The Fence Post is a quarterly update session hosted by Willmeng Construction to inform trade partners, clients, and broker associates about key issues affecting the construction market. The latest session focused primarily on two critical topics: recent developments in Arizona’s air quality regulations and the potential impact of newly implemented tariffs on the construction industry. The session also touched on current construction pricing trends and introduced a new initiative aimed at supporting utilities and responsible growth in Arizona.
Arizona Air Quality Regulations and EPA Policy Changes
Jimmy Lindblom, Willmeng Construction’s Vice President of Economic Development and Infrastructure, opened the session by addressing Arizona’s air quality regulations, which had been identified as a major concern in previous discussions. Lindblom introduced key figures involved in addressing these issues: Arizona Senate President Warren Petersen and Danny Seiden, President & CEO of the Arizona Chamber of Commerce & Industry.
Seiden explained that Arizona had been facing serious non-attainment issues regarding ozone levels, which threatened significant negative impacts on the state’s economic development. The Arizona Chamber, along with other stakeholder groups, had been engaged in extensive discussions on this matter for an extended period. Presentation slides highlighted the unique challenges Arizona faced due to factors beyond its control and proposals to address these challenges.
A pivotal development came with EPA Administrator Lee Zeldin’s visit to Phoenix in March, arranged at the invitation of Senator Mark Kelly. During this visit, discussions centered on modernizing EPA guidance and reducing regulatory burdens for local governments and businesses regarding air quality compliance. Following these discussions, the EPA took action by rescinding its prior guidance on Clean Air Act Section 179B Demonstrations for Nonattainment Areas Affected by International Transport of Emissions. This previous guidance had been criticized for making it excessively difficult to demonstrate that air pollution originating outside the United States was contributing to local air quality issues.
Seiden characterized the EPA’s decision as appropriate and beneficial, providing regulatory certainty and ensuring that regions like Maricopa County could continue their economic growth trajectory. He emphasized that regions should not face sanctions for air quality issues originating beyond their control and expressed appreciation for Administrator Zeldin’s collaborative approach with the business community.
Warren Petersen shared his experiences from multiple meetings with Administrator Zeldin, noting specific requests that had been made, including addressing the Waters of the United States (WOTUS) regulations and preventing the closure of the Coronado power plant. He announced positive outcomes on both fronts: the EPA had begun rolling back WOTUS regulations and had committed to keeping the Coronado power plant operational, developments that Petersen described as “absolutely huge” for developers, farmers, and Arizona’s power supply infrastructure. Petersen also highlighted that during meetings with Zeldin, business leaders had expressed their inability to meet existing EPA requirements even if all local businesses and vehicles were eliminated, due to pollution originating from foreign sources such as China and Mexico, as well as neighboring states.
James Murphy, Willmeng’s CEO, emphasized the tangible progress achieved through these discussions, noting that the group had presented Administrator Zeldin with a clear action list detailing the obstacles to their success and the changes needed for improvement. Murphy also raised concerns about permit timelines for air emissions, which had increased from a historical standard of 6 months to 24-36 months, significantly delaying construction projects. These timelines are starting improve, but are still considered suboptimal compared to previous standards.
Concluding the air quality section, Seiden highlighted the significance of the Administrator’s visit to Arizona and announced that the EPA intended for Arizona to be the first state to implement a 179D designation, which would prevent air pollution originating outside the county from counting against Arizona in compliance assessments. He stressed the importance of Arizona submitting its application promptly, after which similar considerations would be extended to other states facing comparable challenges. Seiden expressed optimism that air quality regulations were no longer a primary concern for industry stakeholders, marking a significant positive shift in the regulatory landscape.
Materials Pricing and Supply Chain Challenges
The session then shifted to construction pricing, with presentations by Thomas Jarvis, Willmeng’s Vice President of Pre-Lease Estimating, and Arun Ghosh, Pre-Lease Estimating Manager. Jarvis provided a quarterly update on construction pricing for industrial spec projects and office tenant improvements (TI), noting that the current market was characterized by supply exceeding demand for ground-up buildings, albeit with some unusual recent leasing patterns.
A persistent challenge highlighted was extended lead times for certain materials, particularly electrical equipment, which had been problematic for approximately three years. Ghosh elaborated on the specific case of Switchboard Control Enclosures (SCEs), explaining that demand had surged due to the proliferation of AI-powered data centers, which require triple the number of SCEs compared to conventional data centers. This increased demand had strained manufacturing capacity, with Ghosh noting that establishing a new SCE manufacturing facility requires approximately two years, though Siemens had recently launched such a facility. Despite these challenges, Ghosh characterized the increased demand as presenting potential opportunities for the industry.
Regarding pricing forecasts, Jarvis advised clients to anticipate a slight escalation for projects without intensive mechanical, electrical, and plumbing (MEP) requirements, primarily attributable to the immediate effects of tariffs. This assessment was based on real-time observations and input from various industry sources. For MEP-intensive projects, particularly those requiring substantial air conditioning systems and electrical infrastructure, extended lead times remained a critical planning factor.
For office tenant improvements, using a 10,000-square-foot space as an example, Jarvis projected a more substantial escalation. Ghosh attributed this primarily to demand for specialty items, especially millwork, exceeding available supply. He cited cases where millworkers had to be sourced from distant locations due to local trade partners being fully committed. While reasonable pricing for office TI projects remained achievable, securing high performing trade partner teams with adequate capacity and expertise was driving cost increases.
Both presenters advised clients considering projects to proceed expeditiously rather than delaying, citing greater certainty in current conditions compared to anticipated future scenarios. Jarvis also highlighted Willmeng’s strategic development of its shared services department, including in-house utility coordination capabilities to better navigate project complexities and permitting processes.
Impact of U.S. Tariffs on Construction
The central focus of the session was a detailed discussion on the impact of U.S. tariffs, moderated by Jimmy Lindblom with insights from Danny Seiden and Dennis Hoffman, Director for the Center for Competitiveness and Prosperity Research at Arizona State University. The uncertain nature and potential consequences of tariffs were identified as matters of significant concern for the construction industry.
Seiden expressed surprise at the resurgence of tariffs as a major economic policy instrument in 2025, noting the longstanding economic consensus regarding their detrimental effects. Reflecting on his economics education, he recalled that tariffs were presented as a failed policy approach. Seiden criticized the simplistic characterization of America receiving a “bad deal” in global trade based solely on trade deficits, arguing that this perspective fails to account for the substantial benefits the U.S. derives from the current international economic system, including the dollar’s privileged status as the world’s reserve currency.
He specifically criticized retaliatory tariffs as counterproductive and emphasized that tariffs fundamentally function as taxes ultimately borne by consumers and businesses. Seiden challenged the notion that tariffs would effectively stimulate domestic manufacturing, citing TSMC’s investment decisions as being made independently of recent tariff policies and highlighting the reality that even domestic production relies extensively on global supply chains.
Hoffman reinforced Seiden’s position, noting that the economic debate over tariffs had been conclusively settled decades ago, referencing Adam Smith’s foundational work “The Wealth of Nations.” Drawing on personal experience growing up in Michigan during an era of limited international competition in the automotive industry, Hoffman argued that increased competition ultimately improved the quality of American-made vehicles. He characterized protected jobs as effectively “handouts” and highlighted that automation, rather than international trade, has been the primary factor in manufacturing job losses across the United States. Hoffman expressed concern that current tariff policies aim to protect a limited number of jobs at the expense of broader economic prosperity and consumer benefits from lower prices.
Both experts agreed that the uncertainty surrounding tariffs creates a challenging business environment, emphasizing that businesses thrive in conditions of predictability. While acknowledging Arizona’s positive economic climate, driven by factors including deregulation, favorable tax policies, and pro-business academic institutions, Hoffman expressed concern that tariff policies could undermine this progress. He expressed hope that current tariff measures would eventually be reversed, aligning with the predominant view among economists.
Seiden unequivocally stated that tariffs would result in higher prices across virtually all consumer and business purchases, including construction materials. He referenced previous discussions about lumber prices, noting America’s significant dependence on Canadian lumber and limited domestic capacity in steel and aluminum production. He also highlighted the negative impacts of retaliatory tariffs on export-oriented sectors such as copper mining and agriculture, citing soybean farmers who lost Chinese market share and subsequently required government compensation. Seiden likened the rationale behind tariffs to “hot take” sensationalism rather than sound economic policy and urged critical evaluation of tariff effects and consideration of historical precedents.
The discussion noted that uncertainty surrounding tariffs was prompting suppliers to shorten price guarantee periods and mentioned a specific recent example where a vendor had quoted a 25% price increase on wrought iron, illustrating the immediate market response to anticipated tariff impacts.
The conversation briefly addressed recent volatility in the 10-year Treasury Bond market. Hoffman said there are some speculating that coordinated selling of U.S. bonds by major international holders, potentially in response to trade policies, might have contributed to this instability. Seiden emphasized the risks of alienating traditional foreign trade partners and debt holders without clear justification, as such actions could destabilize the U.S. bond market.
Addressing how businesses were experiencing tariff impacts, Seiden explained that while many business owners were reluctant to speak publicly due to potential political repercussions, they were observing increased costs at the point of import. He noted confusion regarding whether tariffs would apply to goods ordered before tariff implementation but received afterward, with the general understanding being that tariffs are applied upon receipt. Seiden highlighted the Arizona Chamber’s ongoing efforts to survey members and communicate tariff impacts to policymakers, reiterating his belief that current tariff policies would ultimately harm both the American economy and workers, despite stated intentions to the contrary.
The morning concluded with Lindblom introducing Arizonans for Responsible Growth, a new coalition of business and community leaders, emerging industries, and policy experts united in the belief that Arizona’s long-term prosperity relies on responsible economic development and a robust energy and water sector to power new growth. Lindblom encouraged those gathered to contact him with any questions about how they can support Arizonans for Responsible Growth.
