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The Construction Material Crisis – “It’s The Worst It’s Ever Been.”

The Construction Material Crisis

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With cost of living rising like Apollo 13, one of the worst-affected industries is that of construction and building materials. The crisis started in 2020 and has shown no signs of slowing down, with recent events only adding fuel to the flame. We break down the torrid time that builders and suppliers find themselves in and look at why things might get worse before they get better.

The Current Situation

According to the Department for Business, Energy and Industrial Strategy (BEIS), the shortage in material supplies has seen the cost of building work escalate by 22.7% in 2021, with the prices of materials steadily increasing during this period. This has led to a major shortage in the availability of raw material, shown by a survey from the Federation of Master Builders who cite that 89% of their members have had to pause work during the last year due to a lack of materials. Construction professionals are being hit with eye-watering bills for the material they need in order to fulfil their projects. Cement costs are no longer set-in-stone, tiling prices are through the roof and steel charges are setting the foundations for a worrying period (sorry – now’s not the time for puns). According to an article from the Office of National Statistics, the top five building materials increasing in price year-on-year are:

Tap below to read updates on some of the top UK construction materials:

Bricks and Tiles

In a statement from the Construction Leadership Council, they forecast that demand for bricks and roof tiles will remain high, meaning supply chains will continue to be pushed to their limits. They also project volatile prices for global shipping, leading to elongated lead times. CLC have suggested that lead times for roof tiles are around 24 weeks, soaring to 41 weeks for some profiles.

Timber

According to Forest Research, the price index of standing timber grew by 47.9% in the year to September 2021, compared to the previous year. Although there is something to be positive about, with prices started to drop back down after four months of steady decrease. Between December to January, the price of imported sawn or planed wood fell by 9.3% – although this figure is still significantly more expensive than in January of last year (30.5% rise).

Cement

Cement production fell by 11.4% to between 2020 and 2021 although supplies of bulk and bagged cement are gradually getting back to normal levels. This does come with a warning however, with the CLC says despite the slowing of price inflation, it will likely take time for prices to stabilise.

Steel

Last May, British Steel were forced to halt orders on structural steel sections due to ‘extreme demand’, meaning prices skyrocketed. Data from BEIS showed that the cost of structural steel grew by 70% throughout 2021, leaving the industry in disarray. However, like timber, the steel prices are steadily decreasing although still sit 51% higher than a year ago.

4 Reasons Behind the Construction Material Crisis

1

Interrupted Supply Chain Due to COVID

Like the rest of the world, 2020 was a major challenge for the construction sector, with many companies feeling unsure about their businesses future. Rewind back to the first lockdown and many sites were forced to close their doors, or operate at a much slower pace. Suppliers faced restrictions on delivering materials and the distribution chain took a major hit.

2

High Demand Post-Lockdown

When the world started to open up again, there was a major surge in the number of construction and home improvement projects. Whilst this was positive move on paper, the increase led to slowdown in the production of materials, meaning supply chains were stretched and prices began to soar. With demand exceeding the processing capabilities of suppliers, material costs were forced to increase and have struggled ever since.

3

Brexit and Lack of Tradespeople

Since the decision was made to leave the European Union, the burden on the construction industry has increased two-fold. Firstly the price of goods moving across the border has increased due to the additional border checks and administrative work – adding yet more disruption and costs to the material supply chain. The other issue that construction faces post-Brexit is the increasing crisis in labour supply. The construction industry relies heavily on foreign migrant labour with fears that there will be a national skills shortage.

4

Lack of HGV Drivers

As seen across major news outlets, the Road Haulage Association has reported a shortage of some 100,000 HGV drivers (though recent estimates place this figure closer to 70,000). It’s reported that this figure can be attributed to Brexit and Covid, however the Recruitment and Employment Confederation claim that there is a wider retention issue that won’t be improved until wages improve and Visas become more readily available for HGV drivers.

Why It Might Get Worse Before It Gets Better

Unfortunately, this situation is anything but stable. As demand continues to surge, disruptions in supply chains will continue to haunt construction companies up and down the UK. And to pile on yet more pressure, builders have fresh concerns to keep them busy with Russia’s invasion of Ukraine and the soaring energy prices looking set to impair the industry further.

Chief Executive of FMB, Brian Berry, has released a statement on the war in Ukraine, saying:

“As a result of Russia’s actions, supply chain disruption and the reallocation of certain types of materials will intensify the situation, with oil, steel, aluminium, timber and copper all set to be some of the worst affected. At a time when costs are surging, it puts builders in the unenviable position of having to raise costs for a customer base that are tightening their belts. Pragmatic policy delivery from government to help ease pressures on the sector and consumers alike will be needed.”

BRIAN BERRY

The economic shockwaves of the tragic events in Ukraine are already being felt across Britain, but it could also lead to shortages of materials such as bricks, roof tiles, and plastics. Despite the fact that only 1.25% of building products imported into the UK last year came from Russia, Ukraine or Belarus, CLC have warned that “there are likely to be higher levels of direct and indirect exposure to some product components either through raw materials or through higher prices in more-exposed European markets.”

The People It's Effecting

This is an unprecedented time, with some of the worlds largest economies closing and reopening at different times which has caused major disruption. We spoke to someone who has felt the full force of this crisis in Steve Rutherford, a small-business owner who owns his own building firm.

"As a small construction company, these times of uncertainty has made it really difficult for the company to operate. We've had multiple occasions throughout the past few years where material hasn't arrived on time which has meant delayed projects. We're also having to push prices up for our customers just to be able to pay for the material. I hope things start to get better as Covid dies down but I'm worried it will take a while for things to level out. I've worked in the industry for 26 years and I'd say this last few years is the worst it's ever been."
Forestside Construction
STEVE RUTHERFORD
Forestside Construction

How Gordian Can Help

Over the past 85 years, we have worked with a wide range of building material companies and have a deep-rooted understanding of their problems and needs. As outlined above, the need for construction materials has increased and, whilst companies supply chains struggle to deal with the demand, the increasing requirement for material means there is a greater need for package securement.

We pride ourselves on being able to deliver cost-effective solutions that enhance organisational capability and decrease the time taken to complete operations.

Whilst the forecast remains bleak for delivery of material, the wider construction industry will continue to flourish across the UK and we are hopeful that things will return to normality for those smaller businesses. In the meantime, we are here to help on any package securement requirements and we’d love for you to get in touch if you have any questions.

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