May 2018 Newsletter

May 2018 Newsletter

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May 2018 Newsletter
Dear Friends,

I am writing this letter right after returning from a three day financial conference in New York City. I’m happy to report that the unanimous conclusion of all of the speakers is that the current recovery will continue until at least the second half of 2020, if not longer. The main reasons for the continuing expansion were cited as the recent tax reform law and continuing low interest rates and low inflation. The data presented were convincing and I feel their bullishness is warranted.

However, the continuing strong market and the steel tariffs have caused a lot of recent price increases. See below for more details.

The worldwide price for oil increased dramatically over the past several weeks with US Brent Crude trading at over $78.00 barrel and most analysts expect prices to continue to rise in the coming weeks. The surge in the price for oil has and will affect the prices of construction products, which contain resins made from oil. Higher oil prices have also caused freight costs to rise even more due to higher diesel prices, which manufacturers and distributors of construction products will pass through to their customers. The price for scrap steel posted down by $10.00/ton on the Chicago Metals Exchange which most analysts expected: however, most analysts expect scrap steel prices to rebound in June.

ABT, Inc., one of the largest manufacturers of polymer trench drains and trench drain systems, announced on April 30th that they will increase prices by an average of 4% on June 1st. Increased costs for raw materials, especially steel and hydrocarbon-based materials were cited as the reason for the June 1st price increase.

Some concrete reinforcing wire mesh manufacturers increased prices in mid-May by approximately 5% and other manufacturers have announced they will increase prices on or before June 1st. This is the 5th industry wide price increase this year and prices are now over 30% higher than they were in December, 2017. Wire rod manufacturers have already announced another price increase for June and if they are able to get the June increase, concrete reinforcing wire mesh manufacturers have indicated they increase prices again by July 1st. There are also long lead times for some sizes of rolls and sheets with some manufacturers being at much as 3 weeks out on some items. If you have any projects that require concrete reinforcing wire mesh, we strongly urge you to buy out these projects as soon as possible to avoid paying even higher prices and to ensure that you will be able to have the wire mesh on site when needed.

For the first month this year, domestic rebar mills did not increase prices in May; however most analysts expect domestic mills to increase prices in June, despite the price of scrap steel moving down by $10/ton in May. Most rollings for June are sold out and some of the rollings for July are already sold out. Some distributors and rebar fabrication shops continue to experience stock outs of some diameters and lengths. With little to no competition from imported rebar and with the high demand, there is nothing to prevent domestic rebar mills from increasing prices in June. As we recommended in our past several newsletters, we once again strongly recommend you buy out any projects you have that require rebar in order to try and avoid project delays, due to the long lead times that are expected to continue for the next several months.

On May 1st BoMetals, Inc. increased prices as follows on their entire product offerings:

Metal Keyway, Anchor Slot, Anchors and Stakes – 10%
Round Steel Dowels and Nail Stakes – 15%
PVC Waterstops and Plastic Products – 5%
Foam Products and all other Concrete Accessories – 10%

Increased raw material costs and higher transportation costs were cited by BoMetals as the reason for the May 1st price increase.

W.R. Meadows announced on May 17th a price increase of between 3 to 10% on many of the products they manufacture, effective June 18th.  The price increase applies to the following products:

Mel-Drain – 3%
Cementious Grouts and Repair Products – 3 to 5%
Penetrating Hardeners, Form Release Agents, and Decorative Sealers – 4 to10%

After prices for some sizes of southern yellow pine dimensional lumber fell in April, prices have risen steadily since and are now back to the same levels as they were in March and early April, or higher. Analysts expect lumber prices for both southern yellow pine and spruce to continue to increase through June, due to high demand and predict prices will increase by 5% or more in June, depending on the grade and size of lumber. If you have projects which require these products, we strongly urge you to buy them out as soon as possible to avoid paying higher prices in the weeks to come.

Most manufacturers of Geotextile erosion and drainage fabrics will increase prices between 3 to 6% due to recent resin price increases. As with some other construction products made from oil or natural gas resins, the supply of erosion control and drainage fabrics will be tight in the coming months and further price increases are expected in the coming months as resin manufacturers are expected to increase their prices again. 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 and to avoid paying higher prices in the future.

Several construction epoxy manufacturers announced price increases for June and those who have not announced a June price increase are expected to do so in the near future. Due to the worldwide shortage of epoxy resins, resin prices have increased by as much as 75% since the 4th quarter of 2017 and epoxy manufacturers must raise prices to cover their increased costs for resins. The June price increases will vary by the type of epoxy and will range from a low of 10% to as much as 20%. If you are bidding any projects which specify any type of epoxy, please ensure that you get a current quote from your New South sales representative. 

Higher diesel and fuel costs coupled with the nationwide truck shortage have caused freight rates to increase even more in May and freight rates are expected to continue to increase steadily throughout the summer months. Due to the substantial increase in freight costs, several manufacturers of construction products are now charging a fuel surchargeto their customers on all orders and other manufacturers are expected to begin charging fuel surcharges soon. Most manufacturers that are charging a fuel surcharge are charging between 1.5% and 3%, but some are charging as much as 5%. These fuel surcharges are effectively a price increase, which will be passed on to customers by distributors of construction products.

The producer price index (PPI) for final demand in April, not seasonally adjusted, rose 0.1% from March and 2.6% year-over-year (y/y) from April 2017, the Bureau of Labor Statistics (BLS) reported on May 2. 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

Euclid Chemical

Maker of chemicals and aggregates for the concrete industry

SpecChem

Quality construction chemicals for the concrete industry (Click image for full size)

Polyguard

Specializes in products that protect surfaces and structures from moisture, water and other undesired substances

Associate Profile


Our Associate Profile this month is of Colby Ruel. Colby was born in Manchester, NH and graduated from Londonderry High School. He has attended Daniel Webster College where he studied Homeland Security and Manchester Community College where he studied graphic design. Colby is single and enjoys playing organized ice hockey on the weekends, supporting the New England Patriots and the Boston Bruins, traveling, bike riding, and fishing and boating. He moved to Charlotte in 2015 and worked at 84 Lumber before joining us as a warehouse/inside sales associate last October.

Also, I was recently featured on the Behind Your Back Podcast with industry consultant Bradley Hartmann. If you care to listen to my comments on social media, prospecting, selling, and other topics of interest click here: http://bit.ly/jimsobeckpodcast

Our management article this month is Technology isn’t a Replacement for Communicating in Person. While technology has its place, it can be abused. This article talks about why in person communication will always be appropriate for some situations.


May’s Management Article

Technology isn’t a replacement for communicating in person
By Scott Mabry

There is nothing wrong with the powerful productivity applications that have transformed our work experience.

There is everything wrong with how some leaders use them.

Or should I say, abuse them?

Instant message conversations.

Email management.

Digital collaboration.

Decision automation.

Online feedback.

Big data.

These tools do accelerate the work process. Or at least they should. And that can be a good thing.

But there’s a theme here. Do you see it?

They are designed to replace that slow, cumbersome experience of having to actually talk to another person(s), in-person, or even on the phone, in real time and work things out.

Drive-by messages are substituted for thoughtful conversations. Multitasking is encouraged. Meaning gets warped in the digital noise. Emotions are replaced by emoticons. Stories are sanitized by charts and data.

Our interactions are reduced to byte-size messages with tools designed to keep us productive and create results in the shortest time possible. But what is the quality of those results?

We can cover more territory with more people than ever before. But what is the value of that territory?

What are the trade-offs? Do we know when to stop? When to disconnect from the device and reconnect with people?

Analog leadership feels slower, (but may actually move things faster). It requires our attention, time and creativity. It necessitates certain skills and qualities. It’s a long-term play and it’s more work in the short-term. But it does offer some advantages.

  1. We observe body language, hear the tone of the other person and form a complete picture of the message they are sending.
  2. We give our full attention to the person(s) with whom we are interacting or to the process we are facilitating.
  3. We clear up misunderstandings and clarify intent in real time versus hoping our message was interpreted correctly.
  4. We express the emotions that are tied our words, especially when offering appreciation or giving feedback.
  5. We share our experiences and tell stories that bring color to our ideas and build a connection with others.

Underneath lies the simple truth that leadership is a human experience. With that in mind, the list grows much longer.

I believe we are in danger of slipping unaware into a blurred and frantic pattern of digital interaction and while forgetting that behind these tools are human beings.

It’s hard to build trust via email or know if a person needs our encouragement. There are things the data just can’t tell us. There are unique personalities, experiences, histories, and stories that are easy to miss via instant messages.

There is something intrinsically rewarding about real, human interaction that I just don’t find in the never-ending typing and clicking version of team management. As a matter of fact, I find it a lot more interesting. Others may disagree, and that’s Ok. It’s how I’m wired.

One other thing I’ve noticed. Sometimes you need to slow down to speed up. Often that involves an analog approach.

Our digital world is revolutionizing the workplace. Leaders are smart to leverage the benefits of these tools. I know I do. Just consider that this is not a one-size-fits-all solution. They weren’t intended to nor can they fully replace the necessary human interaction that makes leadership effective. If we apply the right balance we can increase our efficiency without losing our effectiveness.


In closing I know you join me in hoping the forecasters I heard in NYC are correct. None of us want to see another recession any time soon.

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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