McCormick Newsletter -- May 2004
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Rising Steel & Copper Prices Poke Holes In The Roof
-- Affecting Estimates (& Construction's Recovery?)
Inflation is back, at least for the prices of
copper, steel, and other metals. McCormick Systems customers need to take
caution to check and re-check prices -- and availability. Beyond the fact
that prices have increased (as shown in the three charts below),
contractors are telling us that -- especially with steel products --
quotes from suppliers are changing frequently. With this fluid situation,
distributors are reluctant to guarantee a price for any significant period
of time.
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| Steel prices have skyrocketed -- worse in the U.S. than in the rest of the world. Graphic at left is from CNN Money Web site | |
Using the London Metals Exchange Web site, we researched the price of one "tonne" of copper. A tonne is 1,000 kilograms -- or 2,205 pounds. Here are quotes detailing the rising price of copper, given in U.S. dollars per tonne:
January 2, 2003 $1,544
April 7, 2003 $1,597
June 30, 2003 $1,643.50
January 2, 2004 $2,347
April 6, 2004 $2,985
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| This graphic from the London Metal Exchange shows the recent spike in copper prices and the current volatility. |
From the first quote to the last, copper prices are up over 93%; the time span is only 15+ months. In the past year, the increase is almost 86%. In roughly the first three months of 2004, the increase is 27%. To save you a bit of math: At $2,985 for 2,205 pounds, copper -- bought in big quantities -- was priced at $1.35 per pound. Last August, it was below 90 cents/lb.
For comparison purposes, we looked at the LME prices for aluminum. A tonne of that substance sold for $1,329 on April 7, 2003. On April 6, 2004, the price was $1,725 -- a 29.8% gain.
How this is affecting you
For information closer to where the rubber hits the road, we checked with a customer who maintains historical price information. According to this contractor, the price per 100 of 1/2-inch EMT has increased from $10.50 in January to $29.20 in April. For 3/4-inch EMT, the increase is from $19.20 to $57.75.
. . . YES, just short of a triple.
We also checked retail prices, via pricing CDs supplied by a hardware retailer (you can probably guess which one). Here are the price increases at the check-out counter just since the year began: 1/2-inch EMT, 215%. 3/4-inch, 245%. 1-inch, 279%.
Increases of such near-insane dimensions make the copper world seem almost tame. We researched the price of #12 THHN wire. It was $160.72 last month. It was $84.86 in March 2003. That's an 89% increase.
NECA and allied organizations are trying to do something about the increases. Here's a slice of the association's recent release:
" . . . there is a very real possibility that steel shortages could result in the delay or cancellation of construction projects, threatening the livelihood of construction firms. Moreover, the potential effect on local, state, and national tax bases could seriously jeopardize economic recovery, given the fact that specialty contractors alone contribute up to 12 percent of the nation’s total gross domestic product."
For the full release: http://www.necanet.org/whats_new/report.cfm?ID=2335. Note the Engineering News-Record, the construction weekly, ran an article in March claiming a typical building's overall cost could increase by as much as 8% if skyrocketing steel prices do not soon return to earth -- find the feature here: http://enr.construction.com/news/bizlabor/archives/040405.asp.
What you can do
SMACNA, one of NECA's allies, has posted -- on the public portion of its Web site -- escalation clause language for HVAC contractors to use in contracts with customers. At this moment, with steel prices rising and the "ceiling" uncertain, no one wants to be left holding the bag if further increases materialize -- not the steel product manufacturers, nor electrical distributors, nor the customers.
http://www.smacna.org/council/index.cfm?fuseaction=view_issue&issue_id=382&newsletter_id=11
While SMACNA's escalation clause is a public document, it would be smart to have one drafted especially for your company -- by your lawyer.
We've Gone Electronic!
Welcome to the first all-electronic edition of McCormick Systems' customer-focused monthly newsletter!
We've taken advantage of the Web's universal & versatile capabilities here -- with off-site links to information you might like to see. When you use these links, please come back to us!
An additional advantage -- for you and your people -- is that we are no longer limited by paper. Anyone at your company can access this "publication". All they need do to get e-mail notices (telling them a new edition has been posted online) is complete the simple request form found here: http://www.mccormicksys.com/Email_signup.htm.
I hope you enjoy -- and profit from -- this new format. Please contact me at 800-444-4890 (or e-mail me at tmccormick @ mccormicksys.com -- omit the spaces) with ideas, suggestions, criticism, or anything else. Thanks!
Todd McCormick
President
See McCormick During 'Indy Week' In Indianapolis
The Electrical Show 2004 moves to Indianapolis this year, with May 25-27 the dates -- just before the Indianapolis 500 race. You'll find your friends at McCormick Systems ready to help you with answers to your questions, new ideas, and perhaps an idea or two that will help you become more productive in your estimating (and in the field).
We'll be in booth #601. For more info on the Show, see: http://east.electricshow.com.
For info on the race, see: http://www.indy500.com.
Hot News -- Web Links
AutoCAD 2005 Release
AutoCAD has introduced AutoCAD 2005. As you perhaps know, McCormick's unique CAD Estimating module works with AutoCAD products. For info on the new version of AutoCAD:
Company announcement: Click here.
Review (from CADwire.net) -- http://www.cadwire.net/commentary/?31852.
Review (from AEC magazine) -- http://www.caddigest.com/subjects/autocad/select/021804_corke_2005.htm.
NEC 2005: Report On Comments
The NFPA plans full release by April 8 of its Report On Comments on proposals for the 2005 National Electrical Code. However, some of the ROC was online earlier; the large document is "published" in sections, posted to the Web in PDF: http://www.nfpa.org/nec//2005_NECR/2005ROC/2005roc.asp.
Schedule for the 2005 NEC, and links to previous documents, can be found here: http://www.nfpa.org/nec//2005_NECR/2005_necr.asp.
New Web Resource
The Bureau of Labor Statistics (U.S. Dept. of Labor) released it's 2004-05 Occupational Outlook Handbook. This every-two-years publication projects employment and more for virtually every significant occupation in the U.S.
To find "electrician" -- http://www.bls.gov/oco/ocos206.htm.
All construction occupations -- http://www.bls.gov/oco/oco1009.htm.
The main page for the Handbook (see menu of occupations at right) -- http://www.bls.gov/oco/home.htm
As part of the effort to publish the new Handbook, the BLS release a mound of data. Here are data that might be relevant to McCormick's customers:
| Will The U.S. Come Up Short Of Skilled Electricians? | |||
Bureau of Labor Statistics 10-Year Projections |
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| Occupation | 2002 Actual | 2012 BLS Projection | Growth, '02 to '12 |
| Total All | 144,014,000 | 165,319,000 | + 14.8% |
| Electricians | 659,441 | 813,908 | + 23.4% |
| Electrical/Electronic Wholesalers | 367,200 | 450,200 | + 22.6% |
| Electrical Equipment Manufacturing | 176,400 | 180,200 | + 2.2% |
| Electrical Lighting Equip. Manufacturing | 72,200 | 70,100 | - 2.9% |
| Electrical Power Generation, Transmission & Distribution | 435,700 | 404,700 | - 7.1% |
McCormick On The Web
What Contractors Should Look For When Choosing Software (by Jeff Griffin) -- http://www.electricsmarts.com/content/csoftware_lookfor.asp.
McCormick Networked Estimating Stops The Licensing Musical Chairs (from CEE News magazine archives) -- http://ceenews.com/ar/electric_mccormick_networked_estimating
Putting It All Together: VDV, Estimating, CAD & PDAs: http://www.ecenmag.com/ecen/article.asp?article_id=60927&mag_id=ecen
Releases Of Note
Dodge: January Contracts For New Construction Dip 3% -- http://www.construction.com/ResourceCenter/forecast/2004Jan.asp
NECA Improves Safety Web Site -- http://www.necanet.org/whats_new/report.cfm?ID=2320
IEC Meets With Dept. of Labor On Worker Shortages -- http://www.ieci.org/default.asp?PID=547
Get Windows Training Now! Standard Estimating
The class is structured to take you from "Job Startup" through " Bid Summary". It provides in-depth instruction, including good manual experience and "brush-up" exposure for those who want to get more out of the product.
Advanced ManagementDesigned for the database manager or chief estimator, this class drills down into the bottom of the program. You will learn how to build specification formulas, write reports and reports formulas, and more. Before taking the class, you should be proficient in all takeoff phases of the product and understand your company’s needs.
Upcoming Schedule BelowUnless specified, all classes are at the training center in our office in Chandler, AZ. Classes start at 7 a.m. and wind up about 4 p.m. daily. We make hotel reservations using information from the registration forms sent in from participants. We must receive your registration form in order to reserve a space in our class.
To obtain a registration form, call 800-444-4890 and speak with Loriel McCormick or Jodi Dougherty. You can e-mail either one (lmccormick@ or jdougherty@ -- mccormicksys.com).
UPCOMING ESTIMATING CLASSES -- East & West
Standard Estimating Class
Chandler, AZ -- May 19-21, June 2-4, June 23-25 are the dates set for classes at our historic Headquarters building.
Baltimore, MD -- May 19-21 and June 30-July 2 are the next dates set for classes in our Eastern location.
Chicago, IL -- June 2-4 are the dates set for our new Chicago class.
Advanced Management Class
Our next Advanced class is scheduled for McCormick's Chandler, AZ HQ -- August 11-13.
To see all of upcoming classes scheduled -- so far -- go to: http://www.mccormicksys.com/train.htm.
DID YOU KNOW:
We'll 'Suitcase' Classes To You + Customize Them, Too!
Do you have a number of people in your company who need to learn McCormick's system -- and you don't want to send all of them to Baltimore or Chandler?
OR: Perhaps you have specific or special training needs . . . an area or areas in which you need concentrated training, customized especially for your company?
Don't hesitate to contact us. We have trainers -- with broad and deep expertise in the electrical construction industry and, of course, with the McCormick estimating system's capabilities.
Call 800-444-4890!