Electricians feel pinch from soaring prices
Dan Miller, The Patriot-News, Harrisburg, Pa.
May 31--Copper is like a river in a house. Without copper wires, electricity can't flow.
So a surge in copper prices has some electrical contractors struggling to keep their heads above water.
"If the price of gasoline had gone up as much as the price of copper, we'd be paying $6 to $8 a gallon. This is a major crisis in our industry," said Paul Carnathan of Colonial Electric Service Inc. in Hummelstown.
He and other area electricians say they have to use copper because there is no substitute for most inside wiring, as there is for copper pipes used by plumbers.
Many consumers don't know what's going on because the price shot up so much so fast, these electricians say. People might learn when they go to buy new homes or have their existing houses rewired.
Joe Ruth, an electrician for almost 40 years, owns J.L. Ruth Electric in Mechanicsburg. He said his cost to wire a typical two-story new house is $1,000 more now than it was last December.
Copper is an extreme example, but Ruth said contractors generally are contending with across-the-board increases, from gasoline to insurance to drywall.
As many as 12 or more specialty subcontractors can be involved in building one house, Ruth said. With each one passing on higher costs, he said, it's not hard to imagine a builder's cost for a typical new home climbing by at least $10,000.
"At some point in time people aren't going to be able to afford this, and we are going to be heading into a hell of a recession," Carnathan said.
Suppliers give differing explanations for the sharp rise in prices, electricians say. Some cite worldwide demand driven by emerging economies in China and India, and others point to instability at copper mines in Chile.
Michael D. Shaak, an electrician and owner of Shaak and Son Electric in Lebanon, said suppliers tell him that copper wire is being diverted for rebuilding New Orleans and the Gulf Coast. He wonders if a similar shift will occur when New England dries out from recent flooding.
Except for Ruth, none of the electricians has experienced problems getting enough copper -- just the price they have to pay for it.
With copper apparently plentiful, at least in this area, Carnathan thinks someone should investigate if the run-up is really oversupply and demand or speculators bidding up the price in the commodities markets.
Yale Electric Supply Co. is among suppliers to area electricians. John Cox, manager at Yale's Harrisburg facility on Paxton Street, said the price increase began in December 2004 and was driven by demand from China and in the U.S.
Hurricane Katrina caused a price spike and still impacts the market. But Cox said what's really behind the big increases of recent weeks is strikes at two major mines in Chile.
"That has taken a lot of the supply out of the chain," Cox said. Market speculators do help fuel the rise, he noted.
Besides electricians, the price increases also hurt plumbers and those in the heating and air-conditioning industry, Cox added.
Plumbers at least can substitute plastic piping for copper, said Bill Orris, operations manager for Zimmerman Plumbing, Heating & Air Conditioning in Mechanicsburg.
"Five years ago, we wouldn't even have stocked it," Orris said of plastic. Now, his customers increasingly want plastic, after seeing the cost of copper pipe.
The copper market is so volatile that electricians can't give customers a fixed price that is good for beyond the time it takes ink to dry on an estimate.
Ruth said suppliers guarantee him a price only "if you come over and get it right now. It can change in an hour."
Shaak said, "It really makes it difficult to do any kind of estimates or job bidding."
Carnathan cut from 30 to 15 days how long he gives a prospective customer to accept a bid.
During that time, if copper goes up so much he can't absorb the increase, Carnathan takes copper wire out from the rest of the bid and tries to re-negotiate.
That doesn't always work, Carnathan said. "We're losing jobs in some cases."
Cox expects little relief, until the strikes in Chile end and unless worldwide and domestic demand for copper drops off dramatically.
On Friday afternoon, Cox got an e-mail from the man who buys copper for all of Yale's customers. The man said copper closed Friday at $4.01 a pound.
"That probably means another price increase," the man wrote in the e-mail, Cox said.