Building contractors squeezed by higher material costs

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Construction growth may sound like good news. But when it’s China, India and other countries experiencing the growth, it’s not good news for at least one group of people: building contractors.

Even as new signs emerged that the housing market is still in a slump in the U.S., construction in China and India is causing a run on materials such as copper, diesel fuel and brass, according to the Associated General Contractors of America.

The organization says that prices for materials used in construction climbed 0.5% in November and have grown 4.8% over the last year. At the same time, competition among contractors is still high because of the slow market, meaning contractors can’t charge more for buildings.

‘Contractors have been unable to recoup these costs in what they charge,’ said Ken Simonson, chief economist at AGC.

Prices for copper and brass mill shapes grew 16% over the last year. Prices for diesel fuel grew 18% and the cost of aluminum mill shapes grew 14%.

‘As the demand in places like China and India grows, the prices go up,’ AGC spokesman Brian Turmail said. ‘You’ve got contractors paying more and more for materials.’

The association worries that these cost increases could put more construction companies and contractors out of business.

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-- Alana Semuels