burden of cost increases?

Parma

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So I'm aware of some fairly steep prices increases & shortages across the spectrum of items: tri-tip is $25 a lb at costco and a 12' 2x8 heart redwood is $100 at HD (or so I'm told). I couldn't even find a SS 8mm or 5/16 nut at WM and forget about finding the matching 2 1/2 inch or 60mm SS bolt.

So if someone buys a boat, say a glossydeck 45, for a quoted price but thereafter the cost of resin, foam, fasteners, electronics, cabinetry etc all skyrocket who is "at risk" for those increased costs? Do purchase contracts include price increase clauses in the event of shortages & unforeseen inflation? Or does the boat builder have to eat the loss? What happens? Is there a gov't program for that?

 
Depends.

Fixed price contract is just that, builder eats the increases and enjoys any decreases.

With current price volatility, I am drafting many more interesting clauses into construction contracts, such as a current price but may change if price of inputs change from the quote/contract, but many are just now going to cost plus (a certain percent)

The Canadian government has a program for this, it's called higher taxes for the boat purchaser. They nailed it again!

 

TJSoCal

Super Anarchist
Not sure about boatbuilding but I've heard a few stories recently about building contractors either reneging on or asking to renegotiate contracts that were made before the pandemic hit. I expect they'll eat what they can especially for a good customer but I don't think they're willing to go bankrupt based on unforeseeable material cost increases.

Surely my fiberglass job can be categorized as "infrastructure" and I can get a tiny fraction of a trillion dollars from Uncle Joe?

 
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Parma

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All the contractors I know are going time & materials unless the job is small and quick with known costs. How a boat builder projects the cost of resin or a piece of plumbing a year out is beyond me. If you need an 8 x 60mm SS bolt, washer, lock washer & matching nut you might have to pay $4-5 for the entire assembly, not fabricate that part of the boat or use zinc.

 

SloopJonB

Super Anarchist
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This happened during the high inflation period 40 odd years ago - lots of builders went broke because they contracted for boats and then materials prices went way up.

 

Israel Hands

Super Anarchist
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coastal NC
IMO a lot of this is going to fall back to earth pretty quickly. We are already seeing it in some items.

This economy is fueled by the rush of people out of isolation. But it is NOT built on deep confidence in a steady, growing economy. I'm bracing for an uncertain, potentially bumpy ride.

 

LionessRacing

Super Anarchist
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Myrtle Beach,
There's a difference in rising prices due to various factors:

  • Acute short term shortage due to spike in demand or disruption in supply, the price will rise to match supply/demand unless "antigouging/hoarding" laws exist, prices will quickly drop as supply chain recovers and unusual demand is satisfied.


    Example: Plywood and Generators in a hurricane forecast

[*]prolonged shortage due to disruption in supply/increased demand: price will rise and stay high until more suppliers enter market, and panic buying ceases


  • Example toilet paper in 2020

[*]Excessive funds available in short term/immediate locale: Locally high prices will last only for the duration of the temporary event or distance to alternatives


  • Example food prices at a concert venue

[*]Excessive funds available due to influx: prices will rise to meet market willingness to pay, and may well stay high for a long time


  • Example real estate in non urban areas in 2020-2021

[*]Excessive funds available due to market interferences: Easy money, government assistance etc causes inflation


  • Example: petroleum prices since 11/20


 

kent_island_sailor

Super Anarchist
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Kent Island!
translation: A fool and his money are soon parted. 
Cuts both ways. I contract to sell you a boat for $100,000 that costs $140,000 to build. I won't be building you a boat and you might not get your money back depending on where in the process it all goes sideways. I actually would probably not buy a boat that didn't exist yet for this and other reasons.

 

Monkey

Super Anarchist
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I wonder to what extent the larger builders have long-term contracts for materials? In which case it would be the suppliers, not the builders, in a squeeze.
I think Gunboat (under PJ’s ownership, not the current ones) gives us a very simple lesson in building boats that cost more than they sell for. 

 

Parma

Super Anarchist
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I wonder to what extent the larger builders have long-term contracts for materials? In which case it would be the suppliers, not the builders, in a squeeze.
Hadn't thought about that, but then in thinking about it some more if there are significant price increases (like 96% for acetone) wouldn't the suppliers simply sell their supplies to buyers who would pay the higher market rates and simply tell those that might have "contracts" (hah!) for lower rates that they are currently out of supplies ?

 
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