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Building materials: The global rise in demand, delays, and costs

12th August 2021/General News

Building materials: The global rise in demand, delays, and costs

 

For anyone currently undertaking a home renovation or building project, you will no doubt have heard about the major shortage of construction products and materials. From builders and roofers to plasterers and painters – tradespeople of every kind have been affected and, according to industry experts, the shortages look set to continue for the rest of the year. So what is the reason for the shortages and what knock-on effect is this having on companies like Revere Contracts and our clients? Read on to find out.

 

Building in a pandemic

Earlier this year we wrote a blog which addressed the impact of Brexit on the construction industry and discussed the changes and challenges resulting from the UK’s decision to leave the EU. A shortage of labour, supply issues with building materials, and uncertainty over changes to laws, regulations, and standards were the key factors having an impact on construction companies. These negative effects are still being felt but unfortunately the problems have been further exacerbated by the pandemic. Factories affected by lockdowns are still working their way through months of backlogs, and the NHS Covid app ‘pingdemic’ has resulted in yet more time lost as thousands of tradespeople and lorry drivers have been forced to self-isolate.

 

Unprecedented demand

It’s fair to say the demand for home improvement has boomed in 2021. In fact, according to the June Construction PMI from IHS Markit and the Chartered Institute of Procurement & Supply (CIPS), construction output reached a 24-year high in June 2021 – the fastest rise in construction activity since 1997. It makes sense that after months stuck in lockdown and working from home, many homeowners are keen to extend, convert, and renovate their property. But this dramatic rise in demand is only adding further strain to the construction industry, with many smaller businesses struggling to keep up.

 

Shortage of materials

A marked shortage of timber has been causing problems since March 2020. Since then, a warmer winter than usual has further affected timber production in Scandinavia, causing even more problems. Similarly, the cold winter weather in Texas has affected the production of chemicals, plastics, and polymer.

The steel industry has also been faring badly; The British Electrotechnical and Allied Manufacturers Association reported that a dramatic reduction in steel production in early 2020 had caused a worldwide shortage. In fact, many steel manufacturers have stopped taking orders as they are worried that panic buying will result in extremely low stock, and British Steel has stopped taking orders on structural steel sections due to “extreme demand”.

It’s a similar case when it comes to roof tiles, aggregates, cement, concrete, electrical components, plaster, plasterboard, paints, and sealants – all of which have been affected by shortages and delays which are expected to continue for the remainder of 2021.

 

Rising costs

The shortage of materials, together with the shortage of shipping containers and rising shipping costs has led to a dramatic increase in costs. In fact, the cost of materials increased by 15.6% between June 2020 and June 2021, according to the Department for Business, Energy, and Industrial Strategy‘s Monthly Statistics of Building Materials and Components report for July.

 

How is this affecting building projects?

Every construction company is feeling the effects. The production of materials in some EU factories has slowed significantly because of the ongoing effects of the pandemic, suppliers are still dealing with backlogs from lockdown, materials are in short supply, global supply chains are stretched, delivery times have been lengthened due to Brexit and the ‘pingdemic’, costs continue to rise, and demand continues to grow. In short, it is inevitable that most building projects are currently suffering some sort of setback, whether that be a time delay or an increase in cost. And unfortunately it is likely these effects will continue to be felt for the rest of 2021.

 

Our response

We understand how frustrating it is when a project is unavoidably delayed or costs rise beyond our control. We would like to assure all clients that we are continuing to work closely with our suppliers and partners to ensure we secure quality materials as soon as they become available. We are also committed to staying in constant contact with all clients, and we will continue to provide regular updates.

If you would like how the current global situation may potentially impact your project, please call us on 0345 241 7010  or email revere-contracts.co.uk and we’ll be happy to help.

 

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