Construction Materials Edge Up But Labor Remains Depressed
Written by Marilyn Bowden on January 27, 2011
By Marilyn Bowden
The cost of construction materials has bottomed out and is rising somewhat, industry experts say, but with so few jobs to compete for, labor costs remain low.
Costs must be seen in the context of the past few years, said Alberto Milo Jr., president of Builders Association of South Florida.
Mr. Milo is president of Urban Development Group, which specializes in multi-family urban redevelopment properties. In 2009, he formed RUDG, a joint venture between Urban Development Group and The Related Group, to build affordable housing.
"Construction costs were substantially increased at the height of the boom and through 2008," Mr. Milo said — some by as much as 100%.
Now, the price of materials such as copper is starting to inch back up, he said.
Luis Garcia, principal of Adonel Concrete, one of South Florida’s largest privately-owned concrete companies, said that after three years of price reductions, the cement, aggregate and steel industries are pushing for increases in 2011.
"The cement industry is experiencing an historic low," he said. "Everybody is going after the same few projects.
"Those that have been able to survive have had to reduce salaries, people, benefits and expenses, and they cannot absorb another cent. They are not making any money, so they have no choice but to increase the cost to end users."
The escalating cost of gasoline directly affects the construction industry, Mr. Milo said, "so the trend is definitely upwards as far as the cost of materials is concerned."
Labor, however, is a different story.
"It’s definitely still inexpensive," he said, "because not a lot of projects are being built, and so the labor force is going to be interested in just getting the job."
The dearth of projects has forced many Building Association members to change their business models from new construction to renovation work, Mr. Milo said.
"I think that, in times like these, people may not want to build new, but they’ll say, "Let me enhance what I have.’"
But there probably will be some new construction coming out of the gate in 2011, he said.
"The county is going to issue general obligation bonds," he said, "and that will facilitate new projects for both infrastructure and housing. My company has several in the works with them."
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