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The Quarterly
Company Newsletter February 2005

In This Issue

Message From the President

Recent Success Story

Work-in-Progress

Company News

Emloyee Spotlight

Tech Tips


 

Message From the President
David's Picture

Building Materials Price Volatility Remains a Concern

As a builder and general contractor, I'd like to update you on the volatility in materials prices, which may impact current building projects. Since early 2004, the overall effect has been an increased cost for offices, industrial buildings and remodeling projects.

The current situation has been caused by global pressures such as the diversion of wood supplies to Iraq, price increases for specialty metals used in the production of steel and China's ravenous appetite for steel and scrap. The U.S. consumes 13% of the world's steel products, but China is almost three times larger in production and consumption. Higher crude oil prices have driven up the costs of petroleum-based products, such as roofing shingles, and have led to higher transportation costs. Shipping capacity has also been strained. A year ago a tanker cost $35,000 per day. Today it's $135,000.

Analysts believe that we are nearing the peak of a commodity price cycle, but it will take more than a year for the global supply - demand imbalance to correct itself. Why? Steel products are profitable, so more plants will be coming online. Additional shipping capacity will be added. U. S. steel prices are set above the global rate, so there is an incentive to sell more to the American market. Because of these factors, analysts are forecasting moderately declining steel prices in the second half of 2005, with more significant reductions in 2006.

This rationale fuels my optimism, but I'm not ready to tell you that we've begun to see signs indicating a return to pre-2004 times of flat or falling prices, abundant supplies and prompt deliveries. The price of steel used for beams, angle irons, reinforcing rods, sheet metal work, furnaces, water heaters, air conditioners and appliances went up nearly 80% in 2004 and continues to increase. Steel stud prices increased by 300%. We expect a 20% metal building material price increase in 2005. Prices for lumber and nails, concrete, pipe, wire mesh and rebar cost 50% more. For example, a 4x8-foot sheet of OSB has increased to $21 from $8.50. The framing lumber composite price rose to $443 per thousand board- feet from $279. Copper and steel mill products jumped 43%. Gypsum is up 20%. With lean cement inventories, high shipping rates and rail bottlenecks, we will see spot shortages and more than an 8% price hike which is expected to peak in the first half of 2005 due to Florida's post-hurricane reconstruction efforts.

Proactive measures will help Munger to navigate these volatile waters and provide fiscal confidence for our customers. First, customers should revalidate their Munger quotes before securing financing. Second, Munger superintendents are striving to keep their projects on a fast-track. Third, through escalation clauses that account for sudden jumps in material costs, we ask that the building owner pay the actual price invoiced by the supplier, and avoid overpaying if price escalation does not occur.

If you would like to learn more about Pat Munger Construction, please contact me.

David A. DeMaio, President daviddemaio@mungerconstruction.com

Greetings!

Thanks for reading our newsletter. We hope that you find the content to be timely, appropriate and beneficial.


  • Recent Success Story
  • Massey Properties

    Massey Properties develops and leases space for commercial and light industrial clients. There are currently seven Massey properties with an eighth nearing completion at 758 East Main Street in Branford.

    Pat Munger Construction has provided building services for each Massey property including the new Branford site. "We have a repetitious relationship with Munger. They're also in it for the long haul", stated Massey. "Their professionals have pride in quality workmanship - an old time work ethic, a dying breed.

    After receiving the architect's rendering for the Branford facility, Munger produced a basic rectangular shell with intricate columns spaced outside the building footprint. Munger built the foundation to support a Varco Pruden shell infrastructure for Massey's metal panel and plate glass system walls. The metal panels are comprised of a maintenance-free polycarbonate-aluminum composite skin similar to that used on NASA spacecraft. It provides high energy U and R-values to optimize heating costs. The plate glass system is recessed toward the inside, providing the visual effect of exterior columns, encased within the metal panel systems. It delivers natural light throughout the building.

    Munger installed a VP metal standing seam roof on parapet walls that rise above the roofline, which slopes toward the rear and is invisible from the front of the building. It is piped into the site's drainage system. Munger provided interior mechanical plumbing along with metal stud framing and drywall utilizing its own skilled carpenters.

    The building design enables the flexibility needed for Munger to efficiently provide interior fit-up to meet the unique needs of Massey tenants.

  • Work-in-Progress
  • Pat Munger Construction is nearing completion of a new headquarters and show room for The Trailer Depot. Munger's turnkey design/build solution will result in an aesthetically fitted Varco Pruden pre-engineered steel building topped with a colorful metal standing seam roof.

    The Trailer Depot provides trailers, hitches, accessories, installation and repair services to consumer, business, agricultural and government customers. "Having outgrown our current facility, we need more outdoor space for our trailer inventory and more inside space for a showroom, retail parts and offices", said Mike Duhamel, Vice President. "Our new building in Northford provides a rustic look and convenience that will please customers."

    After finding affordable space that satisfied their outdoor needs, they began a search for a quality builder. Duhamel and his team relied on friends who had invested in buildings with the look and feel they required. VanWilgen's Nursery in Branford and the Town of North Branford Public Works Department highly recommended Pat Munger Construction. Duhamel stated, "They were very satisfied with their Munger building. After visiting their sites, we knew whom we wanted to build for us."

    Munger designers turned Duhamel's hand-drawn sketch into a cost effective, aesthetically pleasing design. Taupe cedar shake siding, boysenberry colored roof and wood shingle covered porch with overhang provide a very desirable country look. When inside, customers enjoy a waiting area with coffee bar and antique farm tool décor.

    Duhamel said, "Munger builds win/win relationships and is easy to work with because of their professionalism and attitude. Everyone seems happy to be at work. Their team takes ownership for on- time delivery with no excuses. We are impressed with their honesty and integrity."

  • Company News
  • We have redesiged our website to provide a look and feel that is consistent with our identity. Our site differentiates us by making it easy for people to do business with Munger. Our goal is to position Munger in the mind of the architect, subcontractor and building owner as having the specific talents they need from their partner.

    Visitors will learn about Munger by frequently browsing for fresh content and ideas. They will learn about Munger in a self-service mode and we will learn about their interests.

    Please visit us on the web at www.mungerconstruction.com.

  • Emloyee Spotlight
  • Joe Pierandi joined the Munger team in March 1998 bringing with him 20+ years experience in the construction field. Carpentry is his specialty.

    Joe's primary Munger role is project superintendent. He works with building owners, architects, subcontractors and vendors as he coordinates all aspects of a project from start to finish. Two of his more recent success story projects include Total Tree Care and The Trailer Depot.

    Joe lives in Wallingford with his wife, Fran and their three beautiful daughters - ages 9, 7, and 4. Along with participating in as many family activities as possible, he also enjoys fishing and playing pool.

    Joe is well liked and highly respected by his peers, customers and subcontractors. He is a "hands-on" person who not only manages projects, but leads his team by example as he applies his skills in the field. He is adept at interpreting drawings with precise attention to detail. Joe solves problems by resolving any issues he encounters swiftly and skillfully. We are fortunate to have Joe as a member of the Munger team. Thanks Joe!

  • Tech Tips
  • Accumulating snow acts as an insulator between the outside cold and a building roof. Normal heat loss and solar rays warm the roof causing the snow to melt. When the snowmelt runs down the roof and reaches the overhang, it begins to freeze, especially if the gutters and downspouts are blocked. This often causes ice dams to be formed at the roof's edge, in valleys and near dormers, which prevents melt water from flowing off the roof. Instead, the water flow backs up underneath the roofing materials and freezes. When the ice melts, it leaks through the roof, causing roof and interior damage.

    Building owners should ensure that gutters and downspouts are cleaned regularly and that ice and snow do not block the drainage downspouts at ground level. Consider installing roof & gutter cables and heat tapes to prevent water damage caused by snow and ice buildup in metal or plastic/vinyl gutters and downspouts. They work in conjunction with natural sunlight and a building's own heat dissipation. When natural thawing occurs, the cables create a channel that allows water to flow off the roof and through gutters and downspouts. They are easy to install for years of trouble-free operation.

    Call us: 203-483-3645

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