How surging material costs have impacted one fab shop

Surging steel and aluminum prices have created workflow bottlenecks all across the metal fabrication industry. Nick Martin of North Carolina job shop Barnes MetalCrafters explains how historically high material costs have particularly effected his shop. Getty Images

There are so many things to be unsure about these days. And there are shortages of several things you might once have taken for granted. If you can bear the burden of going inside of a big box store, you’ll find most of the supplies you will need to make it through a couple weeks of living, but there are a lot of things going on right now that are getting a little ridiculous.

For one, if you have a vehicle that you are willing to part with, you’ll probably get top dollar for a trade-in. I’m a truck guy, and I try to keep up with the industry. Following several groups on Facebook or different enthusiasts on Instagram definitely helps keep you in the loop. I read about people all the time who are selling a vehicle that they’ve only owned for a few years and receiving more now than what they paid for it. I can’t believe it.

There is a flip side to this craziness, though.

I recently took my wife’s Chevy Suburban into the dealership to get the AC fixed. (I’m really a Ford guy, I promise). You can’t go long in Eastern North Carolina without cold air, so this was a high priority in the Martin household. When the dealership called to confirm my appointment, they asked if I was interested in selling. I initially said no, but then after I thought about it, I reconsidered. I just needed something in return. I went back to the dealership and told them to tell me what they could do for a trade-in.

When I got back to the dealership, they kinda looked at me funny and said they didn’t bother with it because they had nothing to offer me. They literally did not have a comparable vehicle. So I wasn’t going to sell the family rig for nothing. Look around at all the car dealerships and you will notice a trend: There are no vehicles. And also it seems like a lot of dealerships are using this time to resurface their lots.

I for one am waiting on the new Ford Bronco to come out, but that is a different story for a different day. Ford is having its own problems with the supply chain.

Another one that is really interesting is the lumber industry. There may be lumber out there, but you are going to pay an arm and a leg for it. My dad and owner of Barnes MetalCrafters, Tim, has a personal project he would like to pursue at his home: an addition to a detached garage. Here’s the problem: A trusted contractor we know will not quote it right now because he can’t get anyone to hold their pricing on the lumber. Do you just start the project and eat the rising costs? I wouldn’t want to. You’d never know what the outcome would be.

And with metal, we are seeing prices go through the roof. One of our most used materials has gone up over 320% since this time last year. That is crazy. What’s equally crazy is a shop might not even be able to get the material.

We are at the mercy of the suppliers now. Material we used to get in two to three days now takes three to four weeks. It’s hard to keep the pipeline flowing through the shop, and we have to piecemeal some jobs together with whatever material we have. We are forwarding emails we get from steel suppliers directly to some of our customers, letting them know about updates. It is getting harder to price orders that may repeat. Not too long ago we could lock-in the prices and they would hold for a decent amount of time. We can forget about that now.

For the past year of the pandemic we haven’t seen very many visitors or salesmen come around. Now the guideline leashes are loosening, and several people are coming out of their hiding places. One steel salesman recently came for a visit to the shop. I knew he was coming, and I wanted to pick his brain a little. The funny thing is that he basically knew the questions I was going to ask as soon as I started talking. He said the biggest question he gets from his customers is “Why are prices so high and when are they going to stop?”

Close-up of a large conveyor assembly in the Barnes MetalCrafters shop. Images: Barnes MetalCrafters

It’s basically supply and demand and there isn’t much metal in the market. The salesman called it the perfect storm. During the height of the pandemic, everyone was at home all the time and decided to upgrade their kitchen appliances or buy a new vehicle with their stimulus money.

Two of the largest consumers of steel are the appliance and auto industries. The mills couldn’t keep up with production partly because of the number of workers that were laid off during the pandemic. Now that supply is increasing, the mills are serving the big boys with the biggest contracts that are going to use the most metal. The rest just trickles down.

He mentioned that there is a lot of hoarding going on, and some companies are trying to order truckloads of material that they never have in the past.

We have been ordering more material than normal primarily because we are trying to fill the gap in the delayed shipping times. Locking-in pricing has also been a top priority, and it hasn’t been the easiest thing to deal with.

I know we aren’t alone in this craziness. Many shops and markets are suffering. Now that it’s officially summer, my desire for a wakeboard boat has reached its peak. But realizing the boat market is also insane at this moment, I have to put my wallet away. I can’t see myself overpaying $10K to $20K for a boat right now. I don’t mind holding off, but I’m also not getting any younger.

I hope the sheet metal market gets back to normal soon and I quit hearing everyone say this is the “new normal.”

14-gauge parts folded waiting on the robotic welder in the Barnes MetalCrafters shop.