Katrina's Impact: Construction & Equipment

Materials Costs Will Rise

Prices for cement, steel, copper, gypsum and diesel fuel were on the rise before Hurricane Katrina hit the Gulf Coat of the U.S. last week. And prices for many of these items will now go higher, believes Ken Simonson, chief economist for the Alexandria, Va.-based Associated General Contractors of America.

More On Hurricane Katrina See IndustryWeek's Hurricane Katrina News & Resources section for more on coverage and how companies are responding.

"Contractors use a lot of diesel fuel for off-road equipment, their own trucks, and the multitude of deliveries of materials and equipment. Petroleum or natural gas is a key ingredient in asphalt, roofing materials, plastic pipe and insulation. And energy costs are built into the price of mining, milling, making, molding and transporting metals, concrete and most other construction materials," he explains. Cement was already in short supply in 32 states and the District of Columbia before the hurricane. "The disruption to ocean, barge and rail transport from Katrina, and the loss of power to cement plants in the storm's path, will cut further into cement supplies," he predicts.

Demand Seen For Computers, Fire Trucks

In addition to replacing production machinery and computers damaged by Hurricane Katrina, the storm will create demand for fire trucks, police cars and dump trucks, predicts the Herman Group, a Greensboro, N.C.-based consulting firm. At the same time, "employers throughout the U.S. could recruit displaced workers, with their high level of competency. The difficulty will come in connecting employers and qualified workers."