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That Will Be $49 for Parts and $99 for Fuel

October 9, 2008
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Fuel prices are causing major headaches for construction pros.


It's gotten to the point where you need a loan to keep your work vehicles fueled up...if you could get a loan. 

I just returned from Atlanta where a gas shortage is creating havoc. At one point I became mired in a line of cars when I simply attempted to turn into my hotel parking lot. My path was blocked by a horde of aggressive, petrol-starved motorists, all emotionally invested in reaching the corner gas station.

 

The lead news story that day was about a man who punched a woman in the face during a fuel-seeking frenzy, so I wasn’t about to line-jump. My hand-to-hand combat skills place me distinctly in the “run for help” category.

 

From the perspective of someone from Michigan, where gas is still plentiful, I found the shortage scary. Motorists would actually follow tankers delivering gas and proceed to suck dry every drop of fuel until the station went dark like most of its competitors.

 

No doubt these fuel shortages in the Southeast caused major problems for those in the construction trades. I saw plenty of contractor vehicles stuck in those long gas lines.

But gas supply is only a small part of our problem. The bigger challenge is how higher fuel costs are changing our businesses.

 

Last week I received an advanced copy of a new survey conducted by Supply House Times magazine on fuel savings. Nearly 76% of the respondents were wholesalers or distributors, as would be expected. The other 24% were a combination of contractors, manufacturers and reps.

 

Supply House Times’ survey asked a few basic questions, such as “To what extent has the run-up in fuel prices impacted your business ability to earn a reasonable profit?” Keep in mind this included all fuel prices, not just fuel for vehicles.

 

1% said higher prices had a positive impact

13% said little to no impact

73% said moderate negative impact

12% said severe negative impact

 

Of the 299 respondents to this national survey, 85% are experiencing hardship because of fuel costs. Here are some ways respondents said they are combating these costs right now (future actions presented in parentheses).

 

32% (35% in the future) are moderating temperatures in their offices to reduce fuel use

15% (17%) are moderating temperatures in the manufacturing or warehouse space

49% (42%) are reducing business travel

15% (34%) have switched to more fuel-efficient work vehicles

7% (15%) are allowing employees to work a four-day, 10-hour week

3% (7%) are allowing employees to work from home

5% (9%) are helping organize employee car pools

24% (12%) are doing nothing

Equally interesting were the open-ended questions that allowed survey participants to share what else they are doing. Dozens wrote that they are adding fuel surcharges to customers’ bills, adding delivery charges or raising their overall prices. Others said they are working harder on logistics and cost-control measures.

 

“Cut delivery areas. Institute small fuel service charge”

“Asked for voluntary reduction of vehicle use”

“Added GPS to all vehicles; set gas card limits”

“Re-engineered cooling and roofing”

“Offer raffle prizes for employee carpool/mass transit”

“Limit delivery to two days a week”

“Reduce service area to 60 miles”

 

These changes will make it harder for everyone in the construction field to do business. For example, if you are a contractor or facility manager, your favorite wholesaler may deliver only on certain days, or perhaps not to sites outside newly reduced service areas.

 

Have high fuel prices caused you to change your business procedures? I’d love to know. Post your comments to this blog or e-mail me at fauscht@bnpmedia.com.

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Fuel Costs

Fred
January 14, 2009
I was surprised that fuel dropped below $2.00. Enjoy it while it lasts as it will return above $3.00 shortly. Not long after that above $4.00 again.

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