The roofing industry has been hit with just about everything since the pandemic. Production lines came to a halt during COVID 19. Roofers experienced material shortages and massive price hikes yet were still considered essential workers. Metal prices soared during and after the pandemic, and now the dreaded tariffs will be affecting the industry in an extreme way.
The roofing industry began to feel the pain in January when prices on specific metals increased at the fastest pace ever in the last two years. Prices are increasing every day due to demand for at-cost materials anticipating the massive increase in tariffs that are still to come. Thirty-three percent of steel materials are imported from Canada and Mexico, and over 58% of the United States’ aluminum comes from Canada alone. Not only metals were and are continuously being affected, additional products like lumber, roof panels, fasteners, the list goes on and on.
What does this mean for roofing companies?
In essence these tariffs are beginning to create an economic crisis due to demand shock. Increasing the demand for critical materials, decreasing the demand for new roofing projects due to the increase in cost of those materials. Which decreases profit margins, delaying projects due to material shortage, and further diminishes the amount of skilled labor due to tight immigration restrictions. It’s a supply and demand nightmare!
Prior to the rise in tariffs many manufacturers did not discuss or prepare for the possibility of massive increased costs with their clients or set their limit with price increases, which put them in a bind with excessive cost and additional out-of-pocket expenses they were not prepared for. This has created rifts with both the consumer and the supply chain. However, once the executive order was passed through the administration it directed many agencies to terminate or modify contracts that do not support the administration’s policies and rising costs, and allowed companies to make contracts match the policies that have been placed in action.
Roofing companies and contractors alike now can place serious clauses in their contract documentation to reduce the amount of vulnerability they once had and prepare their companies for mishaps not foreseen!
This situation has caused roofing contractors to include price and time adjustments due to rising tariffs as well as Force Majeure clauses.
Plan! Do the due diligence yourself and cover all the unknowns you can possibly include in your contract. Realize that things are about to get serious and there is no time limit on when it will end.