Just finished installing a new roof for a customer. Roof was a 20 square, dimensional style asphalt roof. I always use 30# felt. Last year, price started out in May at $8.00 a roll. By end of September, price had climbed to $11.00 a roll. Imagine my surprise when the cheapest I could find for this job was $14.00 a roll! All the other lumberyards wanted between $16 and $18 for the same roll!
I asked the lumberyard owner what gives…he tells me that price is going to continue to climb all summer….says that there is a felt shortage…supposedly one manufacturer went out of business, shortage is expected, and so price rises.
What’s it costing in your area? I’m in Pittsburgh, PA region. This is just plain ole 30# weight felt, no fiber in it or anything.
Anyone out there want to go into the roofing felt businees? Serious inquires only! (ha! ha!)
Davo
Replies
This felt paper is a petroleum product. As the price of petroleum products climbs (gas, oil, etc...) so does all of the goods that are petroleum based. The felt paper is but one of many products that will feel the pain of consumerism, and supply and demand tactics.
There is no shortage of this material. Just like gas, the price is manipulated and blamed on everything from the war in the middle east, to shortages of crude oil. I live in an area of the country that imports, exports, and refines a MASSIVE amount of crude oil every day. We are one of the largest refinery centers in the world. Trust me, there is no shortage of this stuff. Only manipulation of the stockpiles. The refineries in my area are hiring people right and left because they are producing a larger amount of petroleum based products than they have in many years. THEIR business is booming. Friends in the industry tell me that the war is really boosting their business.
Here in Southeast Texas, the price started climbing last year and has not come down since. It is currently between $14 and $18 a roll for either 200 sq of #30, or 400 sq of #15. I've seen it hit $22 a roll, and no one bought the stuff for a while. Contractors here traveled to Houston (about a 2 hour trip) to buy it there instead. When that happened, the price started dropping until it hit about $16 a roll on average. Last May it was $7.99 a roll.
I challenged a 84 Lumber manager about the price gouging. He says the shortage and petroleum prices are dictating HIS prices. I say BS because their stock of felt has been sitting there for over a year, untouched. His cost has not risen a dime because he still has the same felt he had a year ago, and his purchase price sure as heck didn't go up. I told him no wonder it was all still sitting there. No one I know would buy it from them! He wasn't impressed...
And I do understand supply and demand, but it was the out right lie he was telling me that pissed me off.
James DuHamel
J & M Home Maintenance Service
"Southeast Texas"
I was a little surprised to find that 30# felt(or at least what passes for 30#!) is now going for $14.25 a roll here in N. NM. I was considering asking my suppliers about that special re-inforced roofing felt,but I probably can't afford it.
Wish I could tell my customers to blame the petroleum industry for the price of construction.what the heck was I thinking?
James -
The guy isn't automatically price gouging when he changes the price of inventory. There are 3 basic ways I've seen businesses charge for their product.
1. Replacement cost. The keep "X" number of widgets in stock. If you buy one, they have to go out today and buy another one to maintain their inventories. This may be what the manager you talked to was doing.
2. Price based on purchase cost. They'll sell it to you based on what they paid for it plus markup.
3. "Average moving cost". They use the average of the last few purchases to determine their cost/selling price.
I don't see any of these methods as being right or wrong. Each lumberyard prices their stuff differently. just as each contractor prices the same job differently.
In a volatile material market, knowing this can be of great advantage. You don't want to buy from someone who uses repacement cost pricing in a rising market. But they would look pretty sweet in a falling market.
I have a twin brother; he's identical, but I'm not
And then there are those who use replacment cost in a rising market, and purchase cost in a falling market.
They're sort of like pork belly traders, except they get to control the selling price.
K
That's right, Ken - They can charge whatever they want, and their customers will pay it without question.
Just like contractors, right?
You've obviously never done any retailing, man!
If he doesn't base it on the replacement cost, he's losing money.
Look at it this way - You build ahouse for 150K last year. You sell it for 165K this year and think you've made some money.
But you paid taxes and insurance.
And then you find out that the land, materials and labor to rebuild the same house will cost you 166K
So your business shrinks...
This is like that customer who thinks a contractor who makes adecent profit is gouging them without any understanding of our true costs.
BTW, over the last twenty or so years my average felt cost has been more like 13bucks. The last couple years have been an anomaly.
Excellence is its own reward!
You've obviously never done any retailing, man!
Actually. I've spent a great deal of time in retailing, and know a great deal about supply and demand, markups, replacement costs, and many other aspects of the retailing industry. As a matter of fact, I deal with it every day right now. I am currently watching a restaurant chain that did not do it's homework completely, and man is it gonna cost them dearly. They relied heavily (almost completely) on number of vehicles passing by their new location when deciding on where to locate their new restaurant. This is an important factor to look at, but they forgot an even more important factor - AVAILABELE WORKFORCE. Those cars pass by on their way home, or to another town. These people in these cars do not live in the area. Great for customers, because they will stop and eat. VERY bad for the store because these people do not live here. There is no available work force in their new location, so they do not have enough employees to even open the new store. They are currently a month behind schedule in opening, and are still 40 workers short of having enough to open. I am gonna help them somewhat by getting them their 40 needed workers, but only for the summer. After that, they are on their own. I don't see that they will be any better off at the end of the summer then than they are right now. This restaurant may have a short life.
They rely heavily on the first month's business revenues to pay the franchise fees, and they are having to pay these fees without producing a single dime worth of revenue. The store's manager, and the restaurant's district manager are having a cow over this, and the owner is about to have a stroke over it. All because someone only did half of their homework. No one bothered to check out the available workforce supply in the area. They just assumed. One single phone call would have given them all the information they needed, and would have caused them to locate somewhere else.
My complaint, and I stated it very clearly, was the outright lie the guy at 84 Lumber was telling me. His attitude, his BS, and his ability as a store manager is WHY all that roofing felt (and lots of other items) are still sitting in his store after being open for a year.
Imagine you are a Wal-Mart store manager, and you are telling customers that the reason the price of Coke went up 3 times it's normal price was because of the shortage of aluminum cans needed to package the Coke in. All the time you are telling your customers this, the aluminum can factory next door is producing 3 or 4 times more aluminum cans than they ever produced. Got so many extra cans laying around that they are filling the parking lot of the can factory. Bad thing for a manager to do who is located in an area so close to the can factory. It makes him look stupid, and makes the customer distrust him.
Same thing with this manager (84 Lumber). He's telling his customers that the shortage of crude oil and petroleum products is the reason for the price increase, while all of the refineries located all around him are producing record numbers of petroleum products, and refining record amounts of crude oil.
Point is, just tell us "supply and demand" is why the price is increasing, not tell us a lie. As business owners, we understand this, and expect it. We may bitch a little about it, but that's just us. DO NOT tell us a lie, and then expect us to trust you.
THAT was my point. James DuHamel
J & M Home Maintenance Service
"Southeast Texas"
We cannot work around lies. I actually just heard that in a very recent post , but , I will never forget it. Its very true.
So , if they arent buying it , what are they using ? Ive heard heavy shingles dont need it. Dont yall come down on me for that statement. I just said I heard it, Ive never ever tried it. Youve got me wondering what they are roofing with out there . Noone should take this question as advice.
Regards
Tim Mooney
Tim,
We use roofing felt, and LOTS of it around here. We just buy it somewhere else.
There are MANY lumberyards, home centers, and roofing supply companies all over the place here. I just don't buy the felt from THIS place. Evidently, no one else does either.
What I really liked about this place was the fact that they match prices, and in most cases will BEAT competitor's prices. Because they are close to me, and do this, I used them a lot. I avoid them now simply because I don't like the manager anymore, and don't trust him. I don't think he is trying to rip me off, or steal from me, but I just don't like people that make up stuff and then use it as an excuse. Maybe it's just me, but I really get turned off quickly by BS.
Maybe I was just having a bad day.... James DuHamel
J & M Home Maintenance Service
"Southeast Texas"
Sorry to misread you. Jeffs suggestion sounds good. Maybe top management is wondering why this particular store has a flow problem and a clue from a customer who can express his opinions clearly will set things in motion.
Excellence is its own reward!
Hey James.....just tell him a dude from Pgh said that ain't the 84 way! Mention Joe Hardy's name...he's the owner.....but his daughter Maggie really runs the show now. Had a good buddy that was a store manager......at a time when I wasn't contracting!......and he told me......they teach them....every thing's negotiable!
They're supposed to work with ya to get all your business......Tell him Jeff said so! Jeff "That's like hypnotizing chickens........."
Hey Jeff,
This particular 84 Lumber ain't gonna make it long. I work across the highway from them, and there ain't a handfull of vehicles going in and out of there all day long.
They are 1 of 3 full service lumberyards in a town of 6,000 people, and they just ain't getting any business. This partucular store manager is kinda like the permanent manager, and they bring in "trainee" managers all the time. He trains them, then they go off to another location. Then they send him a new "trainee", and the process starts all over again.
I've done business with 84 Lumber before, and like them. This particular one just ####. I keep thinking they'll move him somewhere because business is so slow, and bring in someone else.
Time will tell. James DuHamel
J & M Home Maintenance Service
"Southeast Texas"