Every day we are asked “When will this end?” or “Is the rest of the country experiencing this?” when talking about inflation and escalation. In the second quarter, inflation soared to a 40-year high. Wholesale inflation (Producer Price Index) experienced an 11.3% increase from June 2021 to June 2022 while the Consumer Price Index (the driving force of our economy) showed an increase of 9.1% in the same time frame. Central banks are using aggressive rate hikes to reign in inflation but at the same time high levels of personal savings from pandemic stimulus, backlogged demand, and a tight labor market keep the gas pedal on growth.
Within JE Dunn’s Advanced Industries team, we service a variety of clients. These clients include semiconductor, large battery, and pharmaceutical manufacturers. The facilities that manufacture semiconductors are commonly referred to as “fabs.” Since 2013, we have been building fabs and have seen the demand for these facilities grow exponentially. Semiconductors include memory chips, microprocessors, and integrated chips used in items such as smartphones, TVs, computers, video games, advanced medical diagnostic equipment, and radios.
In this quarter’s spotlight, our Advanced Industries Preconstruction Services Director, Bryan Cook, takes an in depth look at the challenges facing the semiconductor industry and some of the construction solutions we are employing daily to mitigate these challenges.
“The strategy has shifted from coordinating “Just-in-Time” deliveries to a “Get-it-Early” mentality. JE Dunn has pivoted to managing warehouses with staff to receive and track inventories. This has allowed us to identify deliveries at risk much earlier than standard practices.”
It looks like there is as much as a 40% difference? The number truly does have that wide of a variance around the country. Lumber is extremely volatile and is heavily driven by the housing market. If you look at the cities where the housing market is booming, those will likely have the highest increases for lumber.
This is a difficult question to apply a percentage answer to. High growth regions of the country are experiencing inflation spikes almost double those of slower growth areas and these can change significantly quarter to quarter. Current quarterly inflationary rates range between 1%-12% from city to city. Mega projects in cities such as Phoenix and Austin also drive spikes in those areas as the trade pool is taxed. At the end of this report, we share location-specific reports to offer you the most applicable information for your local economy.
We agree! Our Client Solutions team maintains this information at a local level and we hope to provide this information in our next issue and moving forward.
