Steel Prices Pose Threat to Southern Nevada Construction

Sat June 26, 2004 - West Edition

While the concern for drought and land price issues have certainly caught the attention of builders and developers in southern Nevada, a new problem has arisen that dwarfs other concerns in the construction industry. Las Vegas Valley builders now face significant price increases for the cost of steel materials.

Prices for scrap, used in most U.S. steelmaking, have risen from $120 per ton last summer to more than $400 in the second quarter of this year. Higher steel prices have significantly impacted the total cost of a building project, as the costs for structural shapes, reinforcing steel (rebar), pipe and even nails have surged.

“It’s definitely a concern for us and other builders and subcontractors in the valley,” said Gary Siroky, president of CORE Construction. “We are at a point where we are forced to pass it on to our customers or face losses on construction projects.”

According to Siroky, China’s enormous consumption of steel and other raw materials has globally limited the supply of steel and products used to make steel. When combined with changing governmental policies on steel trade and the depreciation of the U.S. dollar, conditions for southern Nevada contractors that rely on steel products look dismal.

“The real problem for many area builders is the inability to offer fixed price contracts, such as those seen in public projects,” Siroky said. “It’s getting harder to quote a firm price for long-term projects when steel prices increase as often as every 48 hours.”

Siroky said many contractors are considering the inclusion of price escalation clauses in new contracts and seeking legal counsel for some relief on existing contracts.

These clauses would allow construction companies to pass along to project owners the increases in steel costs over which they have no control. Contractors hope legal clauses will help ensure projects are not delayed and that construction businesses remain competitive.

A full-service general contractor, CORE Construction performs a wide array of project types including municipal, educational, office, medical, retail and industrial. The privately owned company has offices in Nevada, Arizona, Florida, Illinois and Texas.

For more information, call 702/794-0550.