Cement Shortage Gives Builders a Hard Time

Stan Bullard, Crain's

Daniel Tonelli, of Engineered Construction of North Royalton, sweats bad weather delaying a concrete pour even more than in the past.

"When we lost a day recently, it meant we lost deliveries," he said. "We don't know when we will get that order filled again. Concrete suppliers are taking orders a week out now. It's become an incredible burden."

The burden is widespread because cement suppliers have placed local ready-mix concrete suppliers on allocation, sometimes cutting daily deliveries in half. That slows down supply of the critical ingredient, which has to be installed in a given period of time before it hardens, in residential and commercial construction. Most observers have not seen such an allocation for their professional lives.

Andrew Gotlieb, business development manager for Keystate Homes of Bedford Heights, said that during the week of Labor Day, a vendor he declined to name was not able to supply concrete for two days. So plans to pour four floors of concrete at a custom home had to be broken up into more phases to match deliveries.

Keystate also uses multiple concrete suppliers, as it works throughout the region. One recently declined an order because Keystate was not a large enough customer for the supplier to take the order. But Keystate was able to go elsewhere.

Bill Sanderson, a principal at the Team WS building and land development consultancy in Lakewood, said a common phrase among home builders now is, "Where's the damn concrete?"

On the construction of a residential subdivision, he said, a question from the local suburb's building department threw one job off schedule.

"We couldn't schedule installing curbing for a week," Sanderson said. "Small contractors sometimes can't fulfill small orders, such as for five cubic yards of concrete to finish a sidewalk. And it all means there will be no impetus for concrete prices to go down."

Rob Myers, president of the HBA Cleveland trade group for homebuilders, called cement and concrete woes "a symptom, not the illness. And it's only going to get worse." He said many HBA members have had delivery problems. Myers expects the crunch to grow in October and November as construction contractors of all types rush to get pours finished before the winter hits, which affects most users.

The nature of the construction business means that large volume customers, especially larger construction contractors or businesses, will be able to function better than smaller ones. But it's changing the game for many.

Greg Przepiora, a vice president at Donley's Inc. of Garfield Heights, said even for a company active in multiple states, there is less flexibility than in the past.

"You can't call and get concrete," Przepiora said. "In the past, if you wanted to push a pour or change a date, you could. Concrete suppliers don't have the ability to do that now. They are only getting so much material."

Mac Donley, Donley's CEO, said the company has had fewer problems than others because some of its relationships with suppliers go back 80 years.

"We've already seen allocations in North and South Carolina," Donley said. "It's not just Cleveland. We often have commitments with suppliers that may go out as much as 18 months. It's your ability to pour that is being compromised. That is going to be a problem for the industry. We have been able to navigate it successfully, but your scheduling become more critical than before."

George Palko, president and CEO of Great Lakes Construction Co., said the heavy construction company based in Hinckley has found some of its suppliers have had their deliveries cut in half.

"We have had to delay large concrete pours," Palko said. "We have to schedule two to three weeks in the future. We did that anyway, but now we have to do it more diligently."

He expects the problem to increase through the balance of the year.

"Everybody wants their jobs done yesterday," Palko said. "Anytime you delay one, it sets you back as we get closer to the end of the calendar year. Everyone knows that snow is around the corner." Some contractors may be able to continue working, but it depends on the type of job and how many additives — or what additives — they might add to their concrete mix.

Concrete is commonly described as the most widely used construction material in the world. So a shortage, in part due to a U.S. construction boom expected to grow with additional federal spending on roads, highways and bridges, will be a sizable challenge.

With a widespread labor shortage bedeviling construction contractors large and small, some draconian cuts already have been made.

Paul Metcalf, president and business representative of Cement Masons Local 404 in Cleveland, which serves Ashtabula, Cuyahoga, Geauga, Lake and Lorain counties, said about a half-dozen members have been laid off because contractors expect to have reduced workloads due to the cement shortage.

"By the next day, they were working again," Metcalf said. "The volume of work is so strong now that no one is not working. I'm impressed about the volume of construction in our city. The forecast for work is phenomenal. I'm hoping that after things slow down during the winter, the market will be better next year."

Even so, game plans on projects are changing.

"From our end, it's all about planning," Palko said. "We can't produce cement ourselves. We have to communicate better and plan better with our partners."

Tonelli, who co-owns Engineered Construction with his brother Randall, said he believes his company has been treated better than some other contractors because of the volume of concrete it uses — sometimes as much as 15 loads a day.

"We'll take concrete when we can get it," Tonelli said. "We've recently started pouring walls at 6:30 p.m. And we usually have a 7 a.m. start. This amplifies the problem getting workers. Concrete pump trucks have headlights on them, and we'll have guys throw light on the job from their (car or truck) headlights."

In the case of Keystate's Gotlieb, he has been told supplies of concrete blocks may become constrained. So he's considering using brick instead of concrete block in some spots. Keystate also is considering suggesting that customers consider using asphalt instead of concrete for driveways "even though I don't want to do it," he said.

Where lumber supply and pricing can be dealt with by using other materials, such as metal framing, there are parts of a building that no substitute for concrete will work, such as in foundations.

"You can't do a footer (part of the foundation that meets the dirt) out of asphalt," Gotlieb said.

Myers agrees the problems the shortage poses are considerable.

"You can't just pour three-quarters of a basement," he said.