Katrina hits construction industry across U.S.

The impact of Hurricane Katrina can be felt on the construction industry as far away as Hawaii.

"I was already concerned over the last six months over the rise in construction costs," said Jeff Arce, chief financial officer of The MacNaughton Group, a Hawaii developer. "This in all likelihood is going to make it worse."

Prices for diesel fuel and other petroleum and natural-gas products, cement and tires for heavy equipment are already rising, the Baltimore Business Journal reports. Prices for lumber and labor are expected to soar. And delays in projects are likely coast-to-coast.

Damage to refineries and pipelines caused the spike in fuel prices. Cement and rubber prices have risen because of closure and damage at the Port of New Orleans, one of the nation's busiest ports. Ken Simonson, chief economists for the Associated General Contractors of America, told the Baltimore Business Journal that 9 percent of the country's cement imports came through New Orleans and the devastated city is also the entry point for the nation's imported rubber.

"It's already bad enough," Tom Dondlinger, president of Dondlinger & Sons Construction Co., told the Wichita Business Journal. "I'm just really worried about it. I think if the prices start escalating in our industry, owners might decide to postpone building projects because of the cost."

Lumber gets pricey
But those aren't the only worries for those in the construction industry. The cost of lumber will also rise because of damaged mills in the deep south and as demand increases with the rebuilding of communities nearly leveled by Katrina. Already, some contractors are seeing hikes of 8 percent or more in the cost of lumber.

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"We do anticipate seeing some price increases," said Mike Schlegel, president of Bozzuto Construction Co. in Greenbelt, Md. "The scariest thing right now for us is the uncertainty in the market."

For some, that uncertainty is already a certainty, with their costs going up but their contracts already set.

"Anybody that is on a fixed contract is getting hammered," said Bob Yeske, president and owner of 43rd St. Concrete in Lawrenceville, Pa.

The hammering has begun for one Pennsylvania contractor. John Zang of Zendoco Construction Co. in Penn Hills told the Pittsburgh Business Times his company had received notice of an $11.50 fuel surcharge per truckload of concrete.

"Most of us can't pass that on," Zang said.

Jeff Nobers, spokesman for 84 Lumber Co., a lumber company in Washington County, Pa., told the Pittsburgh Business Times that his company would be passing on increased costs to customers soon. The company has 485 stores in 40 states, and its clients are mainly in construction.

"I don't think it's anything that should be unexpected; from coffee beans to gasoline to lumber, you can run down the litany of products and supplies that will be impacted for some period of time," he said.

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