June 2018 Newsletter

June 2018 Newsletter

 

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June 2018 Newsletter

Dear Friends,

As I write this in late June, the economy in general, and the construction economy in particular, continue to chug along. The decrease in the corporate tax rate and the repatriation of profits held offshore by US companies are spurring even more construction with some mega projects rumored to be announced in the next month or so.

The downside of this continued strong economy is that price increases and spot shortages continue unabated. We have had to significantly increase our inventory levels to avoid price increases as much as possible and to ensure that we have inventory ready when you need it.

For a more detailed look at pricing trends for the major products we distribute, see below:

After the Trump Administration announced that all previous exemptions from the 25% tariff on imported steel and 10% tariff on imported aluminum from Section 232 would expire on June 1st (except for Brazil and South Korea) most foreign manufacturers of steel products from previously exempt countries notified their American customers that a 25% surcharge would be added to all existing orders not yet delivered and also notified them that they would increase prices by 25% for future orders. Some domestic manufacturers of steel products also notified their customers that they would increase prices for July orders by double digits. Polypropylene resin manufacturers announced another price increase for June for the second consecutive month and most analysts expect manufacturers of other resins to increase prices in July.

Domestic concrete reinforcing wire mesh mills notified their customers that they will increase prices between 11 and 18%, depending on the wire gauge on July 2nd citing the 25% surcharge foreign mills added to existing orders of wire rod and the announcement by some domestic wire rod manufacturers that they would increase prices by double digits in July. Due to high demand and limited wire rod availability, domestic mills would not allow their customers to book more than a few trucks for stock at current costs in June, so effectively they have put their customers on allocation. All mills’ pricing policy is now that prices are subject to change without notice and that price is at time of shipment. Lead times have increased to as much as six weeks from some gauges of sheets and rolls and some mills have are sold out until August. As we did in our May newsletter, we strongly urge you to buy out any projects you have that require concrete reinforcing wire mesh as soon as possible to ensure, as much as possible, that you have the mesh on site when needed.

For the second consecutive month manufacturers of Geotextile grids erosion and drainage fabrics will increase prices in July. The amount of the price increase will vary by product and will range from 5% on woven fabrics and grids to 14% on nonwoven fabrics.  The availability of erosion control products continues to be tight, primarily due to the limited supply of resins. Please be sure that you buy out any projects which require erosion and drainage fabrics as soon as possible to ensure they will be available when you need them on your job.

Mar Mac Wire will increased prices on June 18th on their entire line of steel concrete accessories and other steel items, both Contractor Brand (imported) and Premium Brand (domestic). The amount of the price increase will range from 5 to 10% and will vary by product. This will be the 3rd price increase by Mar Mac since February.

Wholesalers of imported concrete accessories such as tie wire, anchor bolts, rod chairs, nails, bar supports, snap ties, etc. increased prices for many items by approximately 5% in June and are now quoting prices for July orders 10 to 15% higher than current prices. There is also a limited supply of some items and some wholesalers are experiencing stock outs of some of the most popular items. This situation will continue through July and into August until containers of these items are delivered to ports in the southeast in mid-August. 

Although no manufacturers of masonry reinforcing and ties have announced a price increase, some have indicated they may increase prices in July or early August citing the wire rod price increase and increased costs for zinc and other items. Lead times are still several weeks for some items due to distributors buying heavily in early April before the 15% industrywide price increase took effect. If you have any projects to buy out you may be well served to buy these jobs out soon to beat the probable price increase and to ensure you will have material on site when you need it.

Domestic rebar prices were unchanged in June from May, primarily due to price of scrap steel moving “sideways” in June. Long lead times for orders is now the norm, as domestic mills’ July rollings are sold out and some August rollings are sold out already. It’s anyone’s guess if domestic mills will increase prices in July; however, as rollings are sold out into August and with little imported rebar available, it’s a high probability that the mills will raise prices in July.

After prices for southern yellow pine and spruce lumber steadily increased beginning in May, in recent weeks prices have remained flat, which is the norm just prior to July, as demand normally decreases in July due to the Independence Day holiday and many contractors take vacation in July. Lead times for mill direct trucks of dimensional southern yellow pine are now 2 weeks or less, which is much improved from May. Most analysts expect lumber prices to remain flat the first few weeks in July and then begin moving up again as demand increases in mid-July.

Several manufacturers of steel forms, power tools, steel storage boxes, and power tools will increase prices in July citing the rise in the cost of steel and transportation costs as the reasons for their price increases. Most will increase prices between 3 and 6% and other manufacturers of these products are expected to increase prices by August.

The producer price index (PPI) for final demand in May, not seasonally adjusted, rose 0.4% from April and 2.8% y/y from May 2017, BLS reported on June 13. 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.

Featured Manufacturers

 

Wire Bond

Innovation in Masonry Construction

Access Tile

The Ultimate Solution in Detectable Warning Systems

Sonoco Products

The World’s Largest Producer of Tubes, Cores, and Fiber Concrete Columns

Associate Profile


Our Associate Profile this month is of AJ Sweatman; rebar fabrication manager at our North Charleston, SC branch. AJ is from Moncks Corner, SC and is a graduate of Timberland High School. He has also attended DeVry University. He and his wife Brennan Leigh Sweatman have four children, Drake (nine), Bently (seven) Destiny (six), and Sage (two). In his spare time he enjoys farming, fishing, and spending time with his family. Prior to joining us in March, 2015 he was employed by PPM Contractors and Alcoa. AJ has been a great addition to our team in that he is very versatile and is always happy to pitch in wherever he can help.

Our management article this month is, How to Ease Into Difficult Conversations. Every manager has to have difficult conversations from time to time but how you approach them determines if you make things better or worse. If you manage people I suggest you take a few minutes to read this.


June’s Management Article

How to Ease Into Difficult Conversations

By Bill Benjamin

One of the most important things a manager must do is have skillful difficult conversations – holding people accountable, rolling out change people don’t like, pushing back with the board, and for those of you with teenagers, telling them “no” to something they really, REALLY, want. I’ve trained and coached many managers, and these are 4 common mistakes that they (and I) make that will trigger other people defensive emotions when having a difficult conversation:

1. Not managing your own emotions and thinking first.   If we go into any conversation and we are emotionally triggered or anxious, or we are focusing on the wrong thinking – or both – that spells doom for the conversation.   From our work in Emotional Intelligence, we recommend that you take time before a difficult conversation to disconnect (i.e. not think about the conversation), breathe deeply for a few minutes (meditation is even better), then shift your thinking from all the things that could go wrong and focus on the reason and purpose for the conversation – or as we say in the next bullet point, focus on your positive intention for having the conversation.

2. Not clarifying a positive intention.  Too often, we start a conversation and the other person isn’t clear why we are having the conversation.  In the absence of that clarity, the emotional brain of the other person will assume it’s something negative.  If you want to learn more about the brain science of emotions and why people amplify the negative, watch the second video here.

By stating a positive intention at the beginning of the conversation, you set the other person’s emotional brain at ease, so they can truly listen to the feedback.  Examples could include “I am providing this feedback because I believe it will help you be an even better performer” or “I have news to share and I want to make sure you know how much I value you when this conversation is over”.

3. Starting with statements – or questions that sound like statements.   The emotional brain is triggered by statements like “you did this” or “you should have done that” or even questions that sound like statements such as “what you were thinking?” or “did you not think about how this would impact others?”.
When we ask genuine non-judgmental questions, it engages the neo-cortex of the other person (the rational part of their brain), causing soothing of the emotional part of the brain, which allows them to process the feedback, news or opposing idea without being defensive or closed minded. Example questions could include “give me your perspective?”, “how you feel things went?” or “what’s this been like for you”.

The other advantage of asking non-judgmental questions is a lot of times people will own up to a mistake or something they did wrong without you even having to bring it up!

4. Not saying the Last 8%.  When facing a challenging conversation, most leaders adequately cover the first 92% of what they want to cover. When they get to the more difficult part of the conversation – where the other person often starts reacting emotionally by shutting down, blaming, getting defensive, etc. – they avoid the last 8% of the conversation, which is the part that really needs to be said. What’s missed is the critical information and feedback an individual or organization needs to improve performance, grow and achieve objectives.

Before you start the conversation, be very clear with yourself about the Last 8% that you need to communicate, even if the other person doesn’t react well.  You can’t control how another person reacts, but you can ensure you say what needs to be said.

Having skillful difficult conversations is one of the key differentiators of great CEO’s and world class organizations. While having them is not easy, it is a skill that can be learned and mastered. The ability to have effective difficult conversations isn’t just a skill that’s needed in business, it’s also a critical skill in our personal lives!


That’s all for this month. I hope that, despite the heat, business is as good for you as it is for us. We couldn’t handle it being much better.

As always, thank you for your business.

Best regards,

Jim Sobeck
President 864-263-4377
jim.sobeck@newsouthsupply.com
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Author of The Real Business 101: Lessons From the Trenches
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