Building projects hit by lack of supplies and price rises

Building projects hit by lack of supplies and price rises  https://www.bbc.co.uk/news/business-57247757

By Simon Read & Niall-James Convery Business reporters, BBC News - Published 26 May

Building materials are running short in the UK, leaving DIY projects in doubt and building companies under pressure.

The Construction Leadership Council has warned that cement, some electrical components, timber, steel and paints are all in short supply. It blamed “unprecedented levels of demand” that are set to continue. The Federation of Master Builders said that some building firms may have to delay projects and others could be forced to close as a result. “Small, local builders are being hit hardest by material shortages and price rises,” said chief executive Brian Berry. “We can’t build our way to recovery from the pandemic if we don’t have the materials.”

Roland Glancy, managing director of design service Peek Home, advised people to delay home improvement projects until autumn. “The last thing you want is to knock through a wall and then struggle to get hold of a bag of plaster to complete your vision leaving you living in a building site, just when we should be enjoying our new freedoms,” he said.

Prices rising

The supply problems stem from a number of factors. Construction industry projects have surged since lockdown began easing which has led to skyrocketing demand for already scarce materials. There are also issues hitting specific products, such as the warmer winter affecting timber production in Scandinavia while the cold winter weather in Texas affected the production of chemicals, plastics and polymer. There has also been a sharp rise in shipping costs, said Noble Francis, economics director of the Construction Products Association. “Shipping costs have risen sharply due a shortage of empty containers from Covid-19-related issues and the sharp recovery in global demand,” he told the BBC. For instance the cost of shipping a 40ft container from Asia to Northern Europe soared from $1,500 (£1,061) in summer 2020 to more than $8,300 (£5,873) by May 2021, he said. With demand globally increasing and the UK importing many of its raw materials, lead times for orders are lengthening while prices are shooting up.

‘I’m being quoted £10,000 for a £5,000 bathroom job’

Mohsen Kashan of Milton Keynes has been waiting nine months to have his bathroom renovated after a leak. But with problems getting parts and tradespeople he told the BBC he now simply can’t afford the rising costs he is being quoted. “It’s a simple job for a small bathroom just 2 metres by 2.5 meters. But we have been quoted £10,000 for what used to be less than £5,000. “To expect to pay between £8,000 and £10,000 for a small bathroom seems too much,” Mohsen said. He’s been struggling since September to get the repairs done. “We’ve tried B&Q, a couple of other stores, as well as installers and half a dozen fitters. “Either the cost of the materials has been too high, the cost of labour too high or materials are simply unavailable.” 

The Office for National Statistics has projected a rise of 7-8% in material prices, with increases for certain materials, such as timber, expected to more than double during the course of the year. “My members are experiencing price rises of 10-15% across the board, rising to 50% on timber and 30% on cement,” said Mr Berry. Amy Archer says her firm has never experienced such severe shortages

‘Unprecedented demand’

“It is really challenging in terms of supplies. It’s nothing that we’ve ever experienced before,” said Amy Archer, deputy managing director of the Swift Group, based in Cottingham near Hull, which makes caravans, motorhomes and holiday homes. She said there are two issues: “The first is a shortage of materials in the first place and the delays that we’ve seen through the ports because of shipping container shortages.” The second is rising prices: “Commodity prices are going up because there’s such a huge demand for products.”

Booming activity domestically hasn’t helped too, she said. “Lots of people are doing home improvements such as new kitchens and that’s all draining the materials that are available.” Bayram Timber’s Chris Husband says wood prices are rising fast. “This really is unprecedented,” said Chris Husband, commercial director at wood supplier Bayram Timber. “The sheer volume of timber that’s being demanded at the moment, they are struggling to keep pace with it in Scandinavia, where we source most of our raw material.” His company, based in North Ferriby near Hull. competes against others across the globe for the timber and is “having to wait in line”, he said. “It’s having a huge inflationary effect on the raw material price and obviously the lead times as well.” Is the current situation here to stay? “We’re pretty much certain that this is with us for the rest of this year,” he said.

Brexit effect 

Brexit has also affected the UK’s timber supply as 80% of softwood comes from Europe, said Thomas Goodman, construction expert, from MyJobQuote. Steel is also in short supply, as global demand exceeds supply. “Many steel manufacturers have stopped taking orders, as they are worried that panic buying will result in extremely low stock,” he said. The shipping costs issue is likely to subside in the next three to six months but global demand is likely to remain high for the next six to nine months, predicted Mr Francis.

Mr Berry pointed out that small builders can’t stockpile or plan jobs far in advance, unlike larger firms, so they need to be assured that the materials will be at the merchants when they need them.  “Consumers must be aware that shortages are causing delays to projects, and that costs may change in the months ahead because of this pressure,” he said. Building materials supplier Travis Perkins said: “In instances where we have seen some challenges posed by global demand for raw materials or inflationary pressures, we continue to work closely with our suppliers and partners to ensure healthy stock availability for our customers.” But with higher material prices for the moment, many homeowners and builders are choosing to delay work until the necessary resources become more affordable.


UK material shortages

UK material shortages: cement and aggregates added to the list - 08 APR 2021 BY JOSHUA STEIN

https://www.constructionnews.co.uk/news/uk-material-shortages-cement-and-aggregates-added-to-the-list-08-04-2021/

Cement, aggregates and plastic products have been added to the growing list of items in short supply in the UK, the Construction Leadership Council has revealed. The products have been added to a shortages list that includes timber, steel, roof tiles, bricks and imported products such as screws, fixing, plumbing items, sanitaryware and electrical products. Builders Merchants Federation chief executive John Newcomb and Construction Products Association chief executive Peter Caplehorn have warned that high demand for construction products is set to continue through 2021 and supply problems are expected to get worse in the short term.

Newcomb and Caplehorn, who are co-chairs of CLC Product Availability work group, said plastics production is being held back by a shortage of raw materials, which will continue for at least two to three months. Steel prices are also expected to climb further due to global dynamics, despite an anticipated rebalance in supply and demand in the coming months.

The council highlighted timber availability as a growing concern, as production levels are not meeting global demand. Timber supply in the UK could be under threat of decreasing further as other countries have said they will pay more to access the material, Newcomb and Caplehorn said. However, supplies of plaster and plasterboard have markedly improved on last year’s levels, they added.

Contractors are urged to order supplies early for upcoming projects, but must be prepared for increased demand and longer delays.

The report is the first since the government asked the CLC last month to monitor material shortages on a quarterly basis. It comes following reports of shortages and price hikes in recent months.

The Builders Merchants Federation first warned in January that high demand, escalating prices and shipping delays were drastically affecting material availability, particularly at small firms. The BMF said roofing supplies were hardest hit by the drop in supply.

Paul Hooper, chief executive of drainage and building envelopes company Alumasc, said in February that increasing raw materials prices could increase contractor costs by between 4 and 5 per cent. He added that the inflation could be short-lived as the pandemic begins to slow down and raw material availability increases.


Construction material shortages to continue

Experts: Construction material shortages to continue in 2021 

https://www.constructiondive.com/news/experts-construction-material-shortages-to-continue-in-2021/592705/

The three big drivers — backlog, revenue expectations and contractor confidence — in the business group’s report “nudged up” slightly from the third quarter, but failed to reach pre-pandemic numbers.  All three CCI scores were 70 or above in Q1, before the pandemic began to impact material shortages.

According to the report, 71% of contractors surveyed are facing at least one material shortage. Lumber was the most-cited material shortage (31%), followed by steel or electrical supplies other than copper wire (11%) and lighting supplies (10%).

Fuel, copper, steel and aluminum have each experienced modest price increases, while concrete’s price has slightly decreased, according to Atillo Rivetti, vice president at Turner Construction, who assembles the firm’s Building Cost Index. Additionally, Rivetti said, Turner has received notifications of further material and equipment price increases for 2021.

Steel and lumber price increases have been steep, jumping up several times this fall according to a report from Ken Simonson, chief economist for the Associated General Contractors of America. 

Lumber prices have done an “N-turn,” Simonson said, rising rapidly like they did in the summer. In early December, the U.S. Commerce Department lowered the tariff on Canadian-imported lumber from 20% to 9%, which could impact pricing. However, increasing demand from home builders and remodelers could keep costs higher, he wrote.

The shortages are impacting not only costs but lead times, Rivetti said. Price increases for materials like scrap steel and gypsum drywall are expected to continue into 2021.

“Material availability is best managed through ongoing communications with manufacturers and distributors starting at the earliest design stages of a project,” he added.

The Chamber of Commerce’s quarterly report also shows contractors face increasing challenges due to COVID-19:

  • 83% experiencing product delays.
  • 71% struggling to meet schedule requirements.
  • 68% experiencing delays expected into Q2 of 2021.
  • 58% putting in higher bids on projects.
  • 53% saying major project shutdowns/delays are a top concern.
  • 41% saying material shortages is a severe consequence of COVID-19.
  • 39% turning down work opportunities.
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