Tariffs imposed by President Trump, particularly those targeting steel and aluminum, are expected to have a significant impact on construction costs in the United States if they persist.
This is not good news for Needham as it considers major school and DPW upgrades over the next decade that could carry a collective price tag nearing a half-billion dollars.
Tariff concerns were voiced at last week’s meeting of the Permanent Public Building Committee as it discussed cost estimates for the planned expansion of the Jack Cogswell Building adjacent to the Recycling and Transfer Station along Central Avenue. Town Meeting will vote next month on a request for $19.6 million for the construction of a new fleet maintenance facility at Cogswell.
It is the first phase of a planned long-term, four-phase upgrade of major DPW facilities that is projected to cost more than $100 million.
The PPBC oversees the town’s major construction projects, such as the Pollard Middle School plan currently pegged at $314 million but expected to go higher. Longtime member Stuart Chandler recommended that his colleagues be prepared to answer tariff-related inquiries when the funding for the Cogswell project is discussed at Town Meeting.
“We need to be prepared and be able to answer where in the budget we’re accounting for tariffs,” said Chandler, who has served on the committee for two decades.
“We have had discussions about adding a separate tariff contingency,” said Ken Sargent, senior project manager of the Building and Construction Department. He added that it’s been hard to calculate due to the absence of a coherent tariff regimen.
“So it just needs to be noted that it’s subject to the whims of the executive,” said Sargent.
Interviewed after the meeting, Chandler said he had faith in Sargent and town Director of Design and Construction Hank Haff. “Under the circumstances, we just need to model a little better,” he said of being ready to answer questions at Town Meeting.
“We’re in such chaos in this economy now and everywhere else with what Trump is doing,” he said.
Chandler and the rest of the PPBC wrestled with determining the proper contingency percentage in the budget. The contingency portion are funds, typically expressed as a percentage of the total project cost, set aside to cover unexpected expenses such as design changes, unforeseen site conditions, material price fluctuations or delays.
“I think we’ve got a contingency that we’re comfortable with,” said Chandler. “We’re questioning if we need to change it, but I don’t think we do. I think everybody’s starting to zero in on that for the Cogswell building.”
That “everybody” includes the Finance Committee, which will make a recommendation to Town Meeting on the project. Longtime Finance Committee member John Connelly agrees that tariffs are a consideration, but only one of many.
“With tariffs, there is just so much that is unknown right now,” said Connelly. “What’s going to be implicated and when? What are the effects going to be and when? What’s the effect on projects that are currently going versus projects that are out in the future and how to properly estimate for it?
“It’s very challenging because of its total unpredictability,” he added.
Connelly said FinCom was also concerned about the escalation in the project’s price tag.
“This building was originally projected at $14 million. And now it’s up to $19 million,” he noted. “At that price, can we get more into the building rather than less, as far as maybe moving more operations in there?
“Tariffs are part of a bigger issue. But at the end of the day, how much is too much for this phase 1 and for the remaining phases?”
Chandler is confident that the project can satisfy FinCom’s requirements.
“I think they (FinCom) do support things that are done well,” he said. “When the numbers have been dissected, the right decisions on the right alignment and not careless spending, they tend to support it. And when there’s real need in the town, they tend to back it.”
“You can’t kick maintenance down the road. And we’ve kicked that can down the road so long that it has to get done. Pay the price now, because the price is only going to be higher down the road,” he said of the long-deferred work on the DPW’s facilities.
No townwide tariff impact – yet
As for other town operations, town Finance Director Dave Davison said the town is bracing for tariff impacts.
“We haven’t seen price increases from vendors yet stating an increase was due to tariffs, but it is still early,” he reported.
“The town has similar concerns as many others do with tariffs — the uncertainty and volatility, whether companies will pass the cost onto the customer,” he added. “Another concern is availability — will some companies just not do business with USA customers?”
Davison indicated loss of access to some manufacturers, distributors, wholesalers, retailers or other vendors could leave the town with “limited or perhaps no immediate substitutes.”
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