Material Prices And Poor Economy

J-Peffer

Interested in hearing what others think about the economy and the higher cost of roofing.

I keep pretty accurate data on what my prices have done, or do over the years. 2 years ago, I was paying on average about $75 (summer of 2007).

I&W was 32.95
Landmarks 43.75
Coil nails 22.50

It's winter, but my prices have been the same since September until now (feb 2009).

I just did an estimate for a spring job, and took the time to figure a material price per square. I was shocked actually when it came out to 153.75.

A roof that was 25 square in 2007 cost me $1874.15 in materials INCLUDING dumpster fee.

A roof that is 24 square now, cost me $3653.64 NOT including dump fee's (bought a trailer since 2007).

In 2007, I felt I could really clean up, for a 4:12 simple ranch style, no valley, 2 rows I&W I could charge $210 a square, with no problems. After materials that gave me $135 a square left over to take care of labor and other over head cost.

TO do the same less than 2 years later, I'd have to charge $288, and I've invested in a dump trailer to avoid the dumpster cost, if not I'd be charging $300 a square for a 30 year landmark, 1 layer tear off, 2 rows ice and water for a simple job.

The cost to roof your average easy roof, has went up $2000 in a matter of about 18 months, the material cost has doubled.

For a company like mine, operating out of western Michigan, this has really had a bad effect on these types of homes. Most home owners who have the simple spec homes, are lower to middle class, or younger. I think over this year, I'll be seeing a lot of home owners inviting sisters, brothers and friends over for roofing parties. Home owners won't tackle plumbing or complex electrical on their own, but for some reason, they will tackle a roof on their own.

Last year I did more work, but I obviously made less money. I had to past a lot of the cost on to my customers, but I could not pass all of it on. Just like my distributor did for me, absorbed some of the cost.

I don't think we'll see it, but I think with the cost of barrels of oil dropping to what they are, in half the time it took for them to reach the high prices we saw in 2008.....a price DECREASE on our materials.

J-Peffer

Also, the price of metals is WAY down, Petroleum is WAY down.

In the summer of 2008, I helped a friend bring a 3/4 ton van into the junk yard, he got $675 for it.

Now I see that you are getting $25 a TON for scrap prices.

The last time I took aluminum in from a fascia/soffit/gutter job. 17 cents per pound.

dougger222

Fall of 08 paid $140-155 per square. Going into the Spring of 08 paid $80-90 a square. Price per square for materials only of course, no dump fees or permit fees. Landmark, Winterguard, and Roofer Sellect, no cheap stuff.

Brought in 300+ lbs of aluminum a couple weeks ago and got just shy of $100. Same load Summer of 08 would have been $275. Would have hung onto them but didn't want to bring scrap aluminum to the new house.

Rumor has it there will be another shingle shortage this Summer. Certainteed Shakopee recently rented 13 acres from the race track to store shingles.

philcav7

I don't get it. Why a shortage, if they are renting additional storage space?

Grumpy

My thoughts on the poor economy. If I have to hear about it anymore I am going to start shooting people. Pull your head out of the media and start living your life, not someone elses.

Yeah the prices of materials have gone up. Great for me! Since I mark up material, that means my profit skyrocketed. Last year I did LESS WORK and made MORE MONEY.

louannda

I have been reading the thread and the reason I got on was to see what everyone was saying about shingle prices going up.

How do you in good conscience Chicago pass on material hikes to your customers you already have under contract? Or, don't you have any under contract? Or, are you one of these less than moral contractors that have open ended contracts?

We have been in the business 35 years. We are hired more for our reputation for doing good work and honesty than anything else. We wonder sometimes if it is worth it. But, we ar booked until next November and will only take one more job on for the year.

I try to figure jobs where we make a 50% profit and with our short season still make $50,000 a year and not live on food stamps. We have contracts, in writing, that we have to honor.

So, material hikes, and yes we believe collusion more than any other factor is responsible, will kill us!! We are going to absorb every dime of it.

We have lived through the 80's and know what it will be like. Not fun. But we will survive.

My question is to these contractors that brag big enough crews to do a tearoff of several layers, clean up, haul away, osb, felt, decent shingles such as Certainteed architectural, ice & water shield, venting, (hell, we even clean the gutters)........ How are you going to support a crew big enough to do a job in 3 days and do a decent job and actually make any money? Aren't you going to actually have to quit undercutting other contractors and charge a decent price to make any money?

There are contractors out there that will do anything to get a job. We don't get it. You can't have nor would you want all jobs. Why?? How??

SelfContract

[quote=louannda;596777]I have been reading the thread and the reason I got on was to see what everyone was saying about shingle prices going up.

How do you in good conscience Chicago pass on material hikes to your customers you already have under contract? Or, don't you have any under contract? Or, are you one of these less than moral contractors that have open ended contracts?

We have been in the business 35 years. We are hired more for our reputation for doing good work and honesty than anything else. We wonder sometimes if it is worth it. But, we ar booked until next November and will only take one more job on for the year.

I try to figure jobs where we make a 50% profit and with our short season still make $50,000 a year and not live on food stamps. We have contracts, in writing, that we have to honor.

So, material hikes, and yes we believe collusion more than any other factor is responsible, will kill us!! We are going to absorb every dime of it.

We have lived through the 80's and know what it will be like. Not fun. But we will survive.

My question is to these contractors that brag big enough crews to do a tearoff of several layers, clean up, haul away, osb, felt, decent shingles such as Certainteed architectural, ice & water shield, venting, (hell, we even clean the gutters)........ How are you going to support a crew big enough to do a job in 3 days and do a decent job and actually make any money? Aren't you going to actually have to quit undercutting other contractors and charge a decent price to make any money?

There are contractors out there that will do anything to get a job. We don't get it. You can't have nor would you want all jobs. Why?? How??[/quote]


It's called Trade Secrets... and I doubt many people here will divulge their secret information to Internet Public here either. Your common sense & Pratice makes perfect!

J-Peffer

I've "heard" the demand for asphalt is high right now, and the demand for it is high. From what I've been told, with the new administration, many jobs with bridges and road construction are being pushed forward. A lot of asphalt will be used.

I think it's a lot of hog wash though too.

I'll be okay, I keep busy and i'll make it, but I do really MISS those 2007 prices and profits. I'm not the owner of an established company, I'm 28 and have been doing this since I was 25. I can't ride off a estabished company name, or established clientele. I get jobs, but it's hard work starting a company going into the worse times.

Lucky for me, I love what I do, and get involved with every detail, and I work every single day building my company. Every year, I go through this, worrying about work, booking up work, and every year I get more work than the previous. I do my home work, I am good with my sales and customers and it's not about me really.

The logic of the cost makes no sense. In a poor economy, prices don't increase. When raw material prices go down....prices don't increase. I don't know who is aware of it, but CertainTeed has a 10% increase in March again too. And I just filled my tank for less than the cost of 2 bundles of landmarks, or a case of steel coil nails that the raw materail cost $25 a ton.

roof-lover

2006 democrats took control of govenment.
Our prices hovered around 210 a sq.

Oct 2007 the government implemented rules demanding certain materials and how to install them.
This raised the price to 260 a sq to make the same money above direct labor and material. The time dealing with the city increased and we ate the cost therefore losing money.

May 2008 prices started raising in material. Raising every other month.
Now the price is 300 a sq+
Thats the price with no office and no advertizing.

I have my company listed in the yellow pages.
I dont have a paid ad there. 600 a year.
It has only got me three leads in almost a year
and no work at all.
The people that called thought i would be cheap since i didn't have an ad.

My only work has come from referrals from past customers.
Now they cant afford me unless i start offering financing or something.
roofs all around me need to be done but hardly nobody seems to be able afford it.

They are hoping the pricing will come back down.
But every year the price is going to go up.

Now if the people stand up to the government ONLY
will the price come back down.

J-Peffer

I am actually just going to call CertainTeed some time today.

If I don't understand why the prices of materials keep going up so much, or have so much then I can't explain it to my customer.

I remember bidding jobs, with customers saying "That's about what we figured". It's been a long time since I've heard that!

When the gas prices were high, they understood, my prices had to go up. It's a petrolum base product, and shipping cost, and my driving cost go up, you can explain that.

Not sure how to answer their price related questions now, and I don't want to simply "blame" it on the shingle manufactures.

concretemasonry

Material prices will not go down as fast you everyone would like.

During the period when prices were going up manufacturers, may have had some of a backlog of cheap petroleum products to use up, but had to commit to future purchase volumes in order to maintain an inventory and guarantee of supply. They are not like contractors that go day-by-day, but have to plan ahead.

For the current production, they will be using the fuel they committed to since buying long term contracts and dealing with suppliers is a long-term two way street. They cannot go across the street for a quick, cheap fill from someone that they could care less about and they can shange suppliers the nest day.

Unfortunately, when the economy slows down, production slows down to help get rid of the old inventory because sales are less, but they are still using costly petroleum they are committed to with the market price coming up. - but they are using the petroleum slowly and it will take time to use what they committed to.

The choice to to stop production and use very few petrpleum commitments or cut the price of the stuff in inventory to a very small market. Because of the low interest rates, it is better to to keep the inventory until the demand returns if they can afford it. If they sell it cheap, their inventory value goes down and the balance sheet gets worse, profits nosedive, interest cost go up. It the company is in bad shape, it is bankruptcy or a buy-out by a competitor or worse yet, an investor in a different business.

Not a simple answer, but it is complicated long term situation.

__________________
Dick

Engineer, designer and consultant recently active domestically and internationally on construction and design in about 35 countries.

LA_nailer

ditto

outlaw

This is the best explaination I have heard thus far. Now I understand.

scott.emp

J-Peffer email me @ scott.empie@yahoo.com

patrick_sales

As prices of material skyrocket general contractors are going with the lowest bid sometimes less than the actual cost of doing business. This is going to drive most small roofing companies right out of it by the end of 09

trptman

so in other words,
when material prices go up, they charge more money.
when material prices go down, they still charge more money.
that's about it, right?

trptman

IF you can keep that up, more power to you.
but the problem becomes, someday, your materials and markup are going to price your services out of reach. (not just you and your services, but everyone's in the same boat).
Maybe I'm doing it wrong, but I find myself either not marking things up as much, or not marking them up at all-in order to keep a project affordable for someone so I can keep working. Sucks, but the alternative is sit at home until the wife makes me get a job at Home Despot.