Oil prices down, why aren't shingles?

I have been told for quite sometime now that crude oil prices indicate what shingles cost. For example: When I started roofing shingles were $40 something per square and fuel was $2 per gallon so everything made sense gas went up to $4 per gallon and shingle prices went up to $80. Now I have waited awhile to see if they would drop and I don't think they are even going to drop a single penny. Nope, I'm guessing they will increase.

Are you guys surprised or shocked at this or maybe even a pissed? :S

I can not remember ever rolling back my prices because I bought something cheaper they before.

Time and materials rewards inefficiency. That is why I always give a firm price.

natty Said:

seen-it-all Said: The quality of work described in the meaning of efficient was already priced into the job based on calculating the worst case scenario and average scenario and coming in somewhere in between the two.

That is what I was getting at. Everyone sells quality but few deliver. One contractors efficiency is to slap them down as fast as possible. Anothers efficiency is to do it by the book. When I finally decided that I would no longer give my work away, I found that few could understand why I was higher than the other guy. They just assumed all roofers installed the roofing and decking the same way. If I detailed every little procedure in the proposal, it was as if I wrote it in Chinese. Few were actually interested in the building science behind my recommendations. If I recommended cutting in 20 soffit vents, I needed to charge $600 to do it. Just put it back the way it was, they would say. The hardest part is trying to explain why I am doing so much more work than the other guys.

Nice post. I've always felt that the hardest thing in selling a roofing job is, to get the owner to care about their roof as much as we do.

seen-it-all Said: The quality of work described in the meaning of efficient was already priced into the job based on calculating the worst case scenario and average scenario and coming in somewhere in between the two.

natty Said:

seen-it-all Said: Efficient to me was having solid strapping where each course of sheeting met with no H clips used. All butt seams were staggered. An 1/8 gap at all seams for expansion. True cuts at all hips, ridges and valleys with no gaps. Every 4 x 8 sheet had approx. 128 galvanized 2 spiral nails installed to insure no deflection of the roof deck. All venting was also addressed to limit build up of humidity in the attic.

With that meaning of efficient, how did you maximize profit?

Sometimes that's a hard one to explain natty. You can only maximize profits if you are paying by the hour or salary. If you are subbing out you lose that control. The quality of work described in the meaning of efficient was already priced into the job based on calculating the worst case scenario and average scenario and coming in somewhere in between the two. Time of year and expected weather being the biggest determining factor. How quick you safely accomplish this stage of the job will maximize profits.

I sometimes look at a roof as a river rafting expedition. Point A to point B is running the rapids. Point B to point C is the smooth water until you reach the dock. The same with a roof, from start to dry in is the rapids and the install is the smooth water. How you plan for the rapids will determine if you get to point B without capsizing the boat. You can watch a Go-Pro video and see kayakers torpedo through the rapids and come out unscathed and smiling. That's what you want to accomplish. They map the river, locate the rocks, whirlpools and hazards, choose the right boat and gear and safely get to the smooth water.

Sometimes your competitors are showing up at the launch point hung over with the 12 foot aluminum boat, a case of beer and the dog and are trying to do the same as the guy in the kayak. From point B to point C you are pretty even with both boats but you will have the edge in the rapids.

Another way to maximize profits is to consider each employee as a taxi cab. They show up to work each day with a set fare on the meter, that being a minimum call out time plus payroll costs. After the minimum call out time, the fare meter begins ticking. Your goal as the boss is to safely get the furthest distance out of each taxi by the end of the day. Avoid traffic jams, choose the best route. If you hired a cab, you wouldn't want him driving in circles, pulling over for a smoke or a drink of coffee or having his cab stalling and not being able to run properly, all while the meter is running. Same thing on the job. Your job as boss, or foreman- supervisor is to dispatch the cabs, and direct traffic.

This is a similar situation that I was discussing today with a steel company representative that related to the recent drop in scrap metal pricing from around $12 per hundred weight down to around $7 per hundred weight but the price that we pay for the metal coil to manufacture the metal roofing panels with has not decreased any at all, after some discussion he related to me that the drop in scrap pricing probably would not be reflected in the price that we pay for the painted coil to manufacture it from. The explanation was that by the time that the drop in price of the scrap had a chance to influence the price of the finished product that it would probably not make any difference at all unless it lasted for an extended period of time maybe at least 4 to 5 months. I think unspoken cooperation between large companies in all industries keep prices higher than they should be. At least we have all have benefited some from the recent lower fuel prices. Best wishes to all.

Bret Lyon Lyon Metal Roofing blyon@lyonroofing.com www.WeSellMetalRoofing.com

seen-it-all Said: Efficient to me was having solid strapping where each course of sheeting met with no H clips used. All butt seams were staggered. An 1/8 gap at all seams for expansion. True cuts at all hips, ridges and valleys with no gaps. Every 4 x 8 sheet had approx. 128 galvanized 2 spiral nails installed to insure no deflection of the roof deck. All venting was also addressed to limit build up of humidity in the attic.

twill59 Said: Ive never recieved a differed payment offer.... :( I learned already that if you want something, you have to ask

Home Depot only send out differed offers for consumer card holders. I've never received one for my commercial account. I have a card and the wife has a card so we are good for about 30K in purchases. Some offers are for 24 months with a minimum payment of 1% of the balance each month with no interest charged if you pay the full balance on month 24.

Usually the best time to buy was in January or February as it was usually the slowest time for sales. When Katrina hit 7/16" OSB went up to $23.80 a sheet. Was a good spread from the $7.85 a sheet that I had bought at.

In the late 90's I was able to purchase a few semi loads of OSB destined for the Japenese market. Got it dirt cheap around $1.80 per sheet. Mind you they were Japenese sized sheets at around 38" x 78". Worked well for re- decking over ship lap and strapping. They were a nice size to handle as one man could sheet and not be bagged after 8 hours.

natty Said:

seen-it-all Said: The shingle install process remains verily static as far as time management but the shake removal and cleanup and re-decking was where you could maximize your profit if you were efficient.

On top of the storm chasing racket, this re-deck efficiency did more to ruin the honor of the residential roofing profession- at least in N.Texas. I discovered I was giving my work away when I was charging the same as everyone else but was roofing and decking by the book. Most everyone else was slapping the deck down without a care. The cost of material does not matter much. But as long as you have contractors willing to sub out to $40/sq idiots, there is no honor in roofing.

"Efficient" to me was having solid strapping where each course of sheeting met with no "H" clips used. All butt seams were staggered. An 1/8" gap at all seams for expansion. True cuts at all hips, ridges and valleys with no gaps. Every 4' x 8' sheet had approx. 128 galvanized 2" spiral nails installed to insure no deflection of the roof deck. All venting was also addressed to limit build up of humidity in the attic.

I've seen other contractors nail it where it dropped with minimal nails. Looks nice when they pick up the cheque but just wait six months. Drive by and see the nice 4' x 8' quilted pattern on the roof. Look on a frosty morning and you will see all the faults.

Hardt Roofing Said: gas went up to $4 per gallon and shingle prices went up to $80.

seen-it-all Said: The shingle install process remains verily static as far as time management but the shake removal and cleanup and re-decking was where you could maximize your profit if you were efficient.

twill, if you're credit is good, you might be real surprised what suppliers will do.... if you just ask.

seen-it-all Said: Should have clarified what the deck replacement was for. ...... thanks to Home Depot.

That was a killer post. I hope people in need of it will actually try to digest it and apply it. So often people will say to me "Yeah, but your commercial and that's a different world".... but it ain't. Business is business. Every industry will have those that will do it wrong intentionally just to make a buck, those that will refuse to do it wrong even if it costs them more money, and those that don't know the difference between right and wrong. Educating the ones that actually care will raise the entire industry.

As for shingle prices, I was told one time that the asphalt used in shingles is actually a special blend and costs more to produce and is often in short supply so the price of crude does not play into the cost as much as we think it should. Supply and demand are probably the biggest factor in shingle prices. Where I am located, pricing has been dictated on what supplier can sell the cheapest. One lumber yard would sell shingles at cost with a house package of lumber, insulaton ect. and as a result forced other suppliers to match that price or come close. For years it was the old price increase notice of 8% and then the Mexican standoff for a few weeks until the "who blinks first" happens and pricing levels out. Suppliers recoup their costs by fuel surcharges, roof top charges per bundle and pricing accessories high.

Should have clarified what the deck replacement was for. Back in the 70's-80's and into the early 90's shakes were the go to roof in my area when they cost $80.00 bucks a square for materials. This left thousands of roofs needing replacement coming into the late 90's onward. Shakes are now $300.00 a square for materials so every roof required a full deck of OSB or plywood over the 1x4 spaced wood strapping in order to install asphalt shingles. The average house we did used around a hundred sheets. Deck replacement was one of the largest components of each job, so how you utilized your man power, material placement and handling and method of install played a big part in the profit margin on every job. The shingle install process remains verily static as far as time management but the shake removal and cleanup and re-decking was where you could maximize your profit if you were efficient.

Piecemeal repairs were always charged out at time plus materials plus overhead as per set clause in the contract. They weren't a money maker but you weren't losing either. I used to do the "old $50.00 bucks a sheet" routine until I actually did some time management analysis and found out it was about double that to come to break even point.

So.......100 sheets by a $10.00 spread was a thousand dollar profit before I hit the job site. Home Depot was my banker as I would always buy when they sent me out the one year or 18 month differed payment offer in the mail. They also provided the dry storage as I could buy and just sign out the lifts of material as I needed them. The shingle supplier would pick up the sheeting and roof top it at no charge with the shingle order.

I might have traded a few dollars back when I was wet behind the ears but I soon realized that setting your brand as far as performance in obtaining a contract price that was at the top end, if not the highest, and then maximizing efficiency was where you made your money. I've never priced shopped or quibbled prices with my shingle supplier and they have always treated me well. Service was the key ingredient in our relationship. They often bumped other deliveries in order to fit me in on short notice. I always laughed at the goons that bid a job cheap and then spend half a day grinding different suppliers to save a buck or two a square. A classic race to the bottom, flash in the pan business adventure.

By playing the price spread on the plywood and OSB I could make $10K or more a season without using any money out of my cash flow thanks to Home Depot.

seen-it-all Said: ...

OSB and plywood were another matter though. Ive seen both jump $6-10 dollars overnight ...

I know you say later in the post about buying quantity at low and selling high, and every little bit helps, but even at $10/sheet ($30/square) the way I price deck replacement it wouldn't matter.

With the disruption to production, total labor, disposal, material costs and general hassle, if $10/sheet makes a huge difference, then I'd say it's being priced too cheap to the customer. Generally speaking, that's exactly what I see all to often. I know around here $50/sheet seems "normal", and I can't even begin to comprehend replacing deck at $150/square. That is loosing money before it even starts, and that's if it's large sections. If you're piecemealing at that price, a person would be better off taking those jobs that don't require any deck repacement at a much discounted rate off their norm.... that's my $0.02 anyway. I look at at every aspect of the job from a profit per time invested perspective. If it slows you down, then jack up the price. Ain't any good reason to trade dollars unless it's a charity job.