Contractor Groups Assess Inflation Trends In Meeting With Bush

In a day of meetings that included representatives from a coalition of nine business associations, AGC and ABC leaders told President Bush last week at the White House that materials prices are rising along with fuel prices and discussed the impact high energy prices are having on commercial and industrial construction

Sources: Associated General Contractors of America, Alexandria, Va.; Associated Builders & Contractors
In a day of meetings that included representatives from a coalition of nine business associations, AGC and ABC leaders told President Bush last week at the White House that materials prices are rising along with fuel prices and discussed the impact high energy prices are having on commercial and industrial construction.

AGC President Douglas Barnhart (J. Reese Construction, Inc; San Diego) and CEO Stephen Sandherr explained to President Bush that construction costs have risen much more than consumer prices this year due to the extreme run-up in petroleum costs, and that the producer price index (PPI) for inputs to construction rose 10.4 percent from June 2007 to June 2008, vs. 5.0 percent for the consumer price index. The PPI for highway and street construction–the most fuel- and asphalt-intensive construction segment–rose 18.9 percent. The national average retail price of on-highway diesel fuel on August 4 was $4.50 per gallon, up 55 percent in a year, and 57 cents more than the average for gasoline.

ABC Executive Committee member Michael Uremovich, founder, CEO and chairman of the board of Starcon International, Manhattan, Ill., and ABC President Kirk Pickerel also voiced concerns about rising fuel prices and changes in company policies as a result of higher energy costs. “The energy crisis has driven up costs in all aspects of our business,” said Uremovich. “Not only have we made changes to company travel policies and felt the impact on our fleet of more than 100 vehicles, but for the first time since Starcon was founded 25 years ago, we had to lay off workers. Additionally, our clients have cancelled or postponed nearly $2 billion of projects which translates to fewer jobs.”

The President told the group, “Increased domestic energy production will have a ‘psychological impact’ on the marketplace.” He also firmly stated that the U.S. Congress needs to have an up-or-down vote on off-shore oil drilling, without any other issue that would “muddy the waters√∑It’s what the American people want.”