six Sigma class for Lockheed Martin near Palmdale, Calif. The audience included senior leaders from the company’s Skunk Works division — the R&D innovators who focused on air defense 25 to 30 years in the future. I was a part of consulting team bringing Six Sigma and lean thinking to Lockheed Martin. The program would be a key part of the company’s success in winning the $200 billion defense contract to build the F-35 aircraft.

A noticeably happy man walked in as students were taking their seats. He was obviously someone important to this class. My co-instructor, a retired brigadier general, asked the man if he would like to speak. He smiled, nodded “no,” and took a seat at one of the small group tables. When I spoke with Mr. Big at the break, he was humble, attentive, and extremely optimistic! I later learned he was executive vice president in charge of the entire aeronautical division and highly regarded by the thousands under his leadership.

So, what is the punchline for leaders? Be an advocate for the “light” — opportunities, not problems. Take the mission seriously, not yourself. Be quick to spotlight the works of others, not your works. Demonstrate a strong allegiance to fair-dealings and wholesome relationships. Anchor your directions to unit purpose and organizational mission.

Tell stories that communicate your vision. Be your associates’ widest net to catch them when their smart risk-taking backfires. Be the partner you want them to be to your customers and other colleagues.

Great leaders are ambassadors of happy. They look for ways to shake up the place with quirky events, silly signs, and celebrative occasions. They constantly seek moments to convey encouragement for ingenuity. And, even with serious work they make certain no one is excused from a delicious belly laugh.

In the words of the character Michael Scott on the TV program “The Office,” “Sometimes you have to take a break from being the kind of boss that’s always trying to teach people things.

Sometimes you just have to be the boss of dancing!”

In closing, we wish everyone a very Merry Christmas and Happy Holidays and we extend our best wishes for 2019. As usual, rather than send Christmas cards which are quickly discarded we made a donation to the American Red Cross in the name of our customers and suppliers.

Thank you for your support and friendship in 2018 and we look forward to our mutual success in 2019.

Best regards,

Jim Sobeck
President 864-263-4377
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Author of The Real Business 101: Lessons From the Trenches
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