Tom Ingram's Industry Outlook

Thought the following may interest some of you wooddorkers.
Tom's with "The Detering Company", one of the big building material and millworks suppliers in the Texas Gulf Coast area. Here is what he had to say this morning on lumber and material prices:
<quote>
Within the last four weeks there has been a large spike in lumber costs. In past years we could contribute this jump in prices to the increase in demand as spring approaches. Although business is picking up, this increase in activity is not the cause of the increased material costs. The increase is due to an empty supply chain and the weather. Consider the following factors:
1. The inventory glut, caused by the housing freefall, has been used up. 2. A large number of domestic and offshore manufacturers have either shut down or gone out of business. Unfortunately, a number of the domestic mills will not reopen due to EPA concerns. 3. Ocean freight rates have increased. Not only have rates gone up; the shipping companies have lowered their ships speed for fuel economy and to reduce their carbon footprint. This slower speed has increased transit time from the Far East by 4-7 days. 4. Weather...Due to the severity of this winter's weather, the number of logs removed from the forest has been greatly reduced. The effect of the earthquke in Chile, a major producer of MDF, mouldings and plywood, is already being felt. Domestic MDF suppliers have placed their material on allocation and at present, material is being sold "priced at time of shipment".
The cost increases have currently effected lumber, mouldings, plywood, jambs and frame parts. I expect the increase to start appearing in doors, windows, and other products which use wood fibre in the near future.
</quote>
What else is new, eh?
www.e-woodshop.net Last update: 10/22/08 KarlC@ (the obvious)
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Everything he says is true and then some, the economic carnage at the mill/logger level has taken a chunk out of the available production. If there were any serious uptick in construction it wouldn't be unreasonable to expect lumber prices to triple or quadruple.
personally, I think the housing market recovery is going to be slow and don't expect extremes like lumber prices quadrupling over night, but then again, my crystal ball has been on the fritz.
basilisk
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Seems this post may be at a good time.
Basilisk, I was thinking of pinging you. Aren't you in Alabama or Georgia.... maybe near enough to Mobile for a possible good deal on some specific lumber? McPhillips is selling their assets. A few months ago they sold their tools... I bought a RAS. Now, they are selling their lumber inventory. Some of the prices look good, as of now. http://irsauctions.com/index_lots.asp?pg tails&id253
For those of you in the Maryland/Virginia area, Structural Systems has assets up for sale, also.... too far away for me, though. http://irsauctions.com/index_lots.asp?pg tails&id355
Sonny
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Thanks, I'm in central Al, it looks like some nice stuff, unfortunately for the time being, finances are going to keep me from playing :<. I hope to start construction of a proper shop in the fall and am scrounging every free penny for that.
basilisk
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I believe Detering should have as good a knowledge of the economics of the lumber industry as anyone. I bought a lot of materials from them when I lived in Houston. They buy enough wood to maintain their own RR siding. As an aside I remember the wonderful smell of baking bread from the commercial bakery next to their property. Joe G
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On 3/17/2010 12:14 PM, GROVER wrote:

Detering has supplied me with trim for houses for a number of years, and except for the fact that you can't pick and choose (or even look for that matter), some of the nicest hardwood stock of all species, widths and thicknesses you'll ever see.
Also, during the recent building frenzy they had regular bbq's for their clients, with booths for the various window and cabinet hardwear vendors, which included a tour of their shops ... they have some great old woodworking machinery, including a couple of aircraft carrier sized joiners.
Most of the buildings, IIRC, have been there since the mid 1920's.
Yes, the smell of that bakery makes it a worthwhile trip to their loading docks.
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If there is a negative about Detering, it is that they have been at that location for so long that they can't have a mortgage anymore. That security sometimes shows up as lack of speed when picking your order. It might also be attributable to summer humidity in the Bayou City. Joe G
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On 3/17/2010 12:36 PM, GROVER wrote:

I've got the same outside salesman who's been handling my account for almost ten years, so I never really run across a problem in the regard.
I do have to complain about once a year about their delivery guys ... lazy bunch of SOB's who seem to go out of their way to make an onsite mess with their trucks.
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*SNIP of price increase justification*

Sigh... not much. SOS, different day.
The last two years have been horrendous in the roofing industry. I do some consulting and sales work on occasion for an old buddy of mine to help him out (me too!) when he gets too busy.
The price of shingles has literally doubled. Owens Corning and their competitors ahve decided to play the market in oil profiteering when selling shingles. I was getting two increases a month sometimes.
Their claim was based on the fact that since shingles and SBS were made from oil products, they were simply responding to the cost of oil.
Total bullshit. According to the specs, most shingles have about 17% oil byproducts in them. So how do they justify going up 15% a month on occasion? And how were they able to justify that line of crap when shingles (at 17% oil saturation) 15% a month, and the price of oil based asphalt metal primer (a well refined product) or cold process sealer didn't move an inch for a year? Even felt paper only went up a bit over a year's time.
Worse, just like the oil industry, the profited well from the price increase at the barrel head by immediately increasing their prices. That included a price increase on all products in transit to distributors, in manufacture, and on all stock materials on hand to manufacture.
Then on top of that, they added a "fuel tax" to the invoices. So on top of almost weekly price increases, it is now so bad that I have to put a 7 day window on the contracts I write for roofing.
The fun part is that event though prices of oil have gone down from where they were generating a near $4 a gallon cost of gas, the prices of shingles, felt paper, cold process, asphalt, etc., hasn't come down a cent. A little healthy profiteering, you think?
They used to put the sales guys all in a room and tell them how to explain to angry contractors why they had two price increases from the time they wrote a contract and the time it was accepted.
We heard about oil being diverted for heating purposes up north, hijacked tankers, refinery explosions, cost of fuel for material transportation, speculators, shortage of shingles due to hurricane damage, seasonal demands, and on and on. There was just no end to the pointless drivel we were told. There was always an excuse that sounded like a helluva good reason to increase the price, even if it wasn't true.
After losing a bit on a job I had bid based on their prices just a week before hand, my sales guy and I had a pretty spirited discussion. Maybe more than spirited....
Now, we cut all the bull. He calls me and tells me "hey, we're getting ready to bend you guys over again, pretty hard this time, and I thought you would want to know now".
I can deal with that a lot easier than I can that horse hockey about world events affecting shingle/paper/tar price sitting a yard on a daily basis. I just keep my belt loose so I can drop my pants at any time as needed when ordering materials.
Robert
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On 3/18/2010 3:41 AM, snipped-for-privacy@aol.com wrote:

Yep, about 18 months ago I got an email for Brinkmann roofing, who I've used frequently for the past few years, giving advance warning that shingle prices would double in the near term.
I used to worry about plywood being stolen overnight on a site, but never shingles. It got so bad shortly after that email that shingles were being stolen overnight, by the pallet load, from lumber yards ... hell, they aren't even safe onsite, still bundled, on a roof, overnight with no ladder onsite.
So, on the last house I finished in October I spec'ed a galvalume roof. Pricey upfront, but that margin is narrowing with these shingle prices, and metal is making more economic sense over the long haul, although it would be a tough sell in some markets.
AAMOF, I believe Leon has had a metal shingle roof on his house for years ... and that boy makes his nickels count. :)
> A little healthy profiteering, you think?
You nailed it, Bubba! I've contended that from the beginning. Now that they've started their little justification game for price increase, the mere suspicion that underlying prices are trending upwards is enough trigger the greed button.
I've watched this site for some time to get a sense of what I'm going to have to deal with 12 months down the road:
http://www.eia.doe.gov/emeu/steo/pub/#Overview
I've got one lot left that we bought two years ago to build on. At this point in time, and unless someone wants to buy it for a custom, there is NO way in hell I'm going to build a spec in this market.
IOW, I'm basically dead in the water at the moment.
Speaking of "houses", know anyone wants to buy a chicken coop? <G>
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That is still one of the most amazing things left from the price gouging by the shingle makers. I NEVER used to take a bundle back to my vendors. The shingle bundles stayed under $15 for a long time for 3 tab. Well under. And with gas around $2.50 now for some time, it was $10 round trip to return and $15 item, plus the time on the road, the time at the vendor, and the their 15% restock fee.
You betcha I take any full bundles back now, including ANY stray piece of material they will take back.
I have heard from guys down at the roof supply house that they have heard of whole shingle stocked and dispersed on a roof (in a not-so- remote location) being taken off the roof and spirited away in the night. They take it all; shingles, felt, tin caps, ridge vent, valley and eave strip.
When I see that the average shingle job of replacement has about $2500 in untraceable materials on it, I can see why.
I never would have believed it.

Impossible most places here. If we have our normal every five year hail storm, the insurance companies don't depreciate the roofs much, but with a 1% deductible, those clients may be looking at a $3K minimum payout on their part to replace a dented roof.
That is, if the insurance company deems the amount of dents to be damage. There are a lot of metal roofs that are "textured" from hail, but not considered "damaged" around here.

A man after my own heart!

I agree. At least me and my salesman for the roof materials are past that. I don't want to hear it, and he doesn't want to tell it, so I just ask when the next increase is coming.

Don't blame you. I am one of those that think when the newest flood of credit card defaults come by those who have lived off them for the last 18 months arrive we will see this whole recession start again. Add on top a new crop of foreclosures (which are on the increase across the nation while new building goes on) which are starting to rise geometrically, and there is almost certainly trouble ahead.
> IOW, I'm basically dead in the water at the moment.
If I didn't do a lot of repairs and things like roofing and painting, I would be screwed. Repair and maintenance brings a built in referral business with it in good times, and I haven't advertised in so long I can't remember. But that has all but dried up for me. I have enough to keep busy, but all I am doing is paying bills.
No one I go see even asks about a bathroom redo or a kitchen remodel. And with builders giving away 52" flat screen televisions with free satellite for a year, a ton of upscale goodies and the max allowed as cash contributions towards closing costs, it is almost impossible to sell a kitchen job.
It's too easy to get a new home. Low rates, low prices, lots of freebies from the bulders; what's not to like? They can get in a new $250K house for less than a third of the cost of a new kitchen. For less than a bath remodel.
All I can say is that I am happy I have work, and thank the good Lord for high end, extensive repairs.
Oh yeah, and screw my vendors.
Robert
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On Thu, 18 Mar 2010 09:49:16 -0500, the infamous Swingman

Nor has gasoline, despite the 75% drop in oil prices. Effin' ripoffs. But what about freakin' hardware prices? Screws are double what they were a few years ago. Nails tripled, Simpson galv work is through the GDMF roof.

Wow!
I put a metal roof on the carport I built last year. It oughta be good for my lifetime.

It truly sucks.

Our electric company just requested a 20% jump in prices to fund a wind farm, in the middle of a depr^H^H^H^Hrecession. Go figure!

I grok that in its entirety.

Sux 2 B U, huh? I'm very busy, and it only just started getting sunny on Monday. The crush of Spring work hasn't started yet.
I also noticed that there are now 5 additional listings in the Handyman section of the local daily paper I advertise in. All of them are full contractors, looking for the little stuff to keep themselves going.

I thought you gave that to the lady friend. Well, at least don't sell your doghouse. (You inhabit that too much, don't you? ;)
-- No matter how cynical you are, it is impossible to keep up. --Lily Tomlin
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On 3/18/2010 9:49 AM, Swingman wrote:

Just got a list of price increases from my roofing contractor.
Talk about collusion ... a blanket 7% increase, all effective May 22 to June, 2010, from each of the following:
GAF CertainTeed Atlas IKO Tamko Owens-Corning
Each of their price increase notices read almost identically.
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"Swingman" wrote:

---------------------------------------------- Sounds like SOP to me.
One manufacturer announces a price increase effective in 30 days, then waits.
If competition matches the increase, it flies.
If competition doesn't match increase, it gets withdrawn.
About as basic as it gets to avoid charges of collusion.
The electrical industry has been doing it since the 1960 consent degree.
Lew
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On 4/27/2010 5:20 PM, Lew Hodgett wrote:

A 50% increase was justified about 18 months ago by citing crude going to +/-$150 barrel, so, after crude drops to the $40's (with no corresponding decrease in roofing material price)and now climbs back to $82/barrel, another 7% increase is somehow justified?
Gouging ... a rose by any other name.
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"Swingman" wrote:

----------------------------------------------- There are enough players in the roofing materials business, that no single manufacturer can control the market pricing.
Good greif, I've got at least 6 manufacturers here in SoCal (All customers), which is a prime source of asphalt crude, which explains why they are here.
Once a manufacturer gets a price increase do you really expect them to recind it?
Low prices and virginity have a lot in common<G>.
Lew
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Same as the newsprint industry today.
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