In today’s construction news, learn about how, as the Federal Reserve gets ready to determine whether to lower interest rates next week, construction input prices increased slightly in August but have decreased over the past year, according to an analysis by Associated Builders and Contractors. Meanwhile, according to a regulatory filing on Friday, an Alabama shipyard was awarded a $450 million contract by submarine producer General Dynamics Electric Boat to grow its submarine building business. Finally, the joint venture Kokosing Alberici Traylor (KAT), based in Ohio, US, and the US Army Corps of Engineers (USACE) announced that they had reached an agreement on an approximately US$223 million option for the US$1 billion Soo Locks project in Sault Ste. Marie, Michigan, US, on the St. Marys River close to the Canadian border.
Costs of Construction Supplies Stay the Same as Builders Get Eye Relief
Original Source: Construction input costs stabilize as contractors eye relief
Associated Builders and Contractors found that construction input prices rose slightly in August but have fallen over the previous year, just as the Federal Reserve considers cutting interest rates next week.
ABC analyzed August U.S. Bureau of Labor Statistics data released Thursday and found construction expenses rose 0.1%. The past year, building inputs fell 0.7% and nonresidential costs fell 0.9%.
ABC chief economist Anirban Basu said construction input prices are down almost a full percentage point over the past year. This is good news for contractors.
ABC’s Construction Confidence Index shows that many contractors expect profit margins to fall over the next six months due to economic uncertainties.
Construction expenses are still 40% higher than in February 2020, before the epidemic.
Lower material prices compared to last year and the widely predicted Federal Reserve interest rate cut at the next meeting should give contractors some relief in the coming months, said Basu.
Basu said moderate materials price escalation, relieving labor restrictions, and the near likelihood that the Federal Reserve would decrease interest rates at its next meeting should help contractors in the coming months.
The U.S. Census Bureau reported significant price drops in all three energy subcategories in August. In August, natural gas fell 29.8%, unprocessed energy materials fell 7.5%, and crude petroleum fell 4.2%.
That’s good news for contractors, as energy cost growth last month drove up construction inputs despite most other commodities stabilizing.
According to the data, brick, structural clay tile, construction machinery, and switchgear costs did not change from the previous month. Over the past 30 days, concrete, gypsum products, and hot rolled steel bars had minor price cuts, according to Associated General Contractors of America senior research analyst Macrina Wilkins.
In an email to Construction Dive, Wilkins said diesel fuel, concrete pipe, steel mill goods, copper, and fabricated structural metal prices changed most last year. “[That reflects] some volatility within an otherwise relatively stable market.”
Austal USA Received $450 Million to Construct a Mobile Submarine Construction Facility
Original Source: Austal USA Awarded $450M to Build a Submarine Construction Facility in Mobile
According to a Friday regulatory filing, General Dynamics Electric Boat awarded an Alabama shipyard a $450M contract to grow its submarine building business.
Austal USA, the U.S. affiliate of Australian shipbuilder Austal, received the contract to build a submarine modular fabrication and outfitting plant in Mobile.
Construction of the new facility will begin this autumn in the U.S. and finish in 2026. When fully operational, the building would support 1,000 employment and produce, outfit, and transport submarine components, the Australian Stock Exchange was informed Sept. 13.
This contract will allow Austal USA to design, build, and outfit a new module fabrication and outfitting facility at its Mobile shipyard to support the U.S. Navy’s aim of delivering one Columbia-class and two Virginia-class submarines yearly.
In the previous year, Austal USA’s Mobile shipyard has hosted General Dynamics submarine workers constructing Virginia-class submarine components for attack boats under construction at Electric Boat’s Groton, Conn. shipyard.
“General Dynamics Electric Boat trusts Austal USA to deliver high-quality Virginia- and Columbia-class submarine components. In the Friday announcement to the Australian Stock Exchange, Austal Limited CEO Paddy Gregg said this developing relationship shows trust in Austal USA’s commitment to meet the U.S. maritime industrial base’s needs and assist the Navy’s most important needs.
As it increases Virginia production to satisfy the U.S. commitment to the Royal Australian Navy for nuclear submarines, the Navy is outsourcing submarine building. The Program Executive Office for Submarines manages $17 billion to establish the submarine industrial base.
The yard, founded to construct aluminum ships like the Independence-class Littoral Combat Ship (LCS-2) and Spearhead-class Expeditionary Fast Transport (EPF-1), grew. In the previous two years, the yard has produced steel for the Coast Guard’s Heritage-class Offshore Patrol Cutter and the Navy’s T-AGOS-25 ocean surveillance ship. The yard is also producing the T-ATS Navajo-class towing, salvage, and rescue ship and outsourced submarines.
Austal USA began construction in July on a $250 million, 192,000-square-foot final steel assembly facility to increase steel ship capacity.
US Army Engineers Give JV a Second Contract for Soo Locks
Original Source: US Army engineers award JV another Soo Locks contract
Ohio-based joint venture Kokosing Alberici Traylor (KAT) committed to a nearly US$223-million option for the more than $1-billion Soo Locks project in Sault Ste. Marie, Michigan, on the St. Marys River near the Canadian border, according to the USACE.
The plan is to install a modern lock and modernize lock infrastructure.
Option 3 includes “construction of the lock floor, installation of the mechanical and electrical systems, completion of the filling and emptying system, placing soil in between the New Lock and old Davis Lock, and commissioning of the lock chamber,” according to Inland Navigation Design Center and New Lock at the Soo technical lead Darin White.
The seven-year Phase 3 construction began in 2022.
Examining USACE’s Soo Locks project
In 2022, KAT inked a basic contract for Phase 3 of the tri-staged project worth just under $1.1 billion.
Phase 1 (upstream channel deepening) cost less than $60 million and ended in 2022, while Phase 2 (upstream approach barriers) is slated to finish “this summer,” according to USACE.
USACE Detroit District Senior Civilian Kevin McDaniels said Options 1A (upstream broad wall monoliths), 1B (chamber wall monoliths), 1C (new power plant bridge ramp), 2 (new pump well completion), and 7 (alligator’s mouth mooring area) had been granted for $503.7 million.
The project is worth $1.3 billion, most of which KAT won.
“The contractor has completed over $400 million worth of work through the end of July 2024,” said New Lock at the Soo project manager Mollie Mahoney.
“The contractor is demolishing concrete monoliths and excavating bedrock in the Sabin Lock footprint.
The Davis Lock is being excavated for the new pump well and filled with excavated debris. A new bridge to the power plant and utility access structure are also being built by the contractor.
The “New Lock” and enhanced system infrastructure will be built in the site of the retired Sabin and Davis locks and will be the same size as the existing Poe Lock—1,200 feet long, 110 feet wide, and 32 feet deep.
USACE said three $95.3 million contract options remain unawarded.
“These options are Option 4 (downstream work), Option 5 (hands-free mooring), and Option 6 (downstream ship arrestors),” the USACE said, hoping to grant them next year.
Built in three phases, the billion-dollar project will completion in 2030.
What are Soo Locks?
The US-Canada Great Lakes Navigation System relies on the Soo Locks to allow ships to cross the St. Marys Falls Canal on the St. Marys River, a route between Superior and Michigan Great Lakes, which borders the US and Canada.
Unnamed, the new lock under construction will be the third operational US lock. Over two decades have been spent on it, with groundbreaking in 2009. Two outdated locks over the last 30 years will be replaced with the new lock.
Summary of today’s construction news
In summary, August saw a 0.1% increase in total construction expenses, per ABC’s analysis of data from the US Bureau of Labor Statistics, which was made public on Thursday. However, over the previous year, non-residential prices declined by 0.9% while building inputs fell by 0.7%. ABC Chief Economist Anirban Basu stated, “Construction input prices are now down almost a full percentage point over the past year.” “For contractors, this is a welcome development.”
Meanwhile, in order to increase the capacity for steel ships, Austal USA began construction on a $250 million, 192,000-square-foot final steel assembly facility in July.
Finally, after it is finished, the newly built lock, which will be the third operating lock on the US side, will not yet have a name. The first groundbreaking occurred in 2009, and it has been in development for more than 20 years. Two old locks that were never used and went out of style in the last thirty years will be replaced by the new lock.
