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As construction returns to normal can supply chain keep up?

Profits seem to be returning to normal for the construction industry, as Lendlease’s profits rebound to £20m and it seems as though the supply chain is just about coping.

Lendlease Construction (Europe) has delivered a strong rebound in profit this year to £20m – a huge increase from just £3.9m in 2020. This is due in part to its strong pipeline of work which has increased its profit to £78m from £65m.

Revenue at the business has also bounced back to £554m in the year to June 2021.

This work includes HMP Glen Parva in Leicestershire and Camden Town Hall and 2 Ruskin Square in London.

The supply chain has been causing significant issues to work as lead times increase, but according to John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, this is stabilising.

There are still some items which are in short supply – timber battens, chipboard, steel lintels and PVC products – and the main concerns are around bricks and blocks and concrete roof tiles – where lead times are averaging 24-30 weeks.

Another concern is the transport issue, as global shipping capacity reduces by 25% since the start of the pandemic. This, of course, has led to delays and high container prices.

The lack of HGV drivers is also continuing to affect every sector and John and Peter expect this to take many months to resolve. “This is a major contributor to delayed deliveries in all construction product areas; one manufacturer reported ‘factories piled with product that we cannot get out’.”

Despite all this, it seems we are still in a better position than we were earlier in the year. Though we’re not in the clear, it does appear that the supply chain is just about managing to keep up and its promising to see companies such as Lendlease rebounding.

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