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Cement, labor shortages still dog county construction
By Claudio Mendonça
Rising steel costs, low supplies of cement and a shortage of workers still may be delaying construction schedules in Miami-Dade County.
One industry executive said last week that a lack of cement could postpone some projects up to 60 days. "Scarcity of cement can be an issue," said Luis Garcia, president of Adonel Concrete. "In 2004, we had a shortage and many constructions on Brickell Avenue and in Miami Beach stopped completely."
Mr. Garcia said one of the reasons for the lack cement is that Titan Cement Co.'s new plant in Medley, which has a 1.8 million-ton annual capacity, is not "running efficiently." He also said Rinker Materials Corp. in West Palm Beach is having a hard time importing cement.
Hardy Johnson, president of Titan, said the plant will boost cement production but still won't fill Florida's annual need. "Our plant in Medley is adding capacity, but because of the state's strong construction activity, supply is still critical," said Mr. Johnson.
Ron Shuffield, president of Esslinger Wooten Maxwell, one of the area's largest real estate companies, said the jump in costs can be attributed to prices of steel, dry wall and all petroleum-based products.
"Prices are already being affected because of petroleum products and the consumption of China, which is using 50% of the world's consumption," said Mr. Shuffield.
According to the US Deparment of Labor, steel prices are up nearly 38% from a year ago, lumber prices have risen 10.8% and concrete and asphalt costs are up more than 6%.
Jose Cancio, president of concrete producer Supermix, said, "It's all about supply and demand. Miami is in a construction boom and is the hottest real estate market in the US. As a result, supply is getting short."
Mr. Cancio said Florida consumes 9.5 million tons of cement annually and has a production capacity of 5.4 million. The remaining 4.1 million tons, about 40%, must be imported from Brazil, Colombia, Greece, Spain, Sweden and Venezuela.
"Prices might stabilize in mid-2006," he said. "Some of the cement abroad has been going to China."
Mr. Cancio said cement prices in Florida always have been below the national average. According to the Florida Concrete & Products Association, cement prices in the state average $85 per ton.
Mr. Cancio said he is optimistic that the lack of construction materials will be short-lived.
"Lack of cement won't be a problem," he said. "The new mill in Medley is doubling production and will alleviate some of the needs."
Hosan Halkali, a construction manager for Hines Developers, said the cost jump in building materials will affect real estate prices in the region. But, he said, commercial developers do not have as much a problem as residential developers. Mr. Halkali said he expects the spike in costs of construction materials to continue until the end of the development boom, which he said might end in two years.
The greatest difficulty in the construction industry, he said, is in finding qualified labor in South Florida. That results in having to bring in personnel from other states. "In our most recent project in South Florida, we supplemented our crews in various subcontractor categories."
Adding the cost of travel and lodging for the workers elevates prices up to 40%, depending on the duration of the project, he said.
Because of the high cost of construction, Richard Horton, president of the Builders Association of South Florida, said developers are looking at more cost-efficient methods of construction. "For example, builders are reducing the amount of glass in a project and increasing the amount of masonry and therefore saving in air-conditioning costs."
Mr. Horton said the labor shortage is a major issue for builders in South Florida. "Cost of labor is going up because there is not enough manpower," he said. "High cost of construction can be a problem in the future."