Builders' woes rising

Headwinds are increasing for Northeast Ohio homebuilders.

Rolling scarcity of various supplies, roller coaster lumber prices, labor shortages and the threat of rising interest rates from record lows are dimming prospects as pandemic pains looked to ease. Then oil prices last week hit record levels as global efforts grew to punish Russia economically for invading Ukraine. Rob Myers, president of homebuilder trade group HBA Greater Cleveland, said in an interview, "A lot of things are eating at the bottom line. It's only going to get worse with record gas prices."

Although high fuel costs hit all parts of the economy and daily life, they hit homebuilders harder than other parts of the economy, because their equipment uses lots of gas and homes are loaded with oil-derived plastic parts.

Ken Simonson, chief economist for the Associated General Contractors of America trade group, wrote in an email that other construction materials have embedded energy costs associated with mining, manufacturing and shipping.

"Builders also pay surcharges on many of the thousands of deliveries of (heavyweight) materials as well as fueling equipment to haul away everything from dirt to debris left over after a job," Simonson said.

He and others note manufacturers of items from steel to roofs already were scheduling frequent price hikes before the recent run-up hit.

Shortages also are a new and growing source of concern, especially plastic pipe used in everything from installing streets in new projects to drainage pipes (often called drain tile) installed around home foundations.

Herman "Bucky" Kopf, president and CEO of Kopf Builders of Avon Lake, is among the few building-business survivors of the high-inflation period in the 1970s and double-digit interest rates in the 1980s that brought it to heel.

"We never had the scarcity of both materials and labor that I can remember," Kopf said in a phone interview. "Certain materials may not have been available at different times, but there was always something to exchange it with, such as a different kind of lumber or flooring sample. It's become a tough world. The difference today from years ago is that you have the buyers. Now, it's amazing how many buyers we have."