Supply challenges continue to affect bricks and aircrete blocks, roof tiles, steel lintels, manhole covers, plastic drainage products and certain sealants, coatings and paints according to the Construction Leadership Council (CLC). Compounding the shortages construction is being embroiled in the global shipping and semi-conductors supply crisis.
Some supply concerns have eased but continuing shortages in some key products and the spectre of rising energy costs and product price inflation also continue to cause concern, with the latest forecasts anticipating 2022 price inflation from 7-10+%, with multiple increases expected for some products.
The impact of Omicron has been limited, with an overall level of absence across UK industry at 5% or less during the past month, though some sectors, such as haulage, have been hit harder than others. Absence due to Covid remains a risk over the winter period but appears unlikely to cause major disruption at current levels.
In addition, a shortage of semi-conductors is constraining the availability of boilers at a time when demand is exceptionally high. Semi-conductors are important components for many advanced construction products including lighting and fire protection systems, kitchen white goods and air-source heat pumps.
The high level of demand means that a shortfall in the domestic production of bricks, which is already at full capacity, will continue throughout 2022 until three new UK brickmaking plants come on stream in 2023 and 2024, boosting UK annual capacity by about 150m bricks per year. Imports largely from the EU and potentially beyond will be required to meet current demand.
Delays and volatile prices for global shipping look set to continue at least until Q3 2022. China is home to seven of the top 10 container ports, which have a sustained ‘zero’ policy with regard to Covid outbreaks, leading to shutdowns and delays that have worsened global bottlenecks. Furthermore, with the Beijing Winter Olympics taking place in February, factories will be closed in 64 northern Chinese cities to improve air quality. This will almost certainly affect some construction products, which will have a knock-on effect of levels of inventory later in 2022.
While the issues previously affecting timber and cement availability have eased, they have not been fully resolved, and longer lead times may return as the volume of demand increases later in the year.
The CLC continue to stress the importance of maintaining open lines of communication throughout the supply chain and encourage all sectors to continue to work closely and collaboratively to manage challenges and plan future work.