What Every Business Should Understand about Cash Flow

Make no mistake, commercial and residential building in Nevada is hotter than a fire hydrant chasing a dog in July. The only thing hotter than the construction industry is the cost of building materials… Electrical gear and wire quotes are now good for 7 days, sometimes less. Taking a quick poll of some of our vendors, Greg Layfayette of Pacific Coast Wire & Cable said it best, “Prices are going through the roof, for example PVC was $1.53 per ft last year, now its over $6 a foot.” It’s simply impossible to say how electrical gear and wire shortages will impact a project budget and timeline, the only guarantee we can see is that every project will be affected.

Copper is a good proxy for determining where construction wire and gear material pricing is going. As of writing this the raw material us up 29% this year and the highest on record at over $4.70. This is up significantly compared to 12 months ago when the price was $2.38. Raw material prices will fluctuate and wire and gear manufacturers employ a myriad of strategies to minimize the risk of changing costs. That said, the cost of goods continues to rise and every manufacture across the board has been forced to increased prices and delivery times.

Raw materials are not the only factor, the Covid19 pandemic has disrupted the entire supply chain in nearly every industry. Factories and plants were shut down or lowered capacity. With the global economy starting back up in recovery mode, manufacturers are rapidly trying to scale back up to meet our demand for electrical materials.
Reference link: https://www.fxstreet.com/news/copper-price-today-clocks-all-time-highs-above-470-risks-a-correction-202105070954

It turns out all those new electric vehicles contain roughly four times the amount of copper as a conventional car. In addition, they are fueling the need for tons of new road side and home car chargers. Ambitious infrastructure plans by the government are also fueling demand speculation and investors are buying up copper futures.
Reference link: https://www.bloomberg.com/news/articles/2021-05-08/copper-just-smashed-past-a-record-here-s-what-you-need-to-know

What you need to know:
  1. Understand that material delivery estimates are fluid and can’t be truly guaranteed, even on advanced orders.
  2. As much as you can, plan for material shipment delays
  3. There is a good chance that your schedule will be impacted more than usual
  4. Expect higher materials costs

The increase in construction activity in Nevada appears strong through 2023 and beyond. Demand for new housing is only increasing as new home sales skyrocket to meet the demands of people moving to Nevada. We see announcements of companies moving to Nevada nearly every week from NNDA and EDAWN.

At KD Electric, we see lots of activity with TI’s and new construction for low voltage and high voltage. We are committed to work with our customers to meet schedule deadlines and budgets. We are committed to effective transparent communication with our customers.

Give us a call at (775) 357-9767 or email us for your next project.