Dive summary: After a sudden spike in prices on a batch of building materials in 2021, Associated General Contractors of America has appealed to President Joe Biden to take action to mitigate the soaring cost of lumber. In a Feb. 18 letter, AGC CEO Stephen Sander asked Biden to urge domestic wood producers to increase production to address the growing shortage, as well as make drafting a new softwood agreement with Canada a top priority for his administration. “The skyrocketing price in recent months of prices for all classes of sawn timber has created difficulties for contractors who were called up earlier in the pandemic to create spaces that are vitally necessary for patient care and social distancing between workers and the public,” Sanheir wrote. . “AGC believes the White House can play a constructive role in mitigating this growing threat.” Dive Insight: Over the past year, softwood prices have increased 73%, according to the PPI. In 2017, former President Donald Trump applied tariffs of up to 24% on softwood imports from Canada, a factor that contractors say continues to affect the prices of sawn timber. By calling for the focus of a new deal with Canada, Sander’s speech appeared aimed at mitigating the effects of those tariffs now that Biden has spent most of his first month in office unveiling Trump’s legacy through executive orders. Sandherr writes: “While wood is sometimes considered only an important product in the construction and remodeling of single-family homes, in reality wood and other wood products are used in every type of building construction.” “The fluctuation of sawn timber prices and the impossibility of fixing future delivery dates make it very difficult for contractors to provide bid prices or completion times for upcoming projects.” But the cost increases for contractors weren’t just limited to wood. Iron and steel scrap has risen 50.8% in the past 12 months, including a 25.8% jump from November to December, followed by another 20.6% jump from December to January, according to the January PPI report. Overall, the PPI for cost inputs for new non-residential construction – what contractors pay to get the job done – jumped 2.5%, while price contractors said they would charge fees for specific jobs, rising just 0.2%. The spread of costs versus bid prices by more than a dozen factors has worried industry watchers. “If high material prices are left unchecked, they threaten to undermine economic recovery by inflating the cost of infrastructure projects and economic development,” Sandhir said in a press release before the message. “The widespread damage is caused by maintaining tariffs on products that many Americans need to improve their homes, modernize their infrastructure, and revitalize their economy.”
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