Just look at the aging power infrastructure and mounting
pressure to find alternative "eco-friendly" energy sources and
it's not hard to see why utility tower demand is so strong that
fabricators are struggling to keep pace.
Demand has been going through the roof for transmission
towers in both the United States and Canada, according to Todd
Shipway, director of sales and marketing at Locweld Inc.,
Candiac, Quebec, and that surge is expected to continue for at
least the next 10 to 15 years.
Overall demand is so strong that it has already almost
exceeded what tower fabricators can produce, Jeremy Moore,
director of sales and marketing at FWT Inc., Fort Worth, Texas,
said. "We are now just at the crest of a big boom."
Lead times have already extended out to 16 to 20 weeks vs. a
more normal eight to 12 weeks, said David Ramsey, national
sales manager for Rohn Products, Peoria, Ill., and all
estimations are that it will only tighten further.
This is being facilitated by an increasing change of mindset
on the part of utility regulators, Shipway said. "In the past
it was difficult to get quick approvals; one project took over
16 years to be approved. Today, that can't happen. We can't
wait that long, so there have been a number of efforts to
accelerate the process in a reasonable way. It doesn't mean
giving the utilities carte blanche, but there has been a lot
more collaboration," he said.
Another factor driving the growth of utility towers is
pressure to reduce dependency on conventional fossil fuel
energy sources. "The United States will gravitate toward other
sources, such as renewables (onshore and offshore wind,
geothermal, biomass and solar), nuclear and 'clean air' coal.
Many of these sources are located far from the demand centers,
which necessitates transmission to deliver this energy from the
source of generation to the consumer," said Shelby Pixley,
chief executive officer of plate at ArcelorMittal USA Inc.,
Chicago. "It is clear that you cannot generate
electricity-whether it is from a remote or local area-without
having safe, reliable transmission systems that tie into the
national power grid and a regulatory framework that recognizes
this is of vital importance to our nation."
"We are seeing demand flying off of the charts in Texas,"
Moore said, attributing at least part of that to the tremendous
growth of wind farms in the wind belt, which extends through
the Midwest, including Texas, Oklahoma, Nebraska and
Utility towers are being constructed all over the country,
and not just to tie in alternative energy sources to the grid,
according to Ramsey. "Much of it involves replacing existing,
aging infrastructure where there have been some failures," he
Regardless of the reason for the demand surge, steel stands
to reap the rewards, given that it is generally the material of
choice for transmission towers. "We do not expect a surge of
demand (for steel from the utility tower market) for the
remainder of this year, but we are optimistic about sustainable
growth in the future," Pixley said.
A spokeswoman for Dis-Tran Steel Fabricators LLC, Pineville,
La., said that while she hasn't seen a big increase in demand
for lattice transmission towers in the past year, demand for
steel tapered tubular towers-often referred to as transmission
poles-are up about 15 percent year on year.
While there are other alternatives, steel is "by far" used
more than other materials for these utility poles, Moore said.
Steel towers are lighter and can be galvanized, while concrete
is heavier and more costly to ship and install, he said. In
some cases, laminated wood systems also are used, "but they
can't be as large and can't take as high loads as steel or
concrete." All lattice towers are made of steel.
How much steel is used per tower? Gary Houghton, director of
purchasing at Candiac, Quebec-based Locweld Inc., gave a rough
estimate of about 10 to 15 tons, although he cautioned that no
two towers are alike.
While the majority of towers tend to be somewhere between 70
and 185 feet tall, some rise as much as 450 feet and vary in
width, depending on the voltage requirements and locations,
So the utility tower market is booming, but how will
volatile steel and raw material prices, combined with the
financial crisis, impact the market?
If the financial crisis does have an impact, it won't be
immediate as "most of the dollars have already been allocated
for current projects. If the financial crisis has an effect it
will be in the first quarter of next year or beyond," Ramsey
The raw material price volatility, especially for steel and
zinc, has had a big impact on fabricators and might have caused
utilities to cut back or delay some transmission projects,
particularly when coupled with siting cost increases, Moore
However, Dis-Tran questions whether it has been a limiting
factor, given that the company is expecting to see an increase
in transmission projects despite an 80- to 120-percent increase
in some raw material prices.
"We are not seeing any delays or cancellations due to raw
material prices," Pixley said. "If a project located far from
the demand center is going to be constructed, then the
supporting infrastructure of the transmission towers must be
built. Of course, one project owner might have a greater
tolerance for risk than another."
There is no question, however, that the rising costs have
made it more difficult for fabricators to quote prices for
their towers. "Up to last year I could have given a firm
price," Houghton said. "But we can't do that now. No one knows
where the prices will go in the future."
Another fabricator agreed, noting that he frequently has to
absorb cost increases when raw material price hikes are
announced after contracts have already been signed. "Sometimes
we have raw material escalator clauses in our contracts, but
most times we have to eat the cost increases," he said.
Overall the future looks bright, especially given the need
for energy infrastructure development, Pixley said. "We are
confident the utility tower market will continue to be a
sustainable sector for the steel industry," he said, "but the
uncertainty created by the current financial crisis must pass