The unprecedented demand for building materials has been ongoing throughout the year, and the significant lack of labour is causing concern to rise even further.
The combination of the labour and materials shortages is having a drastic impact on the construction industry’s supply chain across the UK as it is leading to delayed deliveries and continuing rising prices.
In a new statement by John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn CEO of the Construction Products Association, a full run down of the current problems in the industry were highlighted.
“The basic trends of the last six months remain, with global demand far in excess of supply leading to product shortages, rapid and sustained price inflation, long lead times and uncertainty regarding deliveries. It is also clear that the global shipping industry is far from recovered from the disruption caused by the coronavirus pandemic, with congested shipping routes, container cancellations and higher costs still evident.
“The products most affected are those used in housebuilding and domestic repair maintenance and improvement (RMI), including roofing products, timber, insulation, landscaping products, blocks, sealants/PVA, PIR Insulation, kitchen carcassing and products that use plastic, e.g. drainage, some windows and bagged cement.
“Bagged cement is particularly hard hit due to ongoing unprecedented demand but both bagged and bulk cement are on allocation; there are regional variations to this with some areas affected more than others. All UK kilns are operating but it may be a while before stocks return to normal. With high demand continuing, extended delivery times are expected to remain until the end of the year.
“The high level of housing starts has caused a bow wave of demand for plastic pipes for groundworks and drainage. Some manufacturers are currently on allocation, but the expectation is that supply issues will be resolved by the end of Q3.
“Demand for wood and wood products remains very strong and timber supply will continue to tighten into Q3, following the Scandinavian holiday and maintenance season in July, continuing the upward pressure on prices. There are some indications that the situation may start to improve after this as global demand is beginning to ease.
“Within infrastructure and commercial construction, steel and aluminium are both experiencing significant supply disruption and price inflation.
“There is also concern around the availability of steel cabling management systems which could continue into early 2022 and engineering services business are advised to plan ahead.
“Overall, prices for products and materials have increased by a reported 10-15%, consistent with the Office of National Statistics figure for May of 10.2% overall with 12.8% for those most commonly used in RMI. Specific products, especially timber, has seen increases of 20-50% for most products and over 100% for OSB and other sheet materials. For the first time we have had reports that some merchants are destocking certain products that are no longer economic.
“Labour, or rather the lack of it, is a rising concern. All regions report hauliers/HGV/LGV drivers are in short supply and very difficult to recruit, which is contributing to longer delivery times particularly away from major transport routes and urban areas. We continue to support the Road Haulage Association in its discussions with the Department of Transport to address the shortage. We are now receiving reports of other vacancies being hard to fill, from relatively unskilled roles, such as yard operatives, to experienced bricklayers.
“These labour shortages are being exacerbated by the growing number of non-symptomatic drivers, tradespeople, merchant and manufacturing staff required to self-isolate after coming into contact with someone who tested positive for Covid-19. This will further stretch the supply chain.
“Looking forward, housebuilders are managing current builds to completion but there are indications that smaller, regional developers may be forced to delay starting work on new sites until they have more certainty around product availability and lead times.
“The demand for home improvement and RMI work remains strong but most work in this area is covered by JCT contracts which have no facility for any flexibility on material costs, leading to fears that we will see business failures arising from unsustainable contracts. This is now being investigated and may require a change in contractual positions.
“Alongside pricing, stability and accuracy of supply remains the overarching concern and regular, accurate and transparent communication throughout the supply chain to the end client is deemed vital by all. It is important that all parties recognise the extent of the extraordinary challenges we are currently experiencing and adopt a flexible and collaborative approach to finding solutions.”