Blog
   June 21, 2018

We’re seeing huge uncertainty in the construction industry as the Trump administration announced steep tariffs on imported steel and aluminum and is escalating concerns of an upcoming trade war with U.S. allies. The European Union, Canada, Japan, Mexico, China, and India are retaliating with their own higher tariffs on U.S. imports. Last week, Donald Trump left the G7 summit suggesting that the United States might end all trade with our closest allies if they don’t submit to his demands over reduced trade barriers. Around the same time, China announced tariffs on $50 billion worth of American beef, poultry, tobacco, cars, and other products.

The metal tariffs came about in response to the U.S. Department of Commerce’s finding that U.S. steel imports, which were nearly four times our exports, threatened to impair national security. The administration hoped to boost domestic steel production and lower imports, leveling the playing field for the steel industry. It didn’t seem to take into account the rising costs of construction.

So what does this mean for the industry?

Many construction firms and industry experts predict the steel tariffs could hit the industry hard. Prices for construction materials have already risen rapidly. (According to the Associated General Contractors of America, steel mill product costs rose 5 percent between February 2017 and early 2018.)

“We are experiencing unprecedented market conditions. Construction demand is outpacing the market’s ability to provide labor and materials, and when they are available, they are at a premium,” said Terry Shanley, director of operations and business development for DAY CPM, a division of Otak. “At this point, we are unsure of what to expect in the near future. We know the prices will continue to rise as demand continues, which unlike the previous boom, appears to be fueled by demand, not something artificial.”

Higher costs, along with the ongoing labor shortage, will drive prices higher and might prompt some developers to halt some of their projects.

What should we expect?

We could see a rise in steel prices of 25 to 28 percent because of the tariffs through 2022. An even bigger concern is that the tariffs and apparent trade war could undermine economies here and around the world from the rollback of free trade practices, according to Tim Duy, economist at the University of Oregon. A trade war could threaten many of Oregon’s biggest industries.

U.S. steel prices are rising already. “Some can be attributed to uncertainty of impending tariffs, but most are a result of demand as is the case with other commodities such as drywall and lumber,” Terry Shanley said. “We expect prices to increase, across the board, as much as 12 percent over the next year.”

“These new tariffs will cause significant harm to the nation's construction industry, put tens of thousands of high-paying construction jobs at risk, undermine the President's proposed infrastructure initiative, and potentially dampen demand for new construction projects for years to come,” said Stephen E. Sandherr, CEO of Associated General Contractors of America. “That is because the newly imposed tariffs will lead to increases in what construction firms are forced to pay for the many steel and aluminum products that go into a typical construction project.”

In combination with skilled labor shortages, the increased steel prices could slow down development, depending on product type and location. The price increases could affect the budget for a steel-framed, high-rise office more than a wood-framed apartment complex.

How can clients prepare for the increased prices?

Along with the tariffs on imported steel, the uncertainty in the market means that you should build your budgets with additional contingency reserves to anticipate increased costs resulting from the current economic climate and market volatility. Cost estimating and managing scopes of work become more important than ever.

If you’d like to discuss how the steel tariffs will affect your specific projects, contact your Otak or DAY CPM project manager or owner’s representative. Partnering closely on cost estimating and project management, we can prevent surprises and mitigate the impact of the rising prices.

Sources:

https://www.oregonlive.com/business/index.ssf/2018/03/trumps_tariffs_could_have_mute.html 

http://www.concreteconstruction.net/business/management/the-cost-of-steel_o 

http://www.builderonline.com/money/prices/agc-of-america-tariffs-and-other-trade-measures-are-raising-construction-costs_o 

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   June 8, 2018

Early in his career, Matt Marshall found his passion for discovering clients’ objectives and crafting unique solutions to their challenges. Now he is joining Otak as our Colorado region business development manager, where he will use this passion and his 25+ years of experience to collaborate with our team to elevate Otak’s business development and client care practices.

“I jumped at the chance to join Otak,” said Matt. “I have always thought highly of and respected Otak’s reputation as a trustworthy, talented, and creative engineering, planning, design, and construction management firm. I look forward to helping Otak grow our presence, our impact, and our business in Colorado and surrounding states.”

“Matt will be an important contributor to our growing Colorado team,” said Pete Loris, senior vice president and Colorado region manager. “We saw in Matt an ability to develop a deeper understanding of clients’ needs and help them recognize the unique strengths of the services we offer, along with the integrated approach Otak brings to projects.”

Matt graduated from Drexel University in Philadelphia, Pennsylvania with a B.S. in environmental science. He earned an MBA with a concentration in marketing from Clark University in Worcester, Massachusetts.

Otak, Inc. is an award-winning architecture, urban design, engineering, planning, and landscape architecture firm specializing in helping both public and private client’s build vibrant, healthy communities that protect and enhance natural systems. Otak’s Oregon, Washington, and Colorado offices serve clients wherever their needs are.

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   June 7, 2018


Brian Murphy

With a passion for ecological justice and sustainability, Brian Murphy, P.E., began his career working in water education in South America. Now, after nearly 20 years in the water resources consulting field, Brian has joined Otak in Denver, Colorado. He will direct our water and natural resources business throughout Colorado, pursuing new business opportunities, advising staff on standards of practice and emerging trends, and managing large projects and programs.

Brian has managed and executed freshwater ecosystem restoration, watershed studies, and floodplain resiliency projects across the U.S. and internationally, leveraging his multidisciplinary experience and expertise. As a subject matter expert, he is skilled at conveying technical and policy information related to river engineering and floodplain management.

“I joined Otak because it is a unique consulting firm,” said Brian. “Otak values sustainability, social equity, and community involvement. Also, as a long-time Subaru owner, this analogy resonated with me: ‘if Otak were a car, it would most likely be a Subaru: adventurous and dependable, but also fun with a loyal and spirited following.’ I am excited to help lead Colorado Water and Natural Resources and collaborate with a team that is passionate about innovation and being thought leaders in the water resources field.

“We are delighted that Brian has joined Otak’s Colorado operations,” said Pete Loris, Otak vice president and leader of the Otak Colorado team. “His expertise in urban drainage and floodplain management perfectly complements the strong river and stream restoration capabilities of our Water and Natural Resources team. Brian also brings strong business management and team leadership abilities, which will help Otak Colorado grow through expanded service offerings for our clients.”

Pursuing a Ph.D. in civil and environmental engineering, Brian’s research is focused on the nexus among river restoration, water quality, and environmental regulations. Brian is a professional engineer in four states; a professional hydrologist; a Diplomate, Water Resources Engineer; a certified Project Management Professional; an EnvisionTM Sustainability Professional; and a certified floodplain manager. He holds an M.S. in environmental science and engineering from the Colorado School of Mines.

Otak, Inc. is an award-winning architecture, urban design, engineering, planning, and landscape architecture firm specializing in transit, residential, commercial, industrial, and mixed-use developments; regional planning; public works; and civic, institutional, and recreational projects. Otak has offices in Oregon, Washington, Colorado, and Arizona. 

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