October 2018 Newsletter

October 2018 Newsletter




New South News

Dear Friends,

As the year winds down several leading forecasters are calling for a mild construction slowdown in 2019. This has been expected for a while so I’m not shocked but we are being conservative in our budgeting for 2019.

We also are feeling the effects of low unemployment rates. In South Carolina, where we’re based, the current unemployment rate is down to 3.3% and the national rate is 3.7%. This has made it even harder to fill current openings on our staff.

The one constant remains price increases. See below for a detailed look at pricing trends for our main products.

Several manufacturers of construction products we distribute either increased prices or announced price increases in October, primarily due to increased costs for resins and transportation. Most manufacturers of oil and natural gas resins increased prices in September or October and have announced another price increase for November. The price for scrap steel posted up $10/ton on the Chicago Metals Exchange the first weekend in October, but most analysts do not expect this to effect prices for construction steel products.

Dow Building Solutions, a division of The Dow Chemical Company, announced on October 11th a price increase of 7% on all Styrofoam extruded polystyrene insulations effective November 1st. All orders placed on or before October 31st must ship by November 11th to be invoiced at current prices. As of the date of this newsletter, neither Owens Corning nor Kingspan have announced a price increase, however; most industry experts expect them to follow Dow’s lead and announce price increases for November.

Polyethylene sheeting prices have been unchanged for the past several months, but with the recent resin price increase, several manufacturers have indicated they will increase prices by mid-November by approximately 4%. If the November resin price increase holds, expect polyethylene sheeting manufacturers to increase prices again in mid to late December. If you have any projects that require polyethylene, consider buying out these projects in early November to avoid paying higher prices.

Advanced Drainage Systems, one of the premier manufacturers of polyethylene drainage pipe in the US announced a 3 to 5% price increase, depending on the product, on September 30th. Prices for any firm orders in their system prior to September 30th were honored if shipped within 30 days of the price increase announcement. If the November resin increase “sticks” expect ADS as well as other polyethylene drainage pipe manufacturers to increase prices again in November or December.

BASF Construction Systems notified their distributors on October 1st that they will implement a price increase effective November 1st on their entire line of construction chemicals, waterproofing items, sealants, concrete repair products, and floor hardeners. The amount of the increase will vary by product and will range from 2% to 10% across all product categories. If you are bidding any projects that specify BASF products, ensure that you get a current quote from your New South sales representative.

Even though the price for scrap steel posted up by $10/ton in October, most analysts do not expect domestic rebar mills to increase prices in November, as demand is historically lower in November than in other months. If the price for scrap steel posts up in again in November, domestic mills may increase prices in December to try to recoup their higher cost for scrap.

Chase Corporation increased prices on their entire line of CIM waterproofing products on October 19th. The amount of the price increase varied by product and ranged from 3 to 8%. All orders placed by October 18th must be shipped by October 31st to be invoiced at current prices.
National Drainage Systems (NDS), one of the leading manufacturers of polyethylene trench and drainage systems, announced October 1st a price increase effective December 1st on their entire line of products. The amount of the price increase will vary by product and will range from 3 to 10%.

Most polyolefin under slab vapor barrier manufacturers increased prices by approximately 5% in October and others will increase prices in early November. As with polyethylene sheeting and drainage pipe, if resin manufacturers are able to get another price increase in November, polyolefin underslab vapor barrier manufacturers will in all likelihood increase prices again in December, We strongly encourage you to buy out any projects you have that require polyolefin under slab vapor barriers as soon as possible.

Concrete reinforcing wire mesh prices have been unchanged since the double digit increases this summer and early fall and manufacturers are expected to hold the line on prices in November. Availability has improved in recent weeks, but there are still some manufacturers who are sold out of the most popular gauges of sheets and rolls. Lead times for these items are as much as 3 weeks. If you have any upcoming projects that require concrete reinforcing wire mesh buy these projects out as soon as possible to ensure you have the reinforcing mesh on site when you need it.

The producer price index (PPI) for final demand in September, not seasonally adjusted, increased 0.3% from August and 2.6% year-over-year (y/y) from September 2017, the Bureau of Labor Statistics (BLS) reported on October 17. 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

Makers of Chemicals and Aggregates for the Concrete Industry

Simpson Strong-Tie
Connecting systems for wood, steel, masonry, and concrete

A leader in concrete and masonry accessories

Associate Profile

Our associate profile this month is of Chandler McDonald. Chandler is a Manager in Training at our Greenville, SC branch. He was born in Greenville where he graduated from Greenville High School. He then got his Bachelor’s degree in Business Administration-Management at USC- Beaufort where he played on the golf team. Chandler has a 1 ½ year old daughter, Emmie Catherine. When not working he enjoys spending time with his family and the occasional round of golf. He is also a big Redskins fan. Prior to joining us Chandler worked for Tucker Materials. Chandler has made a big impact since joining us in March of this year.

Our management article for October is, Five Essentials to look for in Management Candidates. Not everyone is cut out for management so this article has some good advice about what to look for when promoting someone into management.

October’s Management Article

Five Essentials to Look for in Management Candidates
By Hugh Latif

Promoting your best salesperson to a management position is no guarantee the individual will be an effective sales manager. The same goes for promoting any top performer to management. You just never know. Management requires certain skills and not everyone has them, high performers included.

Recruiting effective managers, either by promoting people from within the organization or by going outside, can be a difficult task and sometimes those appointments wind up as colossal failures. Depending on the circumstances, this sort of thing can set the entire organization back.

Knowing how to identify people with management potential is a key attribute for a business leader. Based on my experience advising hundreds of businesses in Canada, I have developed five essential criteria for doing just that.

The criteria are:
1) Character
2) Technical knowledge and present performance
3) People skills
4) Team play
5) Chemistry

Let’s have a look at each of them.

Character should always be the first thing to evaluate if someone is being considered for a managerial position. What exactly is it? In a nutshell, character refers to the honesty of the individual and their level of integrity better be A1 because it is the foundation for a successful manager. People have to trust this person and if trust is absent, the manager will be ineffective.

Put another way, we can always legislate ethics, but we can’t legislate integrity and there is a big difference between the two. Ethics may be defined as moral principles that govern a person or that govern the behaviour of a group. Integrity, on the other hand, is the quality of being honest, and with that comes strong moral principles and moral uprightness. This means you should avoid hiring a person of questionable character as it will come back to haunt you.

Technical knowledge and present performance are often lumped under the heading of “qualifications.” While these things are important, they are still secondary to character. Why? You want someone who can manage more than do and that means coach. As everyone knows, a coach does not play in the field, but manages from outside the field. So, evaluate technical experience and present performance, but don’t make it the prime criteria for choosing a manager.

Next is people skills. In business we like to say so-and-so is a people person with leadership ability. By that we mean the person can do a whole slew of things – communicate, direct, motivate, encourage, support, teach, develop, train and coach others. Whether they are an introvert or extrovert doesn’t really matter since both types can be effective when dealing with others.

No. 4 is being a good team player, and any good manager must be that or it’s game over. To illustrate my point, think of sports – and not tennis or golf, where individual performance is everything, but team sports – hockey, basketball, soccer. Here team performance is the priority and team play should always be carefully defined. It includes team play going upward, downward and laterally. What do I mean by that? The person must excel at team play on all three dimensions, which means being a good team player when dealing with superiors, when dealing with subordinates and when dealing with colleagues.

The last item is chemistry, which refers to the degree of fit with the organization, and just like team play, several elements are involved. It includes chemistry with the superior, with the rest of the team, and with the company culture and its values. This is more of a subjective than objective call, but it is important. In fact, if your candidate does not fulfill the chemistry criteria, the appointment might be a no-brainer even if they score well on all the other criteria.

In summary then, this is the formula for promoting and recruiting effective managers. First, evaluate the person’s character as best you can. Then, examine their record and appraise their work experience, followed by selecting applicants who possess good people skills. Next is taking a close look at their team play. Finally, assess the fit of this person with the organization and the chemistry they have with their own superior. Add it all up and chances are good you have made a sound choice.

In closing, we expect a strong close to the year and hope the forecasters calling for a slowdown are wrong as we’re not ready for this party to end.

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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