Consumers Should Brace for Higher Prices on Electrical Projects
Irvine, California, June 17, 2021 - As shortages of electrical supplies expand, electrical contractors are not only paying significantly more for copper wire but also facing significant challenges finding it in-stock.
Raiven, a leading supplier of procurement solutions for contractors and building owners explains.
The National Association of Homebuilders (NAHB) recently released its May 2021 survey results and at least 75% of builders are reporting shortages in lumber, copper wire, plumbing supplies, windows and doors, and appliances. As a comparison, in June 2020, 7% of builders reported a copper wire shortage vs. 77% in May 2021.
Lumber led the meteoric surge in building materials prices with a 250% increase over the last year but fortunately, lumber prices have dropped 40% over the last few weeks. The same is not true of copper wire. Retail prices on copper wire have soared 40% - 50% over the last 60 days and many distributors are backordered 30 – 60 days on the copper wire used in residential and commercial electrical projects. This is eerily similar to what was experienced with MERV 13 air filters, Nitrile gloves, hand sanitizers and masks shortly after the COVID-19 pandemic struck.
What is the source of the supply shortage?
A perfect storm has hit the copper industry, (1) The COVID-19 pandemic forced manufacturers and copper producers to close or slow production, (2) an explosive growth globally in electrification projects, (3) China is buying half of the world’s copper production as their economy recovers, and (4) Copper reserves are depleting, and discovery of new deposits is deficient.
What type of electrical projects will be impacted?
Electrification projects, such as home and commercial electric vehicle (EV) charger installations; Solar, wind, battery storage and micro-grid installations; and power grid infrastructure will all be impacted. Further, home improvement and commercial retrofits that include electrical improvements, and new home construction will also be affected.
How much will prices increase?
Don’t be surprised if the electrical project quote you received 30-60 days ago increases by 20% or more depending on the quantity of electrical materials needed on your project. Most experts project higher prices and shortages of copper through 2022 so if you’ve been contemplating getting that EV charger installed in your garage, now is likely better than next year.
Brian Watson, owner of Watson’s Charging Stations & Electric explains the inflationary pressures being experienced, "We’ve installed thousands of EV charging stations and on every job, we use copper wire. A month ago, wire prices jumped 30% and now they’ve increased another 10% in less than two weeks. Inflation puts us in a very difficult situation with our customers because I either don’t pass along the higher prices and we lose money on the job, or I have to inform them that my estimate needs to increase.”
As Mark Cooper, President of H&D Electric, one of the largest electrical contractors in the Sacramento Valley explains, "We’ve been an electrical contractor for single-family and multi-family home builders since 1958. For the first time in my 30-year career, I had to call all my homebuilders to inform them that I needed to revise our contract to reflect the rapid rise in copper wire prices. In the past, I’ve always been able to absorb upticks in price but it’s just not possible with 40%+ increases.”
What can electrical contractors do?
During turbulent times when products are frequently out-of-stock and prices are volatile, contractors need to leverage technology to quickly find where electrical supplies are in-stock and hopefully, at the lowest price. Doing this manually by searching distributor websites and making phone calls is incredibly time-consuming for contractors.
Brett Knox, CEO of Raiven, explains “Technology is now available that searches in real-time across distributors to find product availability and current prices. Raiven launched its sophisticated algorithm in a browser extension during the pandemic to help contractors and facility managers find COVID essentials. It’s now available for a wide variety of electrical, HVAC and building maintenance products.” Brett continues, “Distributors have different levels of pricing sophistication. Some update pricing daily while others may be months behind. In fact, Raiven’s algorithm found a major distributor that is selling Romex and other NM-B cable for 40% less than their competitors so contractors are stocking up. Raiven’s algorithms continue to identify pricing anomalies and product availability for high-demand products in short supply.
Leveraging technology to keep project costs down is paramount when shortages exist in the market. Learn more at Raiven.com.