ᐅ Price Increase – Our Construction Company Wants 21.4% More

In which town is the headquarters of the general contractor K.......? A business associate supplies many companies in the industry with membranes. I might be able to find out something from them.

haydee schrieb:

Silence does not count as agreement.
Were you informed about this by phone or in writing?

Costs arise from the sample selection regardless of the price increase.

The explanation was as follows. I really understand the company; we didn’t even withhold the 5% retention at the first payment that we could have legally/contractually withheld. I transferred the full amount because I assumed a fair business partner. I learned too little from the forum.

"You purchased a house from us on December 29, 2019 with Mr. xyz.

The price developments this year are unprecedented.
In past decades, the annual price increases from our suppliers averaged between 1 and a maximum of 3%. This was once a reliable basis for fixed-price offers. The current increases are ten times higher!
At the same time, profit margins remain in the low single-digit range. Therefore, we had to take this step to protect ourselves from extreme losses. Within just a few months, we experienced price increases more intense than those seen in the entire previous decade combined.

The price increases started in the timber sector. Due to the trade disputes between the USA and Canada that began at the beginning of the year, the amount of timber Canada delivers to the USA was significantly reduced. Germany then, as the most important European timber supplier to the USA, compensated by supplying additional large quantities of timber and wood products to the USA. Houses in the USA are mostly built from wood, which explains the strong demand there. Timber prices in the USA peaked with a 400% increase. We believed at the contract signing that this was an extreme overreaction that would eventually normalize, since such prices would cause the US construction industry—a very important economic sector—to collapse. Fortunately, this began happening in early June, and timber prices in the USA returned to a reasonable level by the end of June.
Unfortunately, the hoped-for relief for Germany has not yet occurred, as China has taken over the role of the main timber buyer, after Russia apparently reduced its deliveries to China. We are hopeful for a short-term decline. Our current prices already factor in a 40% reduction, and we sincerely hope that this will materialize.

Additional consequences include long delivery times and supply shortages for all wood products, so not only for our structural timber but also battens, OSB boards, wood fiber insulation boards, etc.
We are currently receiving only limited delivery quotas for many products. This means we get less than we need and only as much as the supplier "kindly" allocates to us.
The extremely increased prices are non-negotiable. We can rarely activate new suppliers because many suppliers are only serving existing customers due to the shortage situation. Thus, besides increased costs, we face growing difficulties maintaining production at our current high level.

For some products, previously agreed terms have been terminated citing “Force Majeure.” Therefore, even valid supply contracts have not protected us.
In general, plastic-based products are currently difficult to obtain. This apparently results from refineries producing less kerosene, which in turn leads to shortages of co-products used for many plastic products. This also affects paints, silicones, and plasters. Especially problematic are KG pipes and perimeter insulation. Price increases here range from 50% to 100%.

Copper prices, despite a recent decline, have still increased by about 40% compared to the previous year. High prices also indicate ongoing supply issues, which currently mainly affect electricians; one of my electricians still has only one roll of cable left.

Less severe are products that have only become 10 to 20% more expensive, such as staples, nails, screws, steel beams, and drywall panels. These products are the welcome exceptions.

For your building project, this means in concrete terms:

The fixed price guarantee was limited until June 30, 2021. According to our sales, delivery, and payment terms §4.1, our new price list now applies. Due to the issues described above, prices for your project have increased by 21.4%.

We would be happy to discuss the situation tomorrow before the sample selection."

In tomorrow’s meeting, they will probably say the same thing to you in different words, which does not sound like a willingness to negotiate.

In my personal opinion, someone is writing a lot and at length, but at first glance, it doesn’t seem like a legally secure solution.

Ultimately, you currently have no reliable legal knowledge, which means you risk making commitments or decisions in a natural state of shock that you should avoid.

Of course, everyone is presumed innocent until proven otherwise, but the suspicion arises that you are being deliberately pressured here, since these stated reasons didn’t just appear out of nowhere today.

I don’t know enough about your situation, but based on the current information, I would tend to cancel this appointment because how are you supposed to decide on tile color, etc. without clarity on pricing, especially with lingering and justified frustration.

In my opinion, this is totally unprofessional and it feels like being at a market bazaar.

I don’t have a solution, but I believe I couldn’t work with them or at least would want my position to be evaluated and respected as much as possible.

This is frustrating and difficult, and the way they handle things is cruel.

In the end, they strongly advertised their position in their partly confusing letter, but I would definitely have the legal situation clarified beforehand to see if the promises will actually be honored. A consumer advice service can be a first, straightforward step.

As I said, this is just my opinion on how I would probably handle it, although I certainly can’t put myself in your shoes.

My impression was also, "What a load of nonsense."
It read like an article from a tabloid.
My (completely amateur) opinion? If it were legally certain, they would have sent you a letter clearly and briefly stating the price increase. No chatter or unnecessary details.
If someone is confident, they wouldn’t bother writing such a long text.

Edit: especially linking to any sources! Very questionable.

One thing I don't understand, though. Wasn't it contractually defined how the price increase may be structured after the fixed-price period?

If that is the case, then they can arbitrarily come up with any figure without providing justification.

There was once a figure of 0.6% per month mentioned! If it is contractually agreed upon, one should be able to rely on that!