September 2021 Newsletter - New South Construction Supply

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Dear Friends,

Last weekend we celebrated our 40th anniversary on Hilton Head Island with our associates, their plus one’s and many suppliers. Less than five percent of companies make it to 40 years, so we were glad to be able to get together and celebrate this significant milestone. A special thanks to our customers and suppliers, without whom this would never have been possible.

As I write this letter in late September, the overall economy in general, and the construction economy, in particular, continues to do well. There is more inflation than I would like to see, but it isn't really affecting the stock market or construction starts, at least not yet. As the old saying goes, “While the music is playing, we're going to continue to dance.”

Here at New South, our business is currently on fire. Our second quarter was 52 percent higher than the second quarter of last year. We are currently supplying or have in backlog over 10 million square feet of tilt-up construction jobs, our residential business is booming, and we just landed the largest bridge job in our history. The shortages of several of the key products we sell is largely over, except for concrete reinforcing mesh. There is still a worldwide shortage of the wire rod needed to manufacture this product. If you need wire mesh for upcoming jobs, I suggest you order it the second you sign the contract.

There is a lot more coming New South’s way before the end of the year is over, and we look forward to sharing more with you via this email newsletter and on our social media channels – particularly on LinkedIn, Facebook and Instagram.

Read below for a closer look at pricing trends for our key products:

As summer shifts to fall, the construction industry continues to run at full capacity. New jobs continue to break dirt and backlogs for 2022 remain strong. While there were not the huge pricing swings seen in prior months, there were some commodity items that saw pricing movement.

Wire mesh reinforcing continues its steady climb up in pricing. The wire rod shortage remains a significant impact on production and lead times for finished products. Demand remains extremely high and lead times are currently running 12 – 16 weeks. With consumer demand high and availability low, the wire mesh mills pushed out a $40.00 per ton increase on September 15th. This increase comes almost exactly one month after a $40.00 per ton increase was announced August 13th. Wire rod availability projects to remain an issue for the foreseeable future, so the expectation is for wire mesh to continue to rise through the remainder of the year and into 2022.

While mesh continues to rise, rebar has stayed stable in comparison. While scrap metal pricing has continued to decrease slightly over the past few months, demand has remained at a high enough level to keep the finished goods pricing from following the dropping scrap prices. Another factor we continue to monitor is the increasing amount of import rebar hitting the US market. While import pricing currently has little to no advantage over domestic pricing, the instant impact of availability provided by the increased import supply, is helping to decrease lead times and help build domestic inventory at the mills. For now, rebar looks to remain stable moving into October.

Polyethylene saw another small increase come through in September. This increase went into effect September 13th and came just four weeks after an increase of the same size was implemented in August. The increase in costs of raw materials, resin, labor, and transportation are all listed as the reasons for the additional increase. Two increases in such a short time period does bring concern of another price run like we saw earlier in the year. If the market panics and begins to place large amounts of purchase orders in excess of historical demands and current production capacity, we could see a pinch point in the supply chain that causes lead times to increase dramatically.

Lumber pricing appears to have hit the bottom and are beginning to rise back up. After the rapid decline of lumber pricing over the past few months, the solidification and slight rise in pricing has given the mills and brokers a chance to catch their breath. Availability remains strong with the typical sizes and grades able to ship out within two weeks. Expectations are for pricing to continue to slowly rise over the next few weeks.

Materials costs continued to outstrip bid prices in the 12 months ending in August despite a recent drop in lumber and fuel prices. The producer price index (PPI) for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of buildings—increased 0.3% from July and 5.0% year-over-year (y/y) since August 2020, while the PPI for material and service inputs to construction industries climbed 20.6% y/y despite a decline of 1.7% for the month, the Bureau of Labor Statistics (BLS) reported on September 10.

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

Catching up with our Customers

In this month’s segment of Catching up with our Customers, we highlight Frank L. Blum Construction Co., a general contracting company who provides a range of services to multiple diverse markets such as healthcare, higher education, senior care facilities, and corporate interiors to name a few. Beginning in 1923 in Winston-Salem, NC, Frank L. Blum Construction Co. has grown and expanded into four more locations across the state including Asheville, Charlotte, Greensboro, and Raleigh. Learn more about their exceptional past and present projects, their highly respectable core values that shape their day-to-day business, and their industry prediction for 2022 by reading the full Q&A here.

Featured Manufacturers

Owens Corning

Premier supplier of insulation, roofing, and fiberglass composites

Sika/Scofield

The #1 Ranked Brand Name in Decorative Concrete Color, Texture and Performance Systems

Husqvarna

A Leader in Concrete Cutting Tools and Accessories

Associate Profile

Alex "Ferny" Villa
Manager in Training, Charlotte

Our associate spotlight this month is of Alex “Ferny” Villa, a manager in training at our Charlotte branch. Ferny was born in Durango, Mexico, graduated from Trinity High School in North Carolina and received his political science degree from UNC Charlotte. Prior to joining us in April, he was with two equipment rental companies. He has big smile and a great attitude and has already become a major asset at our Charlotte branch. Fluent in his native Spanish, we are excited he can communicate with our valued Hispanic customers more effectively. In his free time, he enjoys traveling, grilling, ATV riding, and spending time with family and friends.

Our Leadership article this month is, Momentum: How a Series of Small Wins Maximizes the Flywheel Effect. If you aren’t familiar with “The Flywheel Effect”, it was popularized by the celebrated business book author, Jim Collins. He talks about how it takes a lot of energy to get a flywheel to move, but when it does, get out of the way. I know you’ll enjoy this article on how to get the flywheel moving in your business.

Momentum: How a Series of Small Wins Maximizes the Flywheel Effect

By Dan Rockwell

“Big things happen because you do a bunch of little things supremely well that compound over time.” Jim Collins

“One little thing doesn’t make a difference. But ten little things do make a difference.” Swen Nater

A series of small wins makes:

Hard jobs easier.
Quitting unlikely.
Problems less troubling.
Environments brighter.
Big wins attainable.

Momentum – how to leverage the flywheel:

#1. Develop people.

Lousy leaders press for results without developing people.

Behaviors are targets too. Describe, honor, and celebrate behaviors that create winning environments.

If it’s only about the numbers, people are tools.

#2. ‘Where’ comes before ‘how’.

Describe where you choose to go before you choose how to get there.

“The answer to how is yes.” Peter Block

#3. Practice 5X encouragement.

Encourage 5X more than you correct.

Which team goes further? A team that constantly cheers for each other or a team that constantly criticizes each other?

#4. Focus on learning.

What are we learning?

How could we do better next time?

What do we need to stop because it isn’t working?

#5. Take action quickly.

Delay kills momentum.

The sooner you begin spinning the flywheel, the quicker you enjoy the flywheel advantage.

Momentum begins with the first step.

#6. Keep spinning after winning.

Wins are endings. You win the race at the end.

Momentum is a series of successful endings that enable beginning again. Reaching today’s goal is an ending point that enables a new beginning.

Momentum killers:

Critiquing small wins.
Devaluing small contributions.
Controlling rather than releasing. Permission-asking kills momentum.
Feedback without encouragement. I believe in you.
Lack of accountability. How are you going to improve? When will we follow up? How can I help? What’s the next step?

Until next month, I hope you and yours are healthy and remain that way and that your business continues to proper. As always, never hesitate to let me know how we can improve our service to you and your company.

Best regards,

Jim Sobeck
President & CEO 864-263-4377 (Direct Line)
jim.sobeck@newsouthsupply.com

Main Office/Branch: Greenville, SC

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