Mike Copeland

Some in the construction, manufacturing and fabricating industries say they’re squeezed by volatile commodity prices and trying to juggle expenses with what they charge their clients and still make a profit.

“Our manufacturers are telling me they can sell what they’re making, but they can’t make any money,” said Ray Childers, president of the Chattanooga Manufacturers Association. “All the bad things that can happen are happening at once.”

Staff Photo by Brett Clark -- Alex Everett uses a machine to make holes in a piece of stainless steel at metals fabricator Copelands on Wednesday.

Copelands Inc., a metal fabrication shop in Ooltewah, is dealing with rising prices in such items as specialty alloy materials, stainless metal and the materials used in galvanizing, said its president and general manager, Mike Copeland.

“It’s the nature of the beast,” he said. “We have long-term relationships with customers and we absorb some of it. It slows the (job) process, but we shop around for the best price for the customer.”

The company makes parts for bridges, industrial pumps, trucks, wreckers and machine manufacturing.

Stainless metal prices recently peaked and went down slightly, he said, but are expected to increase again soon. In March 2007, Mr. Copeland said his company bought the metal for $2.35 per pound, and now the metal costs $2.60 per pound.

The Strauss Co. Inc., a Chattanooga construction company, is paying a fuel surcharge of 3 percent to 4 percent on each truckload of concrete, said President John Straussberger.

Many steel suppliers are charging up to 15 percent more, he said, and another increase is expected this summer.

Steel prices are volatile, Mr. Straussberger said, because of strong demand in China and Brazil, and the weak dollar against foreign currency. Other nations are going on buying sprees in the United States for steel and shipping it overseas, he said.

Mr. Copeland said a scrap metal dealer he knows is shipping a lot of product overseas. The dealer was saying Wednesday his prices are about to peak and decline, Mr. Copeland said.

However, Card-Monroe Corp.’s scrap metal supplier has warned the company of an imminent price increase, said Lewis Card Jr., vice chairman and secretary of the company that makes carpet manufacturing machinery. Last year, scrap metal cost $350 per ton but now costs $750 per ton, he said, and could hit $1,000 per ton this summer.

Mr. Card said his company’s domestic business has dropped 20 percent to 30 percent because of carpet manufacturers being affected by the weak real estate market. However, his exports are up more than 30 percent. A weak dollar and growing foreign markets are the reasons, he said.

The companies that supply materials are only able to guarantee prices for five to 30 days, Mr. Straussberger said. Five years ago suppliers would guarantee a price for a year.

“We haven’t seen this volatility since the days of the late ’70s,” he said.

Home builder Ben Hagaman said he has seen concrete prices shoot up 40 percent in the last three years, and 10 percent to 12 percent in the last year alone. Steel is up 60 percent from two years ago, he said.

On the bright side, lumber prices are down and labor costs are steady or slightly down, Mr. Hagaman said. The demand for land is down, so builders are able to find good deals.

So far, no construction projects have been canceled, Mr. Straussberger said. There is a danger that if prices continue to rise some may decide it makes more sense to renovate existing buildings instead of building new structures, he said.

“There is a concern it will get so bad that they can’t justify the project economically,” he said.

Mr. Copeland said long-term buyers such as utilities and government agencies will continue with any projects that have allocated funds, but may lay off of unfunded projects for now. There was a price run-up in 2004, he said, but people didn’t worry too much because they believed it was temporary.

“We’re not hearing that now,” he said.