Construction Industry Experiences Rapid Material Increases

The cost of raw materials used in the manufacture of our products has never been higher or more volatile. In 2005, steel scrap sold at a cost of $125 per ton. By January 2008, the cost more than doubled to $275. In May of this year, the cost had risen to $515 per ton. It is likely that costs will continue to rise. The chart below illustrates the trend.

Our industry is experiencing similar increases for all foundry materials. The magnitude of these cost increases is unprecedented, and global in nature. Worldwide demand for raw materials has caused disruption in traditional supply channels. In the near future, availability of production materials may be a concern for foundries not aligned with dependable supply sources. Other factors contribute to current cost instability. Transportation costs, fuel, energy and health care costs are at all time highs and rising.

Economic factors including a weaker US dollar, reduced municipal funding, the housing crisis and restrictive financial policies combine to negatively impact the volume of work in the market.

In many ways, our industry in 2008 is a perfect storm: skyrocketing costs, less work, strained supply, and rampant uncertainty.