Finding the best construction materials for your firm can be a daunting task. It doesn't help that the market prices are rising by the day. According to the National Association of Home Builders (NAHB), material costs have increased by 19% since last year. Despite the inflation, there's hope for the construction industry. All you need is some guidance on what to expect when it comes to construction supply shortage trends, and you'll be able to plan effectively.
Several factors have contributed to the construction supply shortage issues of 2022. They include the COVID-19 aftermath, the Ukraine-Russian war, and a Congress-issued tariff tax.
Shanghai is the world's busiest port city. It makes up 20% of China's trade with the rest of the world and 14% of its direct foreign investment.
When the Chinese government put the strict COVID-19 lockdown on the city, logistics slowed down, and labor at the port decreased. As a result, there was a significant decrease in the number of building materials exported from China. Although the government lifted the two-months lockdown on 31st May 2022, the price of construction materials is yet to fall.
Another factor that contributed to the construction supply shortage issues is Russia's invasion of Ukraine. The war that commenced in February 2022 led to the disruption of global supply chains. Brian Berry, the Federation of Master Builders CEO, gave his opinion on the topic. "Due to Russia's actions, supply chains will get disrupted, which will make the situation worse. Oil, wood, aluminum, and steel are likely to be the worst affected."
Last November, the Biden administration put 18% tariffs on Canadian companies that export softwood lumber to the US. The rate was double the one that Trump's administration had implemented.
Ken Simonson, the chief economist for the Associated General Contractors of America, weighed in on the issue. "A doubling of this duty will extend the dramatic price hikes that have affected lumber over the last 18 months." True to his prediction, the tax increase reduced the number of softwood lumber imports to the country.
The labor in the construction industry was highly affected by COVID-19, and it's yet to recover fully. Many construction firms had to lay off employees during the pandemic because fewer people built houses. The initial focus of citizens during lockdown was survival, which translated into a focus on food, water, and healthcare resources.
Although we're out of quarantine, the labor market is yet to recover from pre-COVID-19. Many Gen X labor workers retired and left an open gap in the labor force. As Autumn approaches, the construction sector needs to attract new workers, and reaching the optimum number of workers might take a while.
Since 2022, Ready-Mix concrete has increased by 8.2% per year. The NAHB reports that in the first two months of 2022, the Producer Price Index (PPP) of ready-mix concrete had increased by 1.9%. In January, the PPI went up 1.1%, and in February, the rise increased 0.8%. The NAHB reports that the price of ready-mix concrete may rise as the year unfolds.
Russia and Ukraine are among the world's top ten steel exporters. When you combine their shipments, they rank second only to China. Steel imports to the United States and the United Kingdom have decreased since Russia invaded Ukraine.
As a result, China and other countries had to meet the increased demand, which led to the high steel prices. Steel prices may continue to rise into fall 2022 because of the uncertainty surrounding the conflict between the countries. This is one of the major issues affecting the construction supply shortage.
COVID-related labor constraints caused the significant scarcity of softwood lumber that construction firms have felt since 2020. According to the NAHB, the price of softwood lumber has risen by 79.5 percent since September 2021. Framing lumber has also risen in price since late August.
The primary reason paint prices continue to rise is that the paint industry relies heavily on several raw materials, whose prices are also skyrocketing. Some key essential components in paint creation are zinc oxide, resins, and mineral turpentine. Contractors and remodelers should prepare for the fall season by sourcing paint as early as possible.
Block prices began to rise last winter, and the Department for Business, Energy, and Industrial Strategy (DBEI) predicts they will continue to rise even in Fall 2022. The rise is because of the increase in the price of building materials such as cement and aluminum powder. Our experts encourage landscapers and skilled laborers to work closely with manufacturers and plan for timely materials delivery.
Here are four suggestions to help you prepare for Fall 2022 and keep your business afloat despite increased prices.
Make a list of core components and supplies. You can adequately plan for future constructions by noting the essential components your firm needs. This strategy lets you only focus on the essential items and prevents unnecessary purchases.
Plan ahead: Ensure the inventory stock can cover three to six months of manufacturing. Because costs will continue rising in Fall, it is wise to buy in bulk and store it for future use. Buying in quantity is also cheaper, saving you the trouble of sourcing building materials during the season.
Reuse and recycle: If you have a pile of old construction materials, sort through them to find those of good quality. Afterward, reuse the materials in future building projects. By doing this, you'll have zero waste, you'll be saving up on costs, and you'll also be conserving the environment by recycling.
Partner with demolition companies. Contact demolition firms and inquire if you can recycle materials like steel and gypsum board from the houses they demolish. Some might charge you for the materials, but the cost will be cheaper than the market price.
As you continue to educate yourself on the construction supply shortage trends for Fall, prepare by following the advice we've provided.
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