Sheer panic struck the construction industry earlier this year when hefty tariffs were placed on imported metals. Twenty-five percent and 10 percent tariffs on steel and aluminum, respectively, were enacted to safeguard domestic producers from overseas competition and help reduce the United States’ $568 billion trade deficit. As a result, the construction industry is facing major threats that could affect our overall economy—and there have been few signs lately that the trade wars are subsiding.
According to CNNMoney, 50 percent of global steel production is used for buildings and infrastructure, and the United States is the world’s top importer of steel. The tariffs affected not only local manufacturers, but also large construction companies that need a continuous supply of raw materials to complete development projects.
One repercussion of the tariffs is significant price increases; the cost of rebar has seen an increase of 15 to 20 percent from the beginning of this year. Large companies seized this opportunity to buy large quantities of materials and sell them to smaller firms at exorbitant prices for a profit, or refrained from providing the materials to them altogether to limit competition.
While the ripple effect of the tariffs may have been felt by some in the business, there might be a silver lining to this challenge. The price increase for these metals presents opportunities for innovation and for companies to think outside the box when choosing materials for their projects.
For example, a seven-story building in Minneapolis was the first to be constructed entirely of cross-laminated timber. Apart from being a rival to traditional steel and concrete methods, this type of wood material also creates a healthy environment for occupants. This contemporary and forward-thinking mindset could propel construction companies forward in the long run.
The Nest, an 18-story luxury apartment tower for students of Temple University built by Bock Development Group, is currently being constructed in Philadelphia. The Nest has not experienced a shortage in labor or materials in the construction process because of its strong relationships with construction companies in the area. Workers on the project are fortunate to know what materials should cost and can budget appropriately for them, and know where to get the materials from reputable vendors.
Tom Bock, President and Founder of Bock Development Group