Construction Costs Through the Roof

I can’t begin to tell you how many stories I’ve written lately that referenced the increase in construction costs. I can name some:

On Tuesday we had a story about the municipal court building costing more than projected, making the city wonder whether it will ever build a new permanent place.

The Manette Bridge has been pushed back and its unique features downscaled because of escalating prices.

I didn’t write this story, but on Bainbridge they’re they’re shuffling the budget on money they just got voter approval for in a bond issue.

In an editorial board meeting recently, U.S. Rep. Norm Dicks, D-Belfair, told the board if costs on the tunnel from the ferry terminal are higher than budgeted, he’ll find the money. Based on how every other major project is going, is there any question but that he’ll have to?

Type in “construction costs” in Google and click the News tab and you get 16,000 links, many of which are stories about higher construction costs putting projects in jeopardy.

The city is hoping for new projects downtown, the basis for its decision to make a decision on building heights and a 10-year tax exemption. Whether construction costs make new projects more difficult is something all developers are having to face. It certainly has to put a crimp on efforts to make things affordable.

The one bit of hope in the stories I glanced at was a comment in a story about Wal-Mart scaling down its expansion efforts. The company said a flattening of construction inflation will also help the company spend less on capital next year (in addition to not building as many new stores).

A similar post is being done on the Kitsap Caucus site.

3 thoughts on “Construction Costs Through the Roof

  1. From Concrete Monthly of April 2006:

    Mexican cement duty reduced
    Duties on imports of cement from Mexico, which have been running about $26 per metric ton, were lowered April 3 to $3 per metric ton.

    The U.S.-Mexico Agreement on Cement, which was announced in January, was signed March 6 at U.S. Department of Commerce’s Washington, D.C. headquarters.

    The agreement brings to an end a 16-year trade dispute between domestic and Mexican cement producers. It sets a limit of 3 million metric tons of imports of Mexican cement to enter the United States at the lower antidumping duty rate through 2009. If terms are adhered to over its three-year life, the agreement will be terminated and the 1990 antidumping duty order revoked.

    Commerce Secretary Carlos M. Gutierrez said the agreement addresses the concerns of producers and consumers on both sides of the border. “(It) contains provisions that will help increase access to the Mexican market for U.S. cement producers; ensures that our Gulf Coast communities will have the resources necessary to rebuild; (and,) demonstrates that we have the will and means to resolve difficult disputes with our NAFTA partners,” Gutierrez said.

    Joe Dorn, spokesman for the Southern Tier Cement Committee (STCC) producers who until recently have urged the Department of Commerce to maintain the antidumping duty order, said STCC members welcome fair competition and fully expect that this agreement will become the first meaningful step towards full and open access to the Mexican market.

    Now, the US makes about 91 million metric tons of this stuff every year (China leads the world with 704 million metric tons, consumed internally), and the world price for Portland cement is in the mid-20s range before transportation.

    Obviously demand outstrips supply at the world price, and the anti-dumping duties imposed in 1990 on Mexican cement producers mean all of us pay more for less while the cement producers of the US sell all of their product at above-market prices. How nice and convenient!

    The lowering of duties only occurs on 3 million metric tons, a small increase to the supply of cement for the US domestic marketplace.

    Steel is entirely another subject, and will get to that as time permits. I find it ironic that anti-dumping duties imposed in 1990 drive up construction costs in 2006 – even though our economy has cycled up and down a few times since!

  2. …and the pendulum will begin its swing the other way.
    Until then all the chit chat, second guesses in the world will not change the facts.
    If we can’t afford the costs of the projects, we scale down, eliminate or wait on some…trim the fat off the most needed projects until we are within the budget.

  3. There are some empty office space in buildings now available in Bremerton. THe reason we have build new buildings is
    Is’t more prudent to fill those and/or upgrade rather than having empty offices. Take a look at the Auto Center Way area, for example, with ready access to the freeways–both north and south!!!!

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