After soaring to historic heights, the price of lumber and construction material costs have finally dropped an astounding 74 percent to not quite pre-pandemic prices as Fortune reports. What drove the wild turnaround? The supply chain affected the costs of materials to the point that they became unaffordable.
Do-it-yourselfers stopped doing their home improvement projects as it was not financially feasible. Many home builders also slowed down construction. The exorbitant increase in material costs added too much to the price tag of the home.
Thanks to the higher prices, manufacturers and sawmills sped up production. Considering many stopped their projects and the sawmills picked up production, this flip-flopped the situation. It led to rising supply and falling demands. It's basic economics 101. This course-corrected and brought the prices down, but not to pre-pandemic levels.
The Fortune article states that it will be a long time before prices ever reach pre-pandemic levels. That's because do-it-yourself projects are still more popular than before the crisis. New home construction and home improvement continue to be higher than they were in 2019. Now the tide is changing again.
Just when you thought it was safe to buy lumber again, the price goes back up. After 12 weeks of falling prices, things are turning around in the other direction again. A Business Insider article says lumber prices have already climbed by 50 percent since August. It quotes several experts who say the increases will continue in 2022.
The good news is that the prices haven't reached historic levels. Far from it. As of this writing, lumber futures go for around $700 per thousand board feet. This is just a under half the cost of the record high of $1,700 in May 2021. Before the crisis, lumber futures didn't even reach $600 per thousand board feet.
Why did the price turn around again? The irony is because of lumber's plummeting prices. It became more affordable, so price-sensitive shoppers started ramping up again on their home improvement projects. According to analysts in Mortgage Professional American Magazine, the price of lumber will continue to climb but not to the point of spiking and crashing as it did in recent months.
The good news is that experts say they don't expect the prices to reach the record-breaking levels anytime soon, if at all. Supply chain issues will remain a challenge. Construction companies need to plan carefully to ensure they have the supply they need.
Experts agree the current prices are a good place to be because it helps the sawmills and lumber yards, yet the cost is not out of reach for those who need to watch spending.
Along with the escalating prices of materials comes a jump in lumber theft. In a CTV News story, a detective in Canada states there has been an increase in lumber thefts since 2018. Before the crises and the surging costs of lumber, construction already had challenges with theft. The reason is because criminals know they can enter a construction site after-hours without being stopped. In recent months, more and more news stories have reported on lumber theft.
In California, CBS47 reports two men took more than $30,000 of lumber from a construction site. Thanks to security cameras, the police identified the vehicle used to perpetuate the thefts. Suspects who were in possession of stolen property have been arrested.
KOAA News5 reports that construction sites in Pikes Peak Region have seen lumber worth more than $1 million. Criminals have been driving around new neighborhoods where construction takes place to steal and resell whatever they can get their hands on. The story quotes a representative who says the reason for all these thefts is simple. It's due to the high price of lumber.
With so many lumber thefts from construction sites, police are still investigating thefts from many months ago. The police department has more than 150 cases of construction site thefts they've been investigating this year alone. The county sheriff's office has 100 cases of theft with a price tag of more than $400,000. These are happening in dark areas without good lighting. Apparently, these criminals carry weapons and are potentially violent as they've been threatening people.
Besides lumber theft, construction companies also contend with large equipment theft. The National Equipment Register (NER) and the National Insurance Crime Bureau (NICB) 2016 Equipment Theft Report reveals stolen equipment in the U.S. costs between $300 million to $1 billion with an average of $400 million. The reason for the wide range is due to complete statistics not existing. The report provides an estimate based on the data available.
Additionally, the chance of recovering large equipment is scant with 75 percent of stolen equipment never making it back to their owners. Not only that but also this data does not cover losses from business interruptions. These include short-term rental costs, project-delay penalties, and unused workforce and management time.
The most critical thing you want to do is guard all of your assets on the construction site. Even the inflation alert from the Associated General Contractors (AGC) of America recommends adding security to protect your assets from theft and damage.
Replacing your stolen materials will be a high price to pay. You may have to pay a bit more than what you paid for the original materials, and it puts your project at risk for delays. The supply chain remains flaky, and it may not be possible to get the lumber you need when you need it.
You could potentially have an unhappy client. That means losing their referrals and your company's reputation potentially taking a hit. The simplest and most effective solution is to add remote video surveillance with analytics and human monitoring. The difference in the cost of material could easily pay for security solutions that protect your large equipment and lumber on your construction site.
Construction sites come with many risks beyond safety and theft. Proactive security technology that largely reduces the risk of theft and damage on construction sites while delivering other benefits is remote video surveillance. It can help deter crime, mitigate damage and liability, find opportunities to improve productivity and safety, and save on costs.
Look for video monitoring that incorporates video analytics and human intelligence. Adding analytics helps humans be more effective at their jobs. Watching the cameras is a tedious job. Video analytics closes the gap that comes with being human. It's like putting a computer's eyes on the entire construction site.
Video surveillance with monitoring pairs videos analytics with trained monitoring operators. Analytics watches for unusual activity, such as people approaching the property when the construction site is closed.
Besides contending with potential injuries, construction sites deal with trespassing, vandalism, and inclement weather. The monitoring operators watch the construction site in a safe location away from the property. Severe weather and dangerous criminals won't affect their-decision making and quick action. If a storm hits and causes a problem, the operator can call the construction site's point of contact to report the problem.
For times when an intruder walks towards the construction site, the video analytics will alert the trained monitoring operator. The operator can then issue an audio warning on a speaker. If that doesn't stop the suspect, the operator can call the police department while tracking the intruder's movements.
Video surveillance systems capture everything for later review. The video can be stored for a set number of days, more than long enough in case incidents come to light days after they happened. The recordings can provide with you the proof you need for active investigations and liability claims.
With remote video surveillance, you'll help protect your expensive assets and ensure construction worker safety. The rising costs of lumber justify the need for efficient and proactive security that can deliver a fast return on your security investment (ROSI).
Determining the ROSI is challenging but doable. It can be harder if none of your construction sites has ever had a theft or incident. If you've had $30,000 worth of lumber or equipment stolen, then it helps calculate the security ROI. Remember, any theft or other incident could cost more than the price of the stolen item and repairs.
You can't calculate worker and delivery peace of mind. What you can calculate are the costs of not being able to work at all. When lumber gets stolen, the lead times on obtaining replacement materials are staggering, which can mean paying penalties. If the customer or public learns about the crime or incident, it can affect the reputation of the property and companies involved, and even the public's perception of the construction site.
Don't wait until something happens to act. Construction companies have a responsibility to keep their contractors and visitors safe.
Take a look at this case study that shows how video surveillance decreases theft crime and accidents. To get a customized security solution that fits your construction site requirements and budget, contact us.