Contractors have recently been left reeling from a huge price hike in buildings materials as a result of the shortage in September. While timber supply is finally catching back up to demand, there is still a long way to go before other materials are back to normal levels, with experts predicting we could be waiting another 4-6 months to see an increase.
Dwindling supplies of key building materials such as roof tiles, cement and steel have plagued the construction industry all year, and prices have soared, especially in materials such as concrete products, steel and bricks, and materials such as cement, plasterboard and insulation materials are being rationed by manufacturers.
Why has this happened?
The shortage of these materials has been caused by a range of issues, including the UK’s exit from the EU and disruptions caused by the Corona virus pandemic.
One of the reasons material shortages continue to be felt across the country is the knock-on effect of a shortage in HGV drivers. The lack of drivers means that, even with “record breaking” imports of timber (according to the Timber Trade Federation), disruption continues across the industry. The CLC said of this back in September: “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.”
The ‘unprecedented’ increase in demand of building materials as lockdown has eased has also been cited as a reason by the Construction Leadership Council, with this issue effecting the global industry.
The impact on the industry
Price rises
Creagh Concrete and Jewson have both told customers that prices will rise for a range of goods by as much as a fifth. This has come as a real blow to contractors due to its short notice back in September and may affect fix price contracts with their clients.
Limited availability
Naturally, the shortage will lead to a shortage in availability for these products, with cement, plasterboard and insulation materials being rationed by manufacturers. Jewson have also said that they have had to limit certain products to five an order. British Gypsum had introduced an allocation process for plasterboard, while the insulation firm Recticel had undertaken similar steps.
Delayed Jobs
The Federation of Master Builders (FMB) reports that nine out of ten builders are having to delay jobs due to either materials or skill shortages.
The financial impact on businesses
IHS Markit and the Chartered Institute of Procurement and Supply (Cips) revealed a decline in growth across housebuilding, commercial work and civil engineering for the construction industry as the restricted supply of materials and transport issues weighed on activity.
Brian Berry, the chief executive of the Federation of Master Builders, said: “Builders throughout the UK, particularly smaller firms, are struggling to recover from the pandemic as a result of the continued materials crisis.”
Construction firms said their costs rose at the second-fastest rate in the 24-year history of the PMI survey, surpassed only by a record rise in June 2021. Among those materials reported as up in price, the most common were concrete, fuel, steel and timber.
The Materials Affected
- Steel – there’s currently a shortage of steel lintels. British Steel ceased taking orders back in May due to high demand, which has caused this shortage. They also raised their transaction prices in June for structural sections by £80 per tonne for all new orders.
- Roof tiles – Around half of National Federation of Roofing Contractors members reported a shortage of concrete roof tiles earlier this year. Lead times for concrete tiles are currently averaging 24-30 weeks, according to the CLC.
- Cement – Shortages have been in effect since late last year, and while supplies of bulk and bagged cement are gradually getting back to normal levels, delivery issues due to the HGV driver shortage mean this continues to be a problem.
- Paints and sealants – Supplies to the UK are restricted due to a global shortage and the cost of shipping containers.
- Plaster and plasterboard – There was a severe plaster shortage earlier this year, and while supplies improved earlier this year, plasterboard has been subject to extended lead times, the CLC reports.
When will things return to normal?
Back in August, Professor Noble Francis of the Construction Products Association (CPA) said that supply issues are likely to continue for the next six to nine months.
The CLC, however, says the industry is in a much better position that it was four months ago but “We are not out of the woods yet”. With some builders reporting wait times for materials as late as mid-2022, this statement certainly appears to ring true.
In terms of pricing, the CLC says although product and material price inflation has slowed, it is likely that it will be 2022 before prices stabilise.
Managing Material shortages
If you’re planning or in the middle of building work, then planning far in advance is vital to prevent being caught out by shortages or inflated prices.
The CLC advises self-builders to work closely with their supply chain and communicate their requirements early with suppliers, distributors and builders’ merchants.
To ensure your project has adequate insurance, talk to our experts. You can get in touch at enquiries@finchinsurance.co.uk
