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Construction material costs rise in December

The price of nearly every major construction material increased last month, according to the Bureau of Labor Statistics’ December producer price index.

The prices of four key construction materials increased in December and overall in 2010. Diesel fuel increased 2.3 percent in December and 28 percent for the year; steel mill products rose .5 percent last month and 12.5 for the year; and copper and brass mill shape, which is how the material is measured, rose 1.3 percent in December and 12 percent for the year. Aluminum mill shapes declined .2 percent in December, but the price increased 12 percent overall in 2010.

“I didn’t think domestic or worldwide conditions were strong enough to support such sustained increases,” said Ken Simonson, chief economist for the Associated General Contractors of America.

Perhaps even more discouraging, he said, is estimated bid prices declined or remained steady on new construction projects for offices, schools, warehouses and other industrial buildings. That suggests contractors are paying the price for increasingly expensive materials, Simonson said.

But Milwaukee is bucking the national trend by passing off the increased materials costs to customers, said Mike Fabishak, chief executive officer of the Associated General Contractors of Greater Milwaukee.

Profit margins already are too thin, he said.

“There are certainly exceptions to the rule,” Fabishak said, “but I don’t think there’s any more room or capacity to absorb that kind of costs.”

— Joe Lanane

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