Home News Allocations and price rises add to supply chain woes

Disruption in the construction product supply chain is now leading to allocations restricting purchases and escalating prices.  Difficulties in sourcing supplies is worse for smaller contractors and could put the future of some businesses at risk.

The Construction Leadership Council has said shortages of products and raw materials impacting the market have been driven by both global and domestic supply and demand factors.  Shortages relating to timber, steel, pitched roofing, plastics and paints/coatings continue. Growing areas of concern, however, now include certain electronic components and bagged cement.

The Office of National Statistics expects a rise of 7-8% in material prices, with increases for certain materials, such as timber, expected to more than double during the course of the year. There is evidence that those who can buy in advance and in large quantities are having fewer problems at present than SMEs who generally buy products from their local merchant on the day they need them.

Manufacturers are placing allocation on orders to ensure over-ordering does not drain products from the market. However, the surge in demand means some SMEs are not able to purchase essential materials and is affecting their ability to complete projects, placing further cash flow pressures on their business.

A 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 said that wherever possible the industry must work collaboratively to manage this unprecedented situation to everyone’s benefit.

The CLC said:  “Any allocation systems should be as transparent as possible so all customers can be seen to be treated fairly. It is also calling for accuracy and timeliness of communications to reduce current frustrations.”

The CLC is advising customers not to over-order unnecessarily, while manufacturers should not promise delivery dates that cannot be achieved, only to cancel at short notice.

Where relevant, the production for major projects – which is typically scheduled well in advance – should not be seen to adversely affect volumes available for smaller, regular customers.

The statement also outlined that the unprecedented levels of demand, both in the UK and globally, is set to continue for the foreseeable future, placing the importance of forward planning and communication front and centre.  It concluded: “Only by working positively together can we endeavour to provide customers with the products and solutions they require to complete projects in a timely manner.”

New rules on hauliers have exacerbated the shortage of drivers in the UK, which is another contributing factor adding to delays and lead times not only in the construction industry but many other sectors as well.

Trade bodies in affected material areas have published detailed updates in order to keep the market informed.  These can be accessed at the following links.

Timber

Roofing

Coatings

Cement

Concrete

 

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