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The Era of Shortages and Inflation

Jul 7, 2021 | In the News

As anybody following the construction industry knows, the pandemic upended the supply chain and has caused a spiral of material shortages and rising prices that has impacted nearly every contractor and manufacturer.

At Cemcast, we are among the industry’s essential workers who pushed through the pandemic and continued manufacturing critical infrastructure elements for our customers. Good planning and forecasting helped us to maintain ready supplies of admixtures, rock, sand, cement and fly ash – all critical components in the concrete mix. A severe shortage of steel reinforcement – rebar, wire mesh, bright basic wire and green rod – has been harder to deal with, but we’re managing to stay ahead of the curve.

Inflation has been a more difficult nut to crack. Ken Simonson, chief economist at AGC, has tracked material price inputs for many years, and keeps a close watch on the Bureau of Labor Statistics Producer Price Index. The PPI for construction materials jumped 24.3% between May 2020 and May 2021. It’s the largest increase in the 35 years that the index has been published.

Add in the rising cost of labor and trucking, and it’s easy to see why it is more expensive to construct anything these days. Here’s an example: the price of steel has risen by almost that same 24.3%. It’s about 20% as of this writing. Every full load of precast we send out the door weighs about 50,000 pounds. A 20% rise in steel works out to an additional $10,000 per truckload.

But we’re not whining about it. Like most pipe and precast producers, we’re planning and working our way through the era of shortages and inflation. It has always been part of our culture to eliminate waste wherever we can, so we can meet our pledge of providing our customers the best quality product at the lowest price possible.

While some companies in the industry are struggling in this challenging era, we’re continuing to thrive because of our outstanding workforce and our attention to all the details. That’s why you can count on Cemcast Pipe & Precast – now and in the future – for durable, dependable products, delivered to the jobsite when the contractor wants them. Our whole organization is geared that way, and we’re more focused than ever on that mission.

Carl V. Carlson

About the Author

Carl Carlson is president of Cemcast Pipe and Precast, a locally owned concrete manufacturing company based in Hartford, South Dakota, serving the Midwest region with quality products for underground and above-ground infrastructure.

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