Saturday, May 07, 2005
Big steel renews push into home building
Yahoo! News
The steel industry, which struggled for decades, doesn't want to miss its chance for a piece of the booming housing market. Having consolidated in recent years, larger and better-managed steel companies are on a quest to create new markets and to better exploit existing ones.
Home building is "one of the targets steel has had in its sights for more than a decade now," says Don Moody, general manager of NuconSteel, a unit of Nucor Corp. About 1.6 million new homes go up each year, he says. "If every house is framed in steel in the United States, that would be a 14 million-ton market per year. The steel industry hasn't had a new opportunity like that since the invention of the automobile."
The industry is pushing steel's ability to withstand hurricanes, termites and earthquakes, and to keep a house cool. Although steel framing makes up less than 2 percent of new, single-family home construction in the U.S., it accounts for 72 percent in Hawaii, where insects wreak havoc on wood. And steel makers are teaming up with concrete suppliers to push the idea of homes with concrete exterior walls and steel interior walls.
Still, high prices remain an obstacle. Steel prices have come down a bit this year, after doubling in 2004, and supplies remain spotty in some areas. Meanwhile, wood prices are climbing steadily, rising 20 percent in the 12 months that ended in October, according to a weekly composite index of wood prices. Steel companies have had a hard time persuading consumers that steel is a better value. The rising price of steel "has greatly damaged their potential for picking up a larger share," says Michael Carliner, an economist with the National Association of Home Builders.
The steel industry, which struggled for decades, doesn't want to miss its chance for a piece of the booming housing market. Having consolidated in recent years, larger and better-managed steel companies are on a quest to create new markets and to better exploit existing ones.
Home building is "one of the targets steel has had in its sights for more than a decade now," says Don Moody, general manager of NuconSteel, a unit of Nucor Corp. About 1.6 million new homes go up each year, he says. "If every house is framed in steel in the United States, that would be a 14 million-ton market per year. The steel industry hasn't had a new opportunity like that since the invention of the automobile."
The industry is pushing steel's ability to withstand hurricanes, termites and earthquakes, and to keep a house cool. Although steel framing makes up less than 2 percent of new, single-family home construction in the U.S., it accounts for 72 percent in Hawaii, where insects wreak havoc on wood. And steel makers are teaming up with concrete suppliers to push the idea of homes with concrete exterior walls and steel interior walls.
Still, high prices remain an obstacle. Steel prices have come down a bit this year, after doubling in 2004, and supplies remain spotty in some areas. Meanwhile, wood prices are climbing steadily, rising 20 percent in the 12 months that ended in October, according to a weekly composite index of wood prices. Steel companies have had a hard time persuading consumers that steel is a better value. The rising price of steel "has greatly damaged their potential for picking up a larger share," says Michael Carliner, an economist with the National Association of Home Builders.
