Contractors Urge Action to Relieve Steel Supply Crisis

The board of directors of the Associated General Contractors of America adopted a resolution on March 12 at its annual convention in Orlando, Fla., seeking “equitable adjustment of fixed-price contracts” to compensate contractors for an unprecedented rise in steel prices that has occurred and is expected to continue indefinitely.
The board acted after Federal Highway Administration Mary Peters told AGC that FHWA would allow states to include steel-price adjustment clauses in construction contracts for federal-aid highway projects.
“We hope other federal agencies, state and local entities, and private owners will take note and act appropriately,” said AGC Chief Executive Officer Stephen E. Sandherr. “Many contractors are already facing severe financial problems because of the enormous increases in steel prices and delays in deliveries that are jeopardizing completion of major projects. Highways, schools, hospitals, and other projects are facing costly delays, layoffs, and disruption to the public.
“Today I wrote Commerce Secretary Donald Evans to report that more than 40 workers have already been laid off by a bridge girder fabricator that was unable to get the steel strand it needs. Besides these layoffs, one highway project has already been delayed and two of the biggest jobs in the nation are in jeopardy, risking thousands more layoffs,” Sandherr said. “I asked Secretary Evans to investigate the possibility of suspending a 77 percent duty on stand that the Commerce Department recently imposed, which appears to have triggered this shortage. In addition, I hope the secretary will establish a mechanism for spotting shortages of other steel products—before they reach a crisis stage—and take appropriate steps to avoid layoffs and other problems.”
AGC members also have reported delays in getting pipe for fire, sprinklers, studs and fasteners for wallboard, reinforcing steel, and other products. “We don’t know how high the prices will go or how long the shortages will last, but it is apparent that some contractors will not be able to absorb these unbudgeted cost increases or payment delays,” warned Ken Simonson, AGC’s Chief Economist.

AWCI Members Only Vol. XLV, No. 10 April 2004