F O U N DAT I O N O F T H E WA L L A N D C E I L I N G I N D U S T R Y

Cost of Cold-formed Steel Products

Mines to Job Site

Foundation Research Series

 Cost of Cold-formed Steel Products—
Mines to Job Site

Prepared for
The Foundation of Wall and Ceiling Industry

By
Robert Grupe
Grupe Gypsum Consulting, LLC

©2011 Foundation of the Wall and Ceiling Industry. All Rights Reserved.

No part of this publication may be reproduced in any form by any electronic or mechanical means, including information storage and retrieval
systems without permission in writing from the publisher.

Published by
Foundation of the Wall and Ceiling Industry
513 West Broad Street, Suite 210
Falls Church, VA 22046-3257
(703) 538-1600

July 2011
Preface

Foundation of the Wall and Ceiling Industry

In the late 1970s, there was a clear recognition among industry leaders for the need to unite and expand
the educational and research activities available to contractors, manufacturers, distributors and the pub-
lic, in general. At the time, there were many issues facing the industry—from a national energy crisis
to injuries in the workplace, to unsafe buildings occupied by the public. In response to these issues, the
Foundation of the Wall and Ceiling Industry was formed in 1977 with the following mission statement
as an IRS designated non-profit 501(c)3 corporation to pursue educational and research activities ben-
efiting the industry and the public at-large:

The Foundation’s mission is to be an active, unbiased source of information and education to support
the wall and ceiling industry.

To fulfill this mission, the Foundation owns and maintains the largest independent library serving the wall and
ceiling industry, and provides research support to industry inquiries and publishes research papers. In addition,
the Foundation provides financial assistance through its AWCI Cares program to AWCI member company
employees experiencing hardship.

To obtain additional copies of this publication or to learn more about the Foundation of the Wall and
Ceiling Industry, please contact

Foundation of the Wall and Ceiling Industry

513 West Broad Street, Suite 210
Falls Church, VA 22046-3257
Phone: (703) 538-1600
Fax: (703) 534-8307
E-mail: info@fwci.org

www.awci.org/thefoundation 3
s 00
Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

The Making of Cold-Formed Steel 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Supply Chain Economics: Supply, Demand, Pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

World Raw Material and Energy Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

The North American Steel Industry in Transition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Value Added at Each Step . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Managing Bid Risk for Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Indexing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

WWW.AWCI.ORG/THEFOUNDATION
www.awci.org/thefoundation 5
 Executive Summary
The price of hot rolled steel has jumped 67 percent in the four
months from November 2010 to mid-February 2011. This is
the price of the base steel that is used in the fabrication of
cold-formed steel framing, the backbone of the commercial
interior finishing industry. These building products include
interior drywall studs and load bearing cold-formed steel
framing. Further, the steel industry has experienced several
radical swings such as this in the price of steel over the past
few years. Tracking steel base price trends back through the
last decade uncovers some alarming facts. Between the begin-
ning of 2002 to the end 2009 there have been six swings
or cycles of price. It is common for there to be peaks and
troughs as price follows general market supply and demand
trends. What is unprecedented is the combined magnitude of
the change along with the rate in which the price changed.
Three of those swings were increases that were close to 100
percent, and they occurred in a matter of just a few months.
How can this be? What changed? Drywall contractors used
to be able to submit a bid confident that the price of framing
would change little during the course of the project. Given
current trends, how can contractors now minimize their
exposure to price fluctuations and control their costs? This
paper will provide insight into this highly complex, rapidly
evolving industry and supply some strategies on protecting
contractors’ margins.
The construction industry has radically changed its meth-
ods of both design and construction. Regulations that cover
building product development and subsequent installation
have new emphasis. Advancements in material science have
altered even the basic building materials that have been used
for years. Business models have changed to meet new com-
petitive challenges. This is true in all of construction, but
most certainly it has its impact on cold-formed steel framing.
The steel industry has also undergone a major transforma-
tion. Jeff White, director of corporate strategy for USG Cor-
poration, has defined this amount of change as evidence of
“business evolution.” Further, he describes the symptoms
of such an evolution as vertical and lateral integration,
consolidation, globalization and product proliferation. This
paper will explain these concepts and support the premise
of business evolution as it applies to the steel industry. Steel
mills have seen rampant bankruptcy followed by unprec-
edented mergers and acquisitions. Once a multi-national
industry with the emphasis on domestic markets, it has
now evolved into a truly global entity. The demand for
steel has shifted supply and demand to global supply and
demand from domestically to internationally. The growth
in underdeveloped countries has been exponential, and
with it, there is a global shift and growth in steel demand.
Steel production in the mills has moved from one technol-
ogy to another. This is forcing a shift in raw materials. An
6     Foundation of the Wall and Ceiling Industry
industry in transition will experience turbulent changes
with price in the marketplace.
In cold-formed steel framing and from a very simplistic view
there are approximately 20 basic steps from extraction of
raw materials to the installation of the finished product at
the construction site. Each step along that path is cost sen-
sitive, and any increased cost or disruption of materials in
the process will greatly impact the price of the steel fram-
ing products. Also, each step is subject to outside influences
that will affect the final price.
Energy plays a significant role in the manufacture, fabrica-
tion and distribution of steel framing. A rise in the price of
natural gas, electricity and diesel, for example, will adversely
affect 15 of the 20 steps.
The availability and price of raw materials will drive costs.
Coke is a basic raw material in the production of steel. Cur-
rently it’s only supplied by two countries in the world and is
therefore limited in availability. There has been a significant
shift in how we produce steel. This is especially true here in
North America. We have gone from what is called the Blast
Oxygen Furnace to the Electric Arc Furnace. This process
has some significant advantages in efficiency, energy costs,
raw materials and even water usage. However, it must rely
on the availability of scrap steel, and that has proven to be
a material that is prone to extreme price variability.
A common phenomenon in the world of business is the con-
solidation of companies. It is a natural event in the life cycle of
a business. Large companies buy small companies to be more
competitive and control costs. Since 2000 the steel industry
has undergone tremendous consolidation. It is estimated that
70 percent of the world’s steel capacity is controlled by just
a few conglomerates, and they continue to grow. This alone
can link to the huge swings in base steel price.
Marshall McLuhan penned in his 1967 book, “The Medium
Is the Message,” that the world is a global village. He, at the
time, was referencing the impact of communication on our
perception of the world. Forty years later we start to feel the
effect of the global village in the steel business. The global-
ization of the steel industry has resulted in the United States
no longer being the leader in the production of steel. It has
actually dropped to number three in total number of tons
of steel produced. As social unrest in the Middle East raised
the pump price of gas in Indianapolis, so have international
forces raised the price of U.S. steel.
 The Making of Cold-Formed Steel 101
This section will focus on the first nine steps in the steel
framing process. It starts with the selection and extraction of
the raw materials and ends with coils of coated steel ready
to be shipped to the steel framing roll-form manufacturer.
The raw materials used in steel are few and simple. They
are coke, limestone and iron ore.
Coke is a man-made material that is derived from coal. Coal
used in the production of coke must have specific properties.
Coke is made by driving off water, coal ash and coal tar from
coal at elevated temperatures. This is called coking. The coke
is then used as the fuel in blast furnaces. The material is also
used as a reducing agent to remove the iron from iron ore.
Limestone is used as a flux to remove the impurities from
the ore, which in turn produces the byproduct slag. As a side
issue, slag is sold to various building product manufacturers
to produce insulation and ceiling tiles.
Coke, iron ore and limestone are continually fed into the
top of a blast furnace. At the same time, oxygen enriched
air is introduced up through the bottom. The result is that a
chemical reaction takes place that reduces the iron ore. This
iron comes out the bottom of the furnace while flue gases
exit out the top.
The iron that is produced in the blast furnace is called pig
iron. This type of iron is far too brittle for cold-formed steel
Source: World Steel Association (worldsteel)
framing because of its high carbon content. It is used in cast
iron applications. Further processing of pig iron is required
to make it elastic enough for construction applications. This
is done by moving the molten pig iron into a Basic Oxygen
Furnace. Combustion is used to remove the carbon, and it
is generated by introducing pure oxygen into the furnace.
At this point, molten recycled steel is added to increase the
recycled content of the final steel product. The value of the
amount of recycled content in cold-formed steel has become
very important. This is because of the desire for architects
and owners to achieve U.S. Green Building Council recogni-
tion for their building. The USGBC has developed a rating sys-
tem called Leadership in Energy and Environmental Design.
In the LEED rating system, numbers are accumulated based
on specific energy and environmental design considerations.
Recycled content, LEED credit MR 4, of a building material
can be of significant importance. The threshold level for poten-
tially obtaining an MR 4 credit based on cold-formed steel’s
recycled content is 25 percent. While still fluid, the material
is moved to a refining facility to be shaped into steel slabs.
Throughout the remainder of this paper the term Basic Oxy-
gen Furnace will be used to define the overall steel making
process using blast furnace technology.
The graphic below illustrates the overall process starting
with placing iron ore, coal, coke and limestone into the fur-
nace. The sinter shown in the schematic is used to convert
the materials that originate in the blast furnace operation. It
takes the iron oxide scale, slag and pellet fines, which were
the waste stream byproducts, and prepares them to be re-
www.awci.org/thefoundation 7
 introduced in the furnace. After that step, scrap steel is added
in what is called the converter or basic oxygen furnace. The
molten steel is then ladled in a continuous casting process
that is hot rolled into steel slabs.
Another process that is gaining in acceptance, especially in the
United States, is what is called the Electric Arc Furnace, also
referred to as mini-mills. It offers many advantages over the
conventional Blast Oxygen Furnace. Its raw material stock is
comprised of scrap steel, iron ore and coal. However, nearly
100 percent of the material is recycled scrap steel. This com-
pares favorably to the Blast Oxygen Furnace, which relies
heavily on the use of virgin raw materials. In principal, the
furnace is charged with scrap steel and then electrodes are
used to generate the heat to melt the steel. The amount of
energy used in this method is far less than conventional
Blast Oxygen Furnace. Since their raw material is scrap steel,
their location is not hindered by raw material availability and
shipping. Traditional integrated furnaces were located near
ports for ease of transportation. The process itself allows the
steel manufacturer to stop and start the production to meet
demand, resulting in greater control over costs.
According to John Cross, vice president of the American
Institute of Steel Construction, 30 percent of coil steel used
for structural products is made from the integrated or Basic
Oxygen Furnace process. The balance 70 percent is made
from Electric Arc Furnace. Thomas Curran, north central
regional marketing manager for ClarkDietrich Building Sys-
tems, believes the percentage is even higher for cold-formed
8     Foundation of the Wall and Ceiling Industry
steel. In that process, 93 percent of the raw material is scrap
steel. This is a significant and rapid change. As recently as 11
years ago, the majority of U.S.–made cold-formed steel fram-
ing was produced using the Basic Oxygen Furnace technol-
ogy. The move to Electric Arc Furnace has then changed the
price impact from raw materials. The single largest influence
on raw material cost in the Electric Arc Furnace process is
the price of scrap steel.
The graphic below illustrates the process of steel making
using the Electric Arc Furnace. Even though it shows iron ore
and coal, the majority of the raw material is scrap steel. As
seen in the blast furnace process, molten steel is ladled into
a continuous casting process to make steel slabs.
The steel slabs made from either process are placed in a reheat
furnace. The steel slabs must be reduced in thickness, and
the best way to accomplish that is running it through rollers
while the steel is hot. The steel is allowed to cool before the
next steps are started. To obtain the required mechanical
properties needed in steel framing, it is finished by using
the slower cold-forming process. Cold-forming is just that—
the steel is run through rollers at basic room temperature to
reduce its thickness. Finally, the steel is heated once again to
enhance its structural characteristics. This is called annealing.
Annealing increases the ductility of the steel and enhances
the cold working properties. Ductility, in engineering terms,
is the opposite of a material being brittle. Under an applied
load, a ductile or elastic material will yield before it breaks.
The perfect example of this is a piece of rubber that will
Source: World Steel Association (worldsteel)
stretch before tearing. This material property is essential in American industry it is measured in ounces of coating over
the design of cold-formed steel framing. a square foot of steel surface area.

The illustration below diagrams the process starting with
reheating, then cold-forming and eventually finishing.
The first step in finishing and coating the steel is to clean the
surface of any oils and to “pickle” the surface of the steel.
The hot rolling process and heat treatment of the steel allows
a crust to form on the steel surface. This undesirable crust
is iron oxide, which occurs when oxygen in the air com-
bines with the steel. This must be removed prior to bond-
ing a coating to the steel, which is accomplished by immers-
ing the continuous steel strip in a bath of hydrochloric acid.
The final step in the pickling process is to rinse the steel to
remove any acid residue.
The coating thickness has a unique nomenclature system
based on the type of coating used. The thicknesses are ref-
erenced as alphanumeric designations such as G40 and G60.
The “G” signifies that the coating is galvanized or zinc. The
numbers 40 and 60 are the thickness of the coating mea-
sured in total weight in ounces per square foot of surface
area of steel. Zinc per pound is far more expensive than steel
per pound. Therefore, the added value of galvanizing steel
contributes to the final cost of galvanized cold-formed steel
based on the price of steel.

Now the steel is ready for coating. The primary goal is to

increase the steel’s corrosion resistance. Currently, the com-
mon standard of performance for corrosion resistance in the
steel framing industry is to galvanize the steel. That means
the steel is coated with a thin layer of zinc, and the method-
ology used to apply the zinc is the hot dip process.

Essentially, in the hot dip process the coil is immersed in the

molten coating, in this case zinc. The molten material reacts
with the coil of steel by bonding to the surface. The process is
precise enough to leave a specified thickness of coating. The
thickness of the coating is usually designated as the weight
of the coating over a given unit of steel surface area. In the

poST-pRoCeSSinG
oF STeel

www.awci.org/thefoundation 9
 Supply Chain Economics:
Supply, Demand, Pricing
This section will explore how cost and value are added at
each stage. It will start with an analysis of the trends cited
in the summary. Transportation of materials throughout the
entire process will be analyzed. The section will end with an
analysis of globalization and consolidation and the role they
play in driving the instability of pricing.
The price trend chart below clearly illustrates the fluctuation
in the price of steel. In very short time intervals, the price
increased and/or decreased. According to Scott Negwer, pres-
ident of Negwer Materials, Inc. in St. Louis, the stability of
the price of steel in the past was a sales attribute. This was
especially true when compared to its competition—wood
framing. With the stability in steel prices, building material
distributors could confidently quote projects in the future,
and contractors would have a solid grasp on their cost control.
If there was a price spike, it was understandable and came
with advance warning. This was true for years. To have the
price of steel double in a matter of months was unthinkable.
This chart also clearly shows that price fluctuation is not lim-
ited to cold-formed steel framing, and it is also not limited
to the United States. This is occurring in all types of steel.
Documents listed on the website of the Federation of Plas-
tering and Drywall Contractors of England, an international
member of the Association of the Wall and Ceiling Industry,
contain press releases from building product manufacturers
describing what they are doing to try and help the industry
control the cost of metal framing. On a recent project in the
STeel BASe
pRiCe TRendS
Midwest Spot
Market Prices
(includes surcharges)
Source: Purchasing
Magazine & AMM
(for Chicago#1
Busheling only)
10 Foundation oF the Wall and Ceiling industry
Middle East, the drywall contractor talked about how it was
the steel vendor’s desire to pre-purchase all the steel coils
needed for the project in order to lock in the price. Even
the American Institute for Steel Construction is relating that
cost variation is an issue within the structural steel segment.
In order to understand cold-formed steel supply chain eco-
nomics, it is best to begin at the steel-making process and
look at one parameter of cost—energy. A measure of how
much energy is used in the production of steel can be found
by comparing what is called its “embodied energy” to other
building materials. According to the publication, “The Cana-
dian Architect,” the initial embodied energy is defined as
the non-renewable energy consumed in the acquisition of
raw materials, their processing, manufacturing and trans-
portation to the job site. The following table is a comparison:
Source: USG Sustainability Information
Building Material Embodied Energy MJ/kg
Lumber 2 .5
Concrete 1 .3
Glass 15 .9
Glass Fiber Insulation 30 .3
Gypsum 6 .1
Steel 32 .0
Steel (Recycled) 8 .9
This table documents that steel production is the highest in
the building materials category for embodied energy, thus
making steel prices much more susceptible to fluctuations in
energy prices. It also shows the drop in energy when recy-
cled steel is used.
 In 2002, The Athena™ Sustainable Materials Institute published
what is called a Life Cycle Inventory on the production of steel
in the United States and Canada. It is considered a cradle to
gate analysis of steel production. That means that it evaluates
all the energies, raw materials and emissions used or gener-
ated from extraction of the raw materials to the finished prod-
uct. The analysis determined that the following amounts of
materials and energies were used in the production of 1 tonne
of galvanized steel studs. The study covered both Integrated
(Blast Oxygen Furnace) and Electric Arc Furnaces. The table
below is specific to U.S. mills and is considered combined in
terms of the processes.
Material Type Unit of Measure Amount
Source: USG Sustainability Information
a role just in obtaining raw materials needed for production.
The industry in general has worked very hard to reduce the
amount of energy it needs. This can be seen as another exam-
ple of an industry in transition. This is especially in true in
North America. The proliferation of mini-mills has drastically
reduced the energy demands.
The chart below tracks the raw material and energy costs
over a two-year period (2008 through 2010). The only cost
that remained stable during that time was electrical energy.
There were huge swings in scrap steel, natural gas, coal and
even iron ore. The pricing of iron ore has gotten so erratic

that spot pricing has taken affect. This is partially due to the
Lime Kg 71.561 fact that three companies dominate the iron ore market. This
Limestone Kg 59.436 dependency is underscored by the following quote from Ian
Iron Ore (Pellets) Kg 1190.660 Christmas, the current Worldsteel Association Director Gen-
Scrap Kg 111.915 eral, during the China Iron and Steel Association’s Interna-
Energy Type Unit of Measure Amount tional Steel Market and Trade Conference dinner in Beijing
Natural Gas Mj 1849.365 on March 23, 2011: “The second challenge is the issue of the
Electricity Mj 5306.151 profitability of our industry faced with the enormous bargain-
Diesel Mj 136.239 ing power of our raw material suppliers, particularly for iron
Scrap Kg 111.915 ore and coking coal.”

The above table illustrates that there are several different types
of energy used in the production of steel. Price fluctuation
in anyone type will change the cost structure of the finished
slab of steel. In the same report, it was reported that diesel
energy at the rate of 0.61355 GJ/tonne of liquid steel was con-
sumed just getting the necessary raw materials to the mill.
That translates to roughly 4.32 U.S. gallons/tonne of liquid
steel produced. This number includes shipping via truck, ship
or train, and illustrates how much one energy source plays
Scrap steel is playing an increasing role in price variability.
According to AISC, it makes up 93 percent of the raw mate-
rial used in Electric Arc Furnaces, and potentially 25 percent
in Blast Oxygen Furnaces. In the chart, it clearly has been
unstable for the time shown.
World Raw Material and Energy Costs
Another cost factor that has played its role in the volatility of
steel pricing is that of freight. The U.S. Department of Trans-

STeel CoSTS

Source:
Steelonthenet.com

www.awci.org/thefoundation 11
 portation reported that the cost of diesel fuel rose 126 percent
in the decade ending in 2006. Also, USDOT claims that for
every dollar spent on mining goods, 8 cents goes to freight.
On finished goods there is an increase to 9 cents (the Envi-
ronmental Protection Agency claimed in 1993 that freight cost
on carbon steel accounted up to 10 percent the cost of the fin-
ished product). This was documented in their October 2009
paper called “Fleet Management and Operations.” It further
states that labor costs are impacting the total cost of freight.
From 2003 to 2006 the cost of freight by truck had increased
13 percent. The railroad experienced an increase of 25 per-
cent, while port and harbor operations were up by 9 percent.
Another freight cost factor that does have significant impact
is that of congestion. The paper sites that there are more than
2,000 transportation “bottlenecks” in the national highway
system. These “bottlenecks” create an estimated 243 mil-
lion hours of delay. That simple delay drastically impacts the
total cost of shipping goods. Any disruption or delay in the
Port of Los Angeles can add millions of dollars a day to the
cost of shipped goods across the United States. The impact
of freight costs by truck hit the price of steel at least four
times. From mining to the job site, the steel will be loaded
on a truck for distribution at least four times. Raw materi-
als for Blast Oxygen Furnaces are typically shipped by rail
or barge. The scrap steel used in Electric Arc Furnaces is
shipped shorter distances and by truck.
The steel industry at the turn of the last century is a classic
example of a business segment poised for rapid consolida-
tion. A mature, stable industry that is suddenly is faced with
rapid change is forced to adapt. From 1980 to 2000, every-
thing appeared to be on stable footing. Raw materials were
available, and costs were stable. Then, starting in 1994, the
price of hot rolled steel started to fluctuate radically. From
May 1994 to June 1995 the price of steel rose 58 percent,
only to fall 46 percent by the following February. This hap-
pened not once, but two more times before it collapsed in
December 2001. One of the results of these amazing price
swings was the number of bankruptcies filed during that time.
A total of 35 steel mills filed bankruptcy in just four years.
Most notably were Bethlehem Steel, LTV, National Steel and
Wheeling-Pittsburgh Steel.
In uncertain times it is important for a company to try to
control its capacity utilization and, therefore, its cost struc-
ture. Capacity utilization is the relationship between actual
and potential production. This is made difficult with steel
production using the Blast Oxygen Furnace process because
of the inherent cost of building a Blast Oxygen Furnace. If a
mill had one or two furnaces, then capacity utilization was
a problem. It was almost a question of full capacity or no
capacity. Consolidation offered the bonus of having more
furnaces and, therefore, more control over capacity utiliza-
tion. This also drove the trend toward Electric Arc Furnace.

With this much embodied energy, and with transportation Globalization

cost so high a percentage of the final cost, it is easy to see
how any price jumps in natural gas, electricity or diesel will
have a huge impact on the final price.
Consolidation
When an industry matures, it is quite common that a trend
toward consolidation occurs to gain market share. The drive
toward greater market share generally emerges along with
some competitors starting to fall behind. This falling behind
can be caused by lack of strategic vision, the inability to
adapt to changing market conditions, and/or subsequent
poor positioning. Another reason can be aging technology
or geographic positioning within the general marketplace.
The table below lists the top 20 steel producers in the world
and the amount in tons that they produce. It further lists
the country location of their corporate headquarters; they
all have a global presence. It is a very interesting that many
of these giants are fairly young in age, that is, many were
founded within the last 50 years. They boast continued growth
through expansion and acquisition. Many have a presence in
the United States, but only two claim to be headquartered
in the United States.
One of the older companies in the steel industry is U.S. Steel,
which was founded in 1901. It has seen much change over the
years, and until recently stayed primarily in North America.

Top 20 Rank Company MMT Rank Company MMT

World Steel
Producers 1 ArcelorMittal – Luxemburg 77.5 11 U.S. Steel – USA 15.2
2 Baosteel – China 31.3 12 Shougang – China 15.1
3 POSCO – South Korea 31.2 13 Gerdau – Brazil 14.2
4 Nippon Steel – Japan 26.5 14 Nucor – USA 14.0
5 JFE – Japan 25.8 15 Wuhan – China 13.7
6 Jiangsu Shagang – China 20.5 16 SAIL – India 13.5
7 Tata Steel – India 20.5 17 Handan – China 12.0
Source: 8 Ansteel – China 20.1 18 Riva – Italy 11.3
World Steel 9 Severstal – Russia 16.7 19 Sumitomo – Japan 11.0
Association
(worldsteel)
10 Evraz – Luxemburg 15.3 20 ThyssenKrupp – Germany 11.0

12     Foundation of the Wall and Ceiling Industry

It wasn’t until 2001 that U.S. Steel expanded beyond domes-
tic borders with acquiring holdings in Slovakia and Serbia. It
is currently number 11 on the list.
An interesting story in the steel industry is Nucor. Primarily
a U.S.–based company, Nucor is currently listed as number
14 in steel production. Nucor utilizes the mini-mill concept
and boasts high recycled content.
The North American Steel Industry in Transition
It can be said that the North American steel industry as an
American-based industry simply does not exist anymore.
The evolution to an international industry can be best illus-
trated by tracing the rather short history of the International
Steel Group. It was formed in 2002 by combining the assets
of LTV and Acme steel. LTV had Republic Steel as part of its
history. In 2003, it bought Bethlehem and U.S. Steel’s mill in
Gary, Ind. In 2006 it became part of the ArcelorMittal steel.
It took only four years from establishment to absorption into
an internationally based corporation.
Another major trend in the United States is the move away
from Blast Oxygen Furnace technology to Electric Arc Fur-
naces. In 1999 it was reported that the U.S. product by Elec-
tric Arc Furnace was 46.2 percent (reported by Recupac a
recycler of Electric Arc Furnace dust). The AISC has stated
that currently the percentage of coil steel produced by Elec-
tric Arc Furnace is 70 percent. This becomes important when
considering that the single largest raw material is scrap steel.
What is the impact on the United States? The industry has
undergone a major transformation, the magnitude of which
has never been experienced before. The emergence of inter-
national giants, the significant switch in manufacturing tech-
nology, the dependence on changing raw materials with lim-
ited purchasing leverage and, finally, rapidly changing energy
and transportation costs all occurring at the same time. The
result of all this change can be seen in price volatility. As
industry shifts to a global market strategy, there are reper-
cussions in local regions. Priorities shift to ensure increasing
shareholder wealth by focusing on global opportunities. The
Multi Commodity Exchange of India states that the demand
for steel is shifting from developed to developing countries.
Hence, you can see the shift from the U.S. and European
markets to Asia. The World Steel Association publishes fore-
casts for what is termed “Apparent Steel Usage.” It tabulates
the amount of finished steel that will be used by specific geo-
graphic areas (see chart below). It has been forecast that the
NAFTA geographic area will need less than 9 percent of the
world’s finished steel in 2011. Now compare that to the fact
that this same region produces only 8 percent of the world’s
total production. It is easy to understand why global corpora-
tions will want to focus resources and energy to other more
lucrative and emerging markets.
The transition into a global marketplace has increased the
levels of complexity. It is one level of complexity to ship raw
materials and steel across North America, but quite another
to ship internationally. To buy products on an international
basis not only incurs additional freight costs, but also increased
duties and the impact of currency exchange fluctuations. As
the world economies start to regain strength from the 2007
recession, the U.S. economy appears to still be sluggish. The
United States has been forced to devalue the dollar. This puts
upward price pressure on a commodity such as steel, which
includes its raw materials such as coke.

apparent
steel use (ASU)
Short-range outlook for ASU, mmt Gowth Rates, %
Regions
apparent steel use, 2009 2010(f) 2011(f) 2009 2010(f) 2011(f)
finished steel
(2009-2011) European Union (27) 117.2 139.4 147.4 -35.7% 18.9% 5.7%
Other Europe 23.9 28.7 31.4 -17.3% 20.1% 9.5%
C.I.S. 35.8 45.3 50.3 -28.3% 26.5% 11.1%
N.A.F.T.A. 82.7 108.5 118.0 -36.2% 31.3% 8.7%
Central & South America 34.1 43.6 47.6 -7.5% 7.9% 4.4%
Asia & Oceania 762.8 833.1 867.4 8.9% 9.2% 4.1%
World 1,125.3 1,272.2 1,339.7 -6.6% 13.1% 5.3%
Developed Economies 291.3 358.8 375.3 -33.5% 23.2% 4.6%
Emerging and Developing Economies 834.1 913.4 964.4 8.7% 9.5% 5.6%
China 542.4 578.7 599.0 24.8% 6.7% 3.5%
BRIC 641.0 696.0 730.1 17.5% 8.6% 4.9%
Source:
World Steel MENA 59.0 62.4 65.7 0.4% 5.9% 5.3%
Association
(worldsteel)
World excl. China 582.9 693.5 740.7 -24.4% 19.0% 6.8%

www.awci.org/thefoundation 13
 Any disruption in the world adds further pressure on com-
ponent availability and commodity pricing. For example, the
2011 flooding in Australia has resulted in shortages in the
availability of certain commodity products, in particular, coal.
The Credit Suisse recently reported that the extreme weather
experienced in Australia has reduced the availability of coal.
As a result they have changed the forecast to reflect a 33
percent price increase on the price on that one commodity.
Another example is the huge spike in oil prices. This is pri-
marily due to the civil unrest in the Middle East. That same
phenomenon holds true for steel.
It is also speculated that there will be a shortage in steel
as a result of the recent earthquake and tsunami in Japan.
Automobile production has been halted in many countries
because of the inability to obtain critical automobile parts
that were produced in Japan. In fact, the Credit Suisse is of
the opinion that Japanese car production will fall off 37 per-
cent in the next six months. Take that thought to the next
logical step, there may very well be a shortage in the steel
used in cold-formed steel framing as it is diverted to meet
the increased demand for automobile production.
The U.S. demand for steel has remained flat over the last few
years. In hot rolled sections we tend to ship more overseas
than we import (10 percent versus 7 percent). The Chinese
have raised the required amount of scrap steel used in their
Blast Oxygen Furnaces from 25 percent to 30 percent. This
translates that they need to use approximately 40 million
more tonnes of scrap metal per year. To put that in perspec-
tive, the United States produces only 70 million tones, and
China is our largest customer for scrap steel (they took over
that spot from Turkey in 2008).
This underscores the position taken by the Multi Commod-
ity Exchange of India, and the exponential increase in steel
production and usage in just one country. The chart below
leads to the single conclusion that we are experiencing new,
complex cost pressures on what was once a stable industry.
Total Chinese
Steel Year
Production
2000
2001
2002
2003
2004
2005
2006
Source: 2007
World Steel 2008
Association
(worldsteel)
2009
14     Foundation of the Wall and Ceiling Industry
Value Added at Each Step
Up to this point, the discussion has been limited to the
production of the steel from raw material to coil. The next
step is to trace the finished coil after it leaves the steel
mill up to the point that it reaches the construction site.
The first step in this journey is into the steel fabricator.
Here it is slit into specific widths needed for each stud
profile. The slit steel is then placed on a roll former where
the steel is bent in a continual process to its final shape.
The coil rolls through different stages where dies are used
to form the steel into shape. The finished profile is cut to
length and prepared for shipment by truck to the dealer.
The steel fabricator faces the same production cost pressures
as the steel mill and the added costs passed on by the steel
mills. The value they add is not only the finished product,
but also the engineering, technical service and code compli-
ance. The steel fabricator may provide engineering services
to both the dealer and the end user, the contractor. The tra-
ditional services were stud sizing, detailing and specifica-
tion writing. The demand for sustainability information has
added greatly to work load (and cost) of the steel fabricator.
Another interesting transition is the increased work done
by steel fabricators to develop system performance data.
To support new proprietary stud profiles, the manufacturers
are running extensive fire, sound and structural tests. With
the increased costs of steel, fabricators have looked to pro-
prietary designs that reduce the amount of steel used in a
stud but provide the same performance requirements. This
is also the same situation regarding coatings—how to lessen
the amount of zinc used to achieve the same performance.
Another transition with significant impact is that in 2000, the
three model codes merged into one, the International Build-
ing Code®. The IBC has had repercussions with all building
product manufacturers. What might seem as a move that
would simplify code compliance for a building product man-
ufacturer has had the direct opposite result. A considerable
amount of time, energy and cost is spent by manufacturers
to assure building officials of code compliance.
Tonnage (million tonnes)
125
151
182
222
282
353
419
489
500
567
The steel framing industry has found itself in a long diffi-
cult process just to define how tall a wall can be built with a
specific stud size and profile. The competition on this issue
started back in the early 1990s and is continuing 20 years later.
There should be no question as to the value that steel stud
manufacturers provide. They design and produce the prod-
uct. Beyond that they must make sure their product meets
code requirements—not an easy task. They run tests and
develop information and data that allow architects and con-
tractors to design, detail and install their products in compli-
ance with ever changing performance requirements.
Thomas Curran from ClarkDietrich states that of significant
importance is the amount of research and development that
manufacturers provide the industry. In the last 10 years there
have been very important improvements in steel connec-
tors. These new components add efficiencies while increas-
ing safety to the cold-formed steel design and installation.
Another technical breakthrough is on what the industry calls
“EQ” studs. This new generation of framing provides greater
performance while decreasing the amount of steel that goes
into the framing member. Neither of these advances would
be possible without appreciable resources from the fabrica-
tors themselves.
The next step involves dealers who provide tremendous value
at the local level. Their original and basic service was to inven-
tory and transport product to the job site. The inventory of
building materials that dealers must maintain is essential in
assuring the timely delivery of materials to the job site, which
is critical in keeping the project on schedule. They manage
the flow of monies between the contractor and the building
product manufacturer. Serving as the local source of prod-
uct information, dealers provide training for all trade factors
within the construction industry.
Managing Bid Risk for Contractors
It is generally accepted that as a result of consolidation and
globalization of the steel industry, several trends will continue
to exist in the steel industry. The steel mills will continue to
raise prices to what the global market will bear. Behind that
will be the constant, upward pressure in raw material costs.
The forces of supply and demand will come more closely
attuned. This all leads to continued volatility in steel pricing.
In an attempt to control costs, the steel industry has started
to mimic other industries through price hedging and futures
options. Price hedging, in its most simplistic terms, is the man-
aging of price risk by purchasing two commodities where the
upward price pressure in the one is offset by the downward
pressure on the other. It is an agreement to purchase or sell
a specific volume of product at a prescribed future date and
at an agreed-upon price. An example would be steel fabrica-
tors who purchase steel at its current value. At the same time
they would purchase a steel futures option. At the later date
they purchase back the futures contract with the intent of off-
setting the price fluctuation in the industry. Price hedging is
most common in the foreign exchange and securities markets.
Steel futures are listed with many international commodities
exchanges. The list includes the Dubai Gold & Commodities
Exchange, the CME Group, the National Commodity & Deriv-
atives Exchange, Ltd. (India), the Multi Commodity Exchange
of India and the London Metal Exchange.
Price hedging is in contrast to what is called “spot” pricing
on commodities. As the term implies, there is immediacy in
this form of pricing. The spot price is a commodities value at
this present point in time. Spot pricing can be very fluid and
is only valid for a couple of days at the most. Unfortunately,
in the cold-formed steel industry this is the trend contractors
have to face on their job quotes. The long-term (90 day) quote
is no longer available.
Mike Heering, president of F.L. Crane & Sons, Inc., a specialty
contractor based in Fulton, Miss., reports that contractors are
caught in a vice between general contractors who are unwill-
ing to commit a project to a contractor and the steel vendor’s
inability to lock in a steel price without that commitment.
From a general contractor’s position this policy provides flex-
ibility in their cost structure and allows them to “shop” the
quote right up to the end. John Hinson, division president of
Marek Brothers Building Systems, Inc., a residential and com-
mercial interior contractor in Texas, states that this is further
exacerbated if the contractor has a bid bond in the contract.
The bid bond is a guaranteed price for the project. Significant
penalties can be enforced if the price is not met or withdrawn.
In Heering’s view, steel price volatility and the inability of a
general contractor to commit to a job forces him to constantly
review his quote. The victim in this case is something that was
www.awci.org/thefoundation 15
 traditionally a foundation in this industry: customer loyalty.
The loyal customer would most certainly like to stay with one
dealer and stud manufacturer, but the current conditions force
him to view each project individually.
Working upstream from the contractor is the dealer. Scott
Negwer, again of Negwer Materials, maintains that there is
no upside for dealers in quoting projects. They know the
price will change, edging up or down. Either way it goes, the
dealer loses. In different times dealers were comfortable in
quoting prices on steel from three to six months, possibly a
year on specific projects. They could, with confidence, pre-
dict where the price might be.
Currently the price of steel changes daily and without advance
warning. There are no “benchmarks” out there to help pro-
vide insight as to the future price of steel. Dealers must com-
mit to their steel manufacturers to purchase the steel for a
given quote. The quote became a contract to purchase. If
the price goes up within the time frame of the quote, the
dealer loses money. If the price goes down, the contractor
will most likely go elsewhere leaving the dealer with a high
priced inventory. The value of their inventory stock that was
once an asset can turn into a liability.
Further upstream, the stud manufacturer sees the price of
their coils change daily as well. Thomas Curran relates that
stud manufacturers purchase their coils on spot pricing. That
implies that the manufacturers themselves do not receive
advance warnings of price fluctuations or commitments from
the mills. Therefore, stud manufacturers cannot commit to
predict what the price will be in 30 days. They are forced to
make the dealer sign an agreement to purchase the finished
goods to protect their costs.
Another worry for the larger steel stud manufacturer is an
emerging new model. New fabricators are very small, and
they purchase and sell steel on spot pricing. They have no
legacy costs and very little value added. They can undercut
the big manufacturers by 30 percent on inventory goods,
and they have no risk.
Essentially, the traditional model of contracts and bids does
not work in this new era. All parties, both upstream and
downstream, must assume excessive risk to assure that the
product moves along the chain to a finished state without a
financial loss at each stage. What strategies are available to
all parties—especially contractors—to ensure the financial
fidelity of the industry?
It has been proposed that there are five options available to
contractors who are trying to minimize bid risk. The options
are as follows:
1. Do nothing and hope prices remain stable from the time
of the quote to the start of the job.
16     Foundation of the Wall and Ceiling Industry
2. Purchase the steel in advance of the job and hope the proj-
ect proceeds as scheduled—with your company.
3. Work with a manufacturer who has the capacity to lock
in quotes for longer durations.
4. Use a contract clause that incorporates a “steel index” that
allows the contractor to pass price increases or decreases
to the project owner.
5. Utilize the Integrated Project Delivery construction model.
This system offers risk/reward mechanisms for all involved
parties.
Given the realities of today’s competitive bidding environ-
ment, the bidding subcontractor has no leverage in the pro-
cess. Subcontractors are very mindful of how much “fric-
tion” they are putting into their bids. The more friction, the
more the general contractor has to deal with. General con-
tractors, like everyone else, are operating with smaller staffs,
which are being tasked to do more individually than in the
past. Therefore, the lower the price and the lower the fric-
tion, the more likelihood it will be accepted, assuming the
contractor is qualified.
When it comes to material estimates, the subcontractor is
more than likely to increase the amount in the final bid to
cover the company for any unanticipated price increases
down the road. This is not the ideal situation for the general
contractor. Perhaps a better option for general contractors
is to take price increases out of the equation and deal with
them only when they occur.
There are advantages and disadvantages to each of these
options.
Do nothing and hope prices remain stable from the time of the
quote to the start of the job. This is the easiest route as it involves
the least amount of friction, but it can make or break a job’s
profit depending on where material prices are when the job
starts. Based on the bidding environment, you may have no
choice but to accept this approach. If there are 15 bidders
on the job and three have bids without any additional terms
regarding price escalators, and their bids are in line with or
even slightly higher than the other bids that have escalators,
you can almost guarantee that the general contractor will go
with one of the three and let the selected subcontractor deal
with 100 percent of the material cost risk.
Purchase the steel in advance of the job and hope the project
proceeds—with your company. For small jobs, this is a feasible
option though it does require a cash outlay and the possi-
bility of the job being delayed or canceled. To minimize the
risk, you want to make sure with the general contractor that
you are doing this job; it is your way of committing to your
price quote. An alternative with this option is for the owner
to purchase the steel and for the subcontractor to store it
until the job starts.
Work with a manufacturer who has the capacity to lock in quotes.
Providing that the job is large (250,000 pounds of steel or
more), you can work with one of the few manufacturers
who will provide quotes for longer than 180 days, though
the quote will have escalators associated with the cost of
steel. Depending on the terms of the contract, you may be
on the hook for some costs whether you use the steel or not.
Use a contract clause that incorporates a “steel index” that allows
the contractor to pass a price increase/decrease to the project
owner. Other contractors, such as those using asphalt and
lumber, have developed solutions allowing them to condition
their project bids on publicly available commodity indexes.
The Federation of Plastering and Drywall Contractors of Eng-
land, an international member of Association of the Wall and
Ceiling Industry, provides a contract clause template using a
steel index to condition the steel costs in a project bid.
Indexing
The price index is a contractual methodology that allows for
material price fluctuation over time. Mostly used in public
work, it provides a framework for a contractor to minimize
risk by allowing for material price adjustment after the con-
tract is signed. This adjustment is based on the variance in
price of an established and published indicator of movement
in the specific commodity price of materials such as asphalt,
steel or wood. For example, Idaho, Illinois, New York, Ohio
and California all publish price indexes on asphalt. These
indexes are adjusted every month.
Written into the contract is language that states that the
material price of the bid is based on the last posted “base
price index.” For asphalt the base price index is in dollars
per ton of performance binder asphalt. For steel it is broken
into rebar and structural steel, and is also in dollars per ton.
This index is the calculated average of that material over
a given time and specific geography. At the time the con-
tractor purchases the material, the value of the contract is
adjusted up or down by the differential in the price index.
If the price index goes up 20.1 percent in the time between
bid and purchase, then the value of the material portion of
the bid goes up by 20.1 percent. This effectively moves the
risk away from the contractor and over to the owner.
The New York Department of Transportation has in its stan-
dard specifications indexes for diesel fuel, asphalt and steel.
For steel they use the Steel Producer’s Price Index published
by the United States Department of Labor. In the wood indus-
try, the wood index is compiled by Western Wood Products
Association for the Western United States. In Idaho, the state
uses a third-party firm to develop the index on asphalt.
With an indexed contract clause, budget adjustments are
straightforward because the material costs are benchmarked
at the time of the bid, and the price index is a publicly avail-
able measure. This means the outcome is not subject to
interpretation or negotiation.
The Illinois Department of Transportation currently is using
the option on price indexing for asphalt, fuel and steel. For
steel, the option has been in place since 2004. When a proj-
ect is “advertised for bid” it may contain “special provisions”
within the plans and specifications. These provisions are
developed by the Bureau of Design and Environment. The
one for steel is called “Special Provision for Steel cost Adjust-
ment,” and its latest revision came about on Jan. 9, 2009. It
can cover any steel—including structural steel, guard rails
and rebar—that is in the specific project were the provision
in place. The bureau has developed a simple mathematical
formula to allow for cost adjustments. The cost of the steel
is modified by the published “Materials Cost Index” that is
found in “Engineering News-Record” magazine. The value is
adjusted based on the difference in the index from the month
www.awci.org/thefoundation 17
 the contract was let to the month the steel was shipped from their New York office, comments that special conditions may
the mill. To exercise the adjustment, contractors must for- warrant using an index approach. Some trades, on a given
mally sign the agreement at the time of bidding. project, may request shared price risk on long-term contracts.

The Western Wood Products Association boasts that they John Hinson is diligently educating contractors in his area to
have reported price indexing to the industry for more than 30 consider the benefits of sharing the risk in a form similar to
years. They do this on a monthly basis and report on the price what is described above. His strategy is to have all the local
differentials based on based on species. Sawmills from the drywall contractors write a time limit into his quotes. The
12 western states provide invoice data to the WWPA, which quote will state that this bid is good for only “X” amount
in turn calculates the price index. This information is used in of days. The general contractors are at risk of losing their
both the private and public sectors to adjust lumber prices. quotes if they do not commit to the contract within a speci-
fied time frame.
Ted Boeckerman, manager of Preconstruction for Turner Con-
struction, first used this concept for asphalt back in 2005. He Utilize the Integrated Project Delivery construction model. This
used the Ohio Department of Transportation price index on system offers risk/reward mechanisms for all involved par-
“Performance Grade Asphalt” as the benchmark. It included ties. This concept is fairly new. It is a team approach to the
an allowance for potential material increases. He feels that construction process. The architect, owner and contractor
it “leveled the bidding so contractors were not assuming the are all bound by a single contract that has a built-in risk and
risk of the volatility of the increases over the months before reward system for all parties. If there are design problems or
they started work.” cost over-runs, all parties are faced with equal penalty lev-
els. If the project comes in faster than scheduled and under
“The trick, he states, is agreeing to and equating material budget, all parties are rewarded. The design and construc-
escalation with increase in total dollars as a ratio of labor, tion phases are shortened in time and highly collaborative.
and equipment to material. So if the steel material goes up Integrated Project Delivery is just starting to include the con-
10 percent, what does that mean in dollars to the client if tractor. If the drywall contractor can get on board this early
the steel contractors bid, say, $500,000? Does the 10 per- in the process, then all parties will share in the risk of steel
cent material increase equate to 50 percent of the total, in framing cost variability.
other words, $25,000 more?” Certain trades are more sen-
sitive to commodity price volatility than others. Those that
have a higher ratio of material to labor costs are more at risk
when commodity materials experience radical price varia-
tions. Here are the trades that have voiced issues with com-
modity pricing:
• Asphalt.
• Structural steel.
• Masonry, specifically rebar; however, the material-to-labor
ratio is too small to drive overall volatility.
• Mechanical, Electrical Plumbing (with respect to copper,
steel, etc.).
• Cold-formed steel framing and drywall.
• Fuel driven trades like mass excavation and hauling.

Boeckerman also points out that there is a problem or chal-

lenge in describing the benefits of price indexing to the client:
“What is the advantage to the client to assume additional risk
on material besides ensuring against the risk of default by the
contractor? In the asphalt situation the winning argument is
that price indexing ‘literally allowed for more people to be
willing to bid—a public situation.’” It is his belief that “com-
petition almost always trumps commodity pricing unless it’s
exceptional, as we’ve seen with peaks in asphalt, steel and,
most recently, cold-formed steel framing.”

Tishman Construction does not use price indexing in their

contracts. Their contracts typically follow a conventional lump
sum bid. However, Bill Stanton, executive vice president in

18     Foundation of the Wall and Ceiling Industry

Final Thoughts to be a fundamental and cultural shift in this vital segment
of the construction industry. This cultural shift will be from
This paper has chronicled an industry in transition, a tran- silos and somewhat adversarial concept to a team mentality.
sition that started a little over 10 years ago and has yet to
stabilize. The business strategies discussed in steel produc-
ing company boardrooms have changed. Even the locations
of these boardrooms have moved. From Luxemburg to Bei-
jing and Seoul and Mumbai, the business of making steel
is radically and permanently different from what the world
has experienced in the past. This change not only impacts
cold-formed steel framing and the commercial interior fin-
ishing contractor, but also the plate steel used in ship build-
ing. It has been felt in the automobile industry. The piping,
structural steel and even the railroad industry have experi-
enced this change.

USG’s Jeff White claims that there is a very significant dif-

ference between business cyclicality and business evolution.
Business evolution “is a one-way street” means that once
evolution takes place, it will not return to a prior state. This
much transformation in the steel industry is not reversible.
Scott Negwer shares this opinion and feels that the “good
old days” are gone forever.

The cold-formed steel framing industry will be forced to

adapt. Each link along the supply chain will look to control
costs while exploring new ways to differentiate themselves
by exploring new venues for adding value. The challenge
for the steel stud manufacturer will be to maintain this dif-
ferentiation as the business gravitates to commodity levels.

A fundamental attribute to this industry is the relationship

nature in which business—at least up to now—has been con-
ducted. These relationships take time to develop, and their
importance cannot be underestimated. A potential outcome
of change may be closer collaboration between the links. No
single link can be expected to absorb a 25 percent material
cost increase in just 30 days. Price risk must be shared, and
this sharing must include those further downstream.

What should the commercial interior contractor do to man-

age this risk? It is important to understand this change is
permanent, resulting in a need to explore and embrace a
new way of conducting business. There were five options
cited in this paper, each with its own strengths and inherent
weaknesses. A certain option may be perfect for one type of
construction project, but potentially assume too much risk
in another. Either the use of steel indexes or the setting of
time limits on quotes helps to push the risk downstream. The
Integrated Project Delivery type of contract is the best for
a collaborative arrangement but to date has seen little use.

In the final analysis this change may foster an even better

climate for the contractor. As price risk is shared by all, stron-
ger relations with vendors, suppliers and general contractors
should result. To accomplish this outcome there will have

www.awci.org/thefoundation 19
 References
Apparent Steel Use By Region, World Steel Association

Cradle-To-Gate Life Cycle Inventory: Canadian and US Steel Production by Mill Type, The Athena™ Sustainable Materials Insti-
tute, March 2002

Freight Management and Operations, The Economic Costs of Freight Management, US Department of Transportation, October 2009

Industry in Motion, Thomas Curran, Dietrich Industries

I-Spy, Sector Review, Global Industrial Weekly, 11, April 2011, Credit Suisse

Mild Steel Ingots, Multi-Commodity Exchange of India

Overview of The Steel Making Process, World Steel Association

Price Risk Management, Steel in Commercial Construction, Eugene Greenburg, Steel Framing Industry Association

Steelmaking Commodity Prices, steelonthenet.com

Steel Statistics, 2011, World Steel Association

Structural Steel: An Industry Overview, April, 2011, American Institute of Steel Construction

The Steel Industry, J. Peden, 1998

Top Steel Producers, World Steel Association

U.S. Metals and Mining, Sector Forecast, 11, April 2011, Credit Suisse

U.S. Midwest Domestic Hot-Rolled Coil Steel Futures, CME Group

Steel Cost Adjustment, April 2009, Illinois Department of Transportation

20     Foundation of the Wall and Ceiling Industry

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Foundation of the Wall and Ceiling Industry

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