Katrina delivers economic punch

Staff -- Industrial Distribution, 10/1/2005

Construction for clean up, as well as port, energy facility and public infrastructure repair, is underway after Hurricane Katrina's devastating blow to the Gulf Coast region, according to Reed Construction Data.

Initially, demand will jump for the materials, equipment and specialized labor heavily used in the clean up and the reopening of utilities and infrastructure. Costs will rise for the use of construction equipment and operators, and specialized utility equipment and tradesmen, especially in adjacent regions that are tapped for emergency assistance, added RCD.

There are many unknowns, not the least of them being consumer confidence in spending, after energy prices jumped to historic highs in the wake of the hurricane. Gasoline prices likely will remain near current levels for much of September, then drop back to near $3 a gallon, RCD said.

Replacement construction for buildings and structures will become significant early next year, and remain that way for several years, putting cost pressures on all materials, equipment and labor, said RCD economist Jim Haughey. The biggest impact, he said, will be on cement and concrete, since widespread shortages of those materials were reported before Katrina hit.

Lumber prices, according to Haughey, have already risen 5 percent to 10 percent, due to water damage to the Gulf area lumber inventory and to the shut down of area sawmills. Overall, the price and availability of framing lumber is likely to be less impacted than most materials, he said.