Simplex Open House

Thursday, September 14, 2017

ATTENTION MODULAR HOME BUILDERS - Prices Are Going Up Quickly

I just received this important information that will affect your business for the foreseeable future.

Prepare for higher prices on common building materials -- as well as the possibilities of longer lead times and even some shortages as the laws of supply and demand take hold.
rocket.jpg

To protect themselves, your factory will be probably begin including escalation clauses in your contracts and you need to make your sure your future contracts with new home buyers reflect this. Don't make assumptions about lead times and let your customers know of any changes right away.

The biggest forces behind this volatility are hurricanes Harvey and Irma. Their damages caused plywood and OSB prices to spike and lead times to stretch out.

Additional price increases are expected. Demand for roof shingles is high, although much of the repair work will be several months out.

The aftermath of the storms will tighten trucking capacity in the South, which could cause delays and additional costs in receiving products from that region. Gas prices are increasing freight costs as well.

Coincidentally, China recently shut down 80 percent of the US's supply of galvanized roofing nails due to environmental concerns. The facilities may come back on line sometime in September but it'll take a while to replenish shelves.

The window market also has supply issues. Four of the 28 window glass lines in the country are down: two due to a fire and two for scheduled maintenance.

Fortunately, this has caused only mild delays in window production so far.

Other factors leading to steep wholesale price increases to your factories:

Steel rod has increased approximately 50% since the beginning of the year which means the price of fasteners is going up. Shipping rates have climbed 6-8% based upon consolidation within that industry.

USD exchange rate has decreased overseas approximately by 3% and available capacity has been reduced as a result of Anti-Dumping actions against overseas manufacturers.

No comments: