Sunday, March 19, 2000
By Lew Sichelman, Special To The Times

WASHINGTON - Late last year, the president of the National Assn. of Home Builders sent a 12-inch section of a steel 2-by-4 to board members of the country’s seven largest lumber producers.

Attached was a rather blunt message—“Something to think about from the nation’s builders”—and a one-page sheet listing the benefits of building with steel.

The package from the 1999 NAHB President Charlie Ruma signaled a change in the attitude of the NAHB leadership toward steel as an alternative building material.

In the past, industry leaders gave only quiet support to the steel industry’s efforts to make inroads into residential construction.

Now, though, the influential trade association is working closely with a group called the North American Steel Framing Alliance and is promoting steel to its members.

“And we’re going to stay active,” Ruma vows, “until we’re sure that steel producers are well on their way” toward gaining complete acceptance by builders.

Home builders still prefer to use wood, if for no other reason than it has been the backbone of housing construction since humans moved out of caves.

But in recent years, lumber prices have oscillated wildly, making it all but impossible for contractors to price their products with any degree of certainty.

In the last year alone, the cost of lumber has been as low as $357 per thousand board feet and as high as $480. Right now, it is about $400; but the NAHB expects that costs will rise sharply when the Asian economies begin to recover. Ruma says builders will be paying 600-plus by year-end.

The main reason lumber costs are high, according to the NAHB, is the quota on softwood lumber imported from Canada, which supplies more than a third of the wood used in American houses. When shipments reach above 14.7 billion board feet in any given year, they are taxed at a higher export fee.

The NAHB is calling for the termination of the lumber import agreement when it expires next year. But that position is getting no support from U.S. lumber interests. They argue that, since Canada subsidizes its producers, the pact is the only way they can compete.

That’s why Ruma and other industry leaders are hoping to persuade the rank and file to give steel a look. Toward that end, the NAHB is trying to encourage at least one builder in every major market to use steel on a trial basis. If one builder can use the product successfully, Ruma believes, others will follow.

In Southern California, a number of home builders, including Brookfield Homes in Costa Mesa and Taylor Woodrow Homes in Laguna Hills, have built several hundred homes with steel framing.

But despite its superiority—it won’t burn, shrink, warp or swell, so walls are straighter, floors won’t squeak and nails don’t pop—steel hasn’t found much of a home in housing, because the price difference between steel and wood hasn’t been enough to push builders into altering the way they work.

But that’s about to change, Ruma and others believe. And higher lumber prices is just one of the factors they say might cause builders to switch.

For one thing, steel is far more abundant than wood. Indeed, it is the most recycled material on Earth, even more so than glass, paper or aluminum.

According to the American Iron and Steel Institute, more than 100 billion pounds of steel are recycled annually, not only from used cans, but also from discarded automobiles and demolished bridges.

Perhaps more important though, the nation’s 73 steel-stud manufacturers have joined together to standardize their products and make them acceptable to local building-code officials—no small feat.

And at the NAHB’s big trade show In Dallas in January they unveiled new estimating software for residential steel framing.

Dan Moody, president of the steel-framing alliance, calls automation a “major step” toward the practical use of steel in home building. “If you know how to frame a home with wood but don’t know anything about steel, the software can take all the mystery out of it in less than two hours,” he said.

Steel makers are hoping all this will make it just as easy for builders to use steel as it is to use wood, and Ruma believes it will.

He explained that in the past, when a builder wanted to try steel, “every house had to be re-engineered, adding $800 to $1,000 to the cost of each unit. Now, all of a sudden, that’s going to change. If you no longer have to pay that, steel will be cheaper and builders will stick with it.”

The NAHB figures that even slight shift to steel will protect the housing industry from fluctuating wood prices. “If we can cut demand for lumber by just 10%, it would take a lot of pressure off the supply side of the equation,” says association economist Michael Carliner, who notes that prices are “very sensitive to even small changes in supply and demand.”

Steel makers, of course, are hoping to make an even greater dent in the market. They have their sights on a 25% market share. But lumber producers are not worried, at least not publicly. If the steel industry takes away too much business, they say, lumber prices will fall and builders will no longer have any reason to make the switch.