Under normal circumstances, there wouldn’t be too much to say in a letter introducing our Annual Construction Issue besides the usual: “Buildings are going up. People are renting spaces. Here is information on selecting a site, choosing a contractor, multistory construction, climate control, etc.”
But these are hardly normal circumstances, are they? Self-storage among other industries has been tossed by the throes of what many have referred to as the “crisis” in steel. Over the past year, our industry publications and conferences have been rife with editorials and meetings about how to weather this storm. And builders and owners alike keep looking for that eye in the storm.
In an update released by the United Steelworkers of America (USWA) in March, steel companies lost $11 billion between 2000 and 2003, and continue to report net and operating losses. Fourteen steel companies have filed bankruptcy since 2002—44 since the “beginning” of the crisis in 1997. Eighteen U.S. steel-making facilities, or nearly 15 million tons of steel-making capacity, have been shut down or idled in the past four years, causing 55,000 steel workers to lose their jobs since January 2000.
In the self-storage industry, the concern has been over the increasing cost of building materials. According to the USWA, the rise in steel prices has been driven by increases in input costs (scrap metal, natural gas, coke and iron ore), reduced steel inventories, decreased domestic steel capacity and the weakened U.S. dollar. The spot price for hot-rolled steel rose 38 percent from a low of $260 per ton in July 2003 to $360 per net ton in February 2004.
Regardless of the swell in materials cost, as long as investment opportunities are ripe, self-storage construction is not likely to cease. However, the professional environment must change. Communication, not cost, is the cornerstone of new business relationships. Owners must be flexible and prepared for the punches that will come with new building: changes in costs and fluctuating budgets. On the other end, it becomes the responsibility of suppliers to keep customers apprised of any alterations to materials and bids, always providing options when possible, and being compassionate to owners’ frustration.
In short, focus on building relationships over structures, and trust over profits. The rest will come in time. If you can maintain flexibility and a positive attitude, you stand a greater chance of culminating your business transaction with a handshake rather than a more colorful gesture that says, “Build this, buddy!”
Best wishes for all your builds,
Teri L. Lanza