As if things could not get worse for Minority Females and Labor in the Mortgage Field Services Industry, lumber prices are getting ready to skyrocket. On September 12, 2006, USTR Susan Schwab and Canadian Minister for International Trade David Emerson signed the Softwood Lumber Agreement in Ottawa. The agreement entered into force on October 12, 2006. For years, the US and Canada have had a dispute with the US saying that the Canadian lumber industry is unfairly subsidized by Canadian authorities. The stumpage fees — prices charged to harvest the timber — are set administratively in Canada, rather than through the competitive marketplace, as in the US. In essence, the US claims that the Canadian lumber environment constitutes an unfair subsidy, and is thus subject to U.S. trade remedy laws.
The New York Times is reporting,
Responding on Monday to a complaint filed by American mills, the Commerce Department found that five Canadian companies received subsidies worth 3 percent to 24 percent and ordered equivalent tariffs on each of them. For other Canadian lumber companies, it set a tariff rate of 20 percent. The department will issue a final determination in September.
Barron’s had this to say before the tariffs took effect,
The immediate result of any new tariffs or trade restrictions would be reduced supply of wood to the U.S., where demand for housing lumber is likely to rise sharply. The effects have already spread from the outdoors to Chicago’s trading floors. Active-month contracts closed Friday around $337 per 1,000 board feet, up from around $338 at year end. But there’s potential for further gains as a tariff-free solution looks unlikely before a preliminary ruling set for April 24.
With a large percentage of US lumber originating from within Canada, that $5 Billion in annual sales will equate to roughly a $1 Billion dollar tax, per year. For the second consecutive month, prices of softwood lumber, gypsum, ready-mix concrete, and OSB all increased, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. The increases were led by softwood lumber and OSB. The price of softwood lumber increased 2.3% in March after rising 4.8% in February. Softwood lumber prices have increased 7.2% over the first three months of 2017 and are up 12.9% since March 2016.
So, what does this really mean? Well, a study last year by the National Association of Home Builders (NAHB) found that a 15 percent tariff would increase new home prices by 4.2 percent and cost 4,666 full-time jobs. And that is across the board. So, why does the our Industry need to worry about it?
First, the National Association of Mortgage Field Services (NAMFS) doesn’t appear to care. Compliance and Material pricing have always been passed down to Minority Females and Labor. Even when pricing has risen and regardless of the dollar for dollar pass through of HUD allowables like $50 per cubic yard, NAMFS Members have always pocketed the money and issued chargebacks for any remaining on the table.
The reality is that on US Department of Housing and Urban Development (HUD) Management and Marketing (M&M) Field Service Manager (FSM) Contracts, the single largest material purchase shouldered by Minority Females and Labor is lumber. Lumber is used for handrails and porch railings. It is used to repair decking and posting for the previously mentioned railings. In fact, while Minority Females and Labor may install a couple of locks per house, lumber, time and again, is the largest material purchase executed. Moreover, though, these items are rarely, if ever, paid for by HUD Contract Awardees. When I worked in the field, we were told that we had to absorb these expenses.
On that note, Minority Females and Labor are CAUTIONED to review any current and future HUD Subcontracting Agreements with respect to whether or not you will be compensated for lumber oriented materials! And bear in mind that while you may or may not be compensated, your pay is AT LEAST sixty days out from the day you begin work and generally a check is mailed to you.
And how about those new contracts recently landed by Purdy Enterprise under the HUD M&M FSM 3.10 award totaling TENS OF MILLIONS OF DOLLARS? We reached out Purdy Enterprise, for comment as to whether they are going to assist Minority Females and Labor with the added costs, but they refused comment. We reached out to PK Management and BLM Companies, firms whom have been paid HUNDREDS OF MILLIONS OF DOLLARS, likewise, and while BLM Companies refused comment, PK Management had this to say,
As you know, this a brand new development and we will be reviewing as it further develops.
Many may question why it is that a lot of my focus is upon the HUD Contract Awardees. Well, I am glad you asked. There has always been this belief that these people are somehow sacrosanct. HUD is Ground Zero for where things like Service Contract Act (SCA) wages and adherence to federal law apply. And the HUD M&M FSM 3.10 is the single largest overhaul of the Field Service Manager contract in recent memory. In fact, Foreclosurepedia lobbied for years to finally get the electrical backfeeding provisions removed which endangered civilians and Labor alike. Statements that small business finally won ring hollow if those awards are going to be merely extensions of the business as usual policies currently ongoing. Moreover, telling small businesses that they get a pass simply because they are small; allowing awardees a pass in the most influential of times within HUD Contracting, does a disservice to all including US Taxpayers.
The US Department of Housing and Urban Development had this to say with respect to the tariffs and their potential impact upon the M&M FSM Contracts,
The FSM contracts do not have an Economic Price Adjustment (EPA) provision, which would be the appropriate mechanism to cover such an increase on a Fixed-Price line item assuming drastic price fluctuations prior to award. The PWS iterations are different across the 3.6, 3.8 and 3.10 FSM contracts relative to Health and Safety Repairs and/or vandalism. Being that HUD properties are sold “as is” it should fall under one of these two service types. In most instances, vandalism is Fixed-Price, so it would be an expense born by the contractor. However, Health and Safety repairs do allow some GTR discretion relative to cost-sharing as a reimbursable, depending on the PWS version.
Foreclosurepedia reached out to the Karen Cobb, Lowe’s Corporate Public Relations Manager, and asked how much of the Lowe’s domestic lumber inventory was of Canadian origin and whether or not the tariffs will impact pricing. Cobb response below would appear to read that prices are most assuredly going to go up.
The majority of lumber sold at Lowe’s is sourced from the U.S. We are continuing to assess the potential impact to our business and to consumers.
Jeff Markee has been in the Mortgage Field Services Industry for over a decade. Owner of Markee Preservation, located in Texas, Jeff is all too familiar with the delicacy of juggling costs and pricing. We reached out to Jeff as Southwest Texas has a history in volatility with respect to lumber pricing,
Obviously, any climbing of costs for material adversely impacts us. The payments to us have been going down for the past twelve years while the costs for materials have risen for the same twelve years.
The fact of the matter is that the tariffs, no matter what anyone says, will impact the bottom line and costs will begin to widely fluctuate depending upon several things. First, new housing starts have climbed to an 8 month high according to the NAHB today citing a MarketWatch article. That is a 15.6% increase since last spring. MarketWatch also revealed that [i]n an interview Monday, Commerce Secretary Wilbur Ross said the tariff will be applied retroactively and imposed on Canadian exports to the U.S. of about $5 billion a year.
The only thing that Minority Females and Labor have to fear is what will happen if the DO NOT UNIONIZE! I always have and I always will advocate for equitable treatment of Labor. Foreclosurepedia has always been a Friend of Labor. Tell me, what have your Masters done for you lately?! Why not take a stand TODAY!
No matter how it goes, Minority Females and Labor will shoulder the burden. And while we did reach out to ask Eric Miller and NAMFS as to their opinion on the tariffing issue and as to whether their Membership will assist with the shouldering of that burden, Miller has done what Miller does best — remained silent. As usual, NAMFS has demonstrated that their wanting to allow Minority Females and Labor into their Association is driven only by revenue to bolster their nearly bankrupted Regime. When combined with the chargeback schemes which NAMFS Members have rolled out over the past several years, it should come as no surprise that the Industry may soon have too many work orders and not enough workers as the construction industry is facing now.
In closing, the Congressional Research Service (CRS) produces many of the Position Papers utilized by Congress. Below, is the Congressional Position Paper, which was obtained by our colleague on Washington DC’s K Street, exclusively for Foreclosurepedia,
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