Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

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.

Additional reports:

Steel Cabling Management Systems

Roofing

Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

The overall product availability picture has not changed this month. Demand both in the UK and globally continues to dramatically outstrip supply and shows few signs of slowing during the seasonally busy summer months.

In the UK, record sales of building materials coupled with strong pre-orders and full pipelines of work are all putting enormous pressure on the supply chain which, in some sectors, has not fully recovered from the impact of Covid. This suggests the unprecedented challenges around a number of key product areas, particularly imported products and materials, will likely persist into the second half of 2021.

Timber, roof tiles and some steel products continue to be in short supply, as is bagged cement which may have been impacted by some manufacturers undertaking overdue preventative maintenance.  Paints, sealants and chemical products, continue to be affected by raw material shortages, with paints additionally affected by a shortage of packaging, particularly metal cans. The situation with insulation boards has also become tighter, with PIR becoming harder to obtain and contractors actively seeking alternatives. Plasterboard has been subject to extended lead times with one major manufacturer indicating their products going on allocation.  Some regions are also reporting delayed deliveries of bricks and blocks.

Electrical products have been affected by raw material shortages, particularly steel products and semi-conductors, since Autumn 2020.  These issues are now compounded by the shipping backlog in China’s Pearl River Delta, with hundreds of container ships waiting for berths to become available. The Electrical Contractors Association and their Scottish counterpart, SELECT, are warning that the blockage already surpasses that of the Suez Canal earlier this year and is likely to lead to extended delays for electro-technical products.

The availability of hauliers is a particular issue raised within the group over the past months and it is clear that this is now a critical nationwide problem causing delays and impacting project programmes.  The UK has lost 15,000 European drivers this year due to Brexit, and 30,000 UK driver tests due to Covid, which has exacerbated the driver shortage.   The CLC’s Product Availability Group is supporting the Road Haulage Association in its discussions with the Department for Transport to address the shortage.

Inevitably, all of this is feeding into price inflation, and the expectation is that high demand coupled with tight supply will sustain elevated prices throughout the year.

As we emphasised last month, forward planning and ongoing communication throughout the supply chain is essential to assist with reliable delivery dates and to manage expectations about any shortages or allocations.

Allocation systems should be as transparent as possible, so all customers can be seen to be treated fairly and provided with both the information and the products they require to plan and complete projects in a timely manner.

Builders and contractors should also maintain open communications with their customers regarding lead times, possible product substitutions and early notice of potential price increases.

Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

Construction activity continues to be strong across the UK, with government statistics and industry surveys indicating this is primarily led by the new housing, housing RMI and infrastructure sectors.  Evidence suggests a positive pipeline of work ahead, including a high level of contracts awarded during the first quarter.  With full order books, the current level of active demand across the entire construction industry will continue to put increasing pressure on the product supply chain.

In general, products are available but lead times have lengthened.  Current demand is such that it is proving difficult for manufacturers and suppliers to build up stock levels.

The worst affected product areas continue to be timber, roof tiles and roofing membranes. There is unlikely to be any improvement in timber supplies this year with little or no timber currently coming into the UK that is not already pre-sold and global demand outstripping supply.  However, the supply of roofing products is expected to improve in the second half.

Raw material shortages, stemming from global demand and other external factors such as factory closures outside the UK, continue to constrain production of PE and PP plastics, PIR insulation, paints, adhesives and other coatings, and also packaging for other product groups.

Global demand also continues to impact prices and delivery times on structural steel, internal steel products and galvanised steel. Evidence suggests that some steel products may suffer continued shortages into the second half of the year.

Pent up demand for landscaping products over the spring and summer may place an additional burden on supplies, but demand will continue to be met with longer lead times where needed.

Accurate forecasting can help alleviate availability issues. The CPA’s latest forecast was published this week and the BMF will publish their latest forecasts in May.

The CLC’s key advice is to plan in advance, work closely with your supply chain and communicate your requirements early with suppliers, distributors and builders merchants.  Collaborative, ongoing communication throughout the whole supply chain is essential.

The Product Availability Group is also exploring further solutions to alleviate other bottle necks in the supply chain such as logistics and transport, including the ability to accept deliveries outside of normal opening hours.

Statement from John Newcomb, CEO Builders Merchants Federation and Peter Caplehorn, CEO Construction Products Association, co-chairs of CLC Product Availability work group.

Demand for construction products remains high both in the UK and globally and is set to continue throughout 2021 in every sector.  Unfortunately, this means the availability issues we are currently experiencing are likely to worsen before they improve.

While supplies of plaster and plasterboard are much improved on last year, almost every other product group is experiencing longer lead times and, as a consequence, higher prices.

Plastics (PE and PP), cement and aggregates have joined existing lists of products in short supply, including timber, steel, roof tiles, bricks and imported products such as screws, fixing, plumbing items, sanitaryware, shower enclosures, electrical products and appliances.

Prior to the temporary blockage of the Suez Canal, we were seeing a slight lowering of both container costs and delivery times of these imported goods.  We anticipate that this will continue once the effect of the temporary closure works through.

Imports of timber will be an issue for the foreseeable future. Not enough timber is being produced to meet world demand.  Added to this, other countries are prepared to pay more to secure their supply, pushing the UK lower down the pecking order.

Steel is also experiencing strong global demand. While supply and demand are likely rebalance within the next few months, global dynamics will continue to drive prices up.

Raw material shortages constraining polymer supplies are causing production problems for plastics (lower ground drainage etc).  Coatings manufacturers are also experiencing raw material shortages beyond their control, at a time when demand is particularly high.  These issues will continue for at least 2-3 months.

All users should plan for increased demand and longer delays, keep open lines of communication with their suppliers and order early for future projects.

The CLC’s product availability group will continue to monitor the situation. The CPA and the BMF – who jointly chair the group – produce quarterly forecasts on market activity which is helping manufacturers to plan output.