Preparing For Price Increases

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The price increases are not occurring as a result of Tech-Fast or our suppliers increasing their prices.  Our prices reflect increased costs to us.  The increase is precipitated by what is happening globally.  Increased consumption world wide, primarily in China has created a high demand for steel products and a willingness of the global market to pay more.  Import steel manufacturers which normally provide pressure on our domestic mills to be competitive are shipping their products elsewhere in the world.  The weak US dollar and overseas demand are keeping the imported steel from hitting our market.  Domestically the mills are increasing prices because they can (less competition), but they are also seeing all of the raw materials (ore, scrap, coke, and coal) that go into making steel at an all time high.  Energy costs and fuel costs, as we all know, are at an all time high also.  Consolidation in the domestic steel manufacturing industry and untimely repairs to steel mills have hurt the supply side.  All this combined has produced significant increases so far this year and they look like they will continue.   Click here for Industry Press Release

Plan to have contingency in your budget (not only for price increases but also for other unforeseen circumstances).  The steel building package can make up 10 to 20 percent of the overall project cost of the new project.  Prices for steel components have risen up to 35% in the first half of 2008.  That alone constitutes an impact to a project of 3.5% to 7%.  For a phased project the steel can be as much as 30% on the project costs producing a price increase impact of over 10%. 

Timing is the key.  Everything you can do to speed up the project may help you avoid the next increase.  Manufacturers base the timing of the increase on the delivery of the product, not when it is ordered.

Taking material early is an option, but you need to consider the risks.  Taking it early enough to avoid an increase may involve having it produced before you obtained your permit.  In addition to the risk associated with changes by the building department, material delivered early has to be stored, protected and possibly moved again.  Material taken early has to be paid for earlier, which also increases your carrying costs.

Consider how your project will be affected by the increases and plan to minimize the impacts where you can.  Contact you sales person or project manager if you have any questions or need help working through this process.