Managing material shortages and price increases
In this month’s column, Richard shares some of the individual drivers he’s identified with respect to material shortages and large price increases of materials and logistics.
ACROSS the construction industry and wider press, I’ve picked up various examples of material shortages and significant price rises both of materials and logistics. I guess it is going to be no surprise to many, and indeed CFA members are potentially already experiencing this at the coalface. What would anyone expect, when we have been battling through a pandemic and starting on the painful journey to re-establish trade terms with the EU? In this month’s column, I share some of the individual drivers I’ve identified.
In CLC and CPA meetings and then quoted in the popular press, fellow ceo, John Newcomb of the Builders Merchants Federation recently warned: ‘Merchants have seen an exceptional demand for building materials since the first lockdown. In November, we saw an average growth of 9% across our membership compared to the same time last year. Looking at December’s figures, we are predicting that growth could be double digits, and that’s unprecedented.’ He advised that some prices for timber products had risen as much as 20%.
With this in mind, and timber and subfloor preparation products in particular, I contacted a CFA member who supplies plywood and asked what his current experience is. He replied that ‘the timber industry is experiencing some massive issues and challenges’. He went on to say ‘as far as the flooring industry is concerned, the availability of the type of plywood required is now very seriously affected and many mills are simply not able to supply the volumes required. Prices have risen quite significantly and there are interruptions in supplies’.
He continued: ‘However, I’m pleased to say we’ve been monitoring the developing situation carefully from a very early stage, and we’ve taken actions to ensure availability of products for the industry. Although our prices will have to rise, we’ve sufficient controls in place to ensure we can mitigate the impact.’
This story isn’t isolated, and I know other flooring products have been similarly affected, with anecdotal stories from quite a few contractor members of difficulties obtaining carpet underlay, gripper, and some floorcoverings.
I recently read that the famous folding bike manufacturer Brompton has seen delivery times from their factory to retailers in Holland increase from three days to up to three weeks due to new red tape making smaller and agile shipments almost impossible and costly. This has inevitably resulted in price rises above inflation.
This situation was echoed by a CFA distributor member I spoke to, who has found that a lack understanding across the distribution supply chain has caused cost and delays. CPA recently reported that feedback demonstrated that businesses are struggling to understand the Rules of Origin in relation to EU trading. In response, through CPA, CFA members have access to a suite of information and support. This includes FAQs, a PowerPoint slide deck, a one-page summary for SMEs and a RoO video. Information can be found in the Brexit section of the Members’ Area of the CFA website.
Regrettably and inevitably these ‘opportunities’, are combining to cause problems with the supply of materials and price increases that are not simply opportunism. The CFA’s job in all of this is to help members understand new guidelines, identify pressure points, lobby to simplify where possible, seek out best practice, and keep CFA members updated in order that they are as competitive and profitable as possible. Regrettably, that doesn’t alter the fact that in the short term some materials will be more difficult to source, and prices are likely to continue to rise above inflation.
The CFA is a leading trade association representing the Flooring Industry. For an application pack or further information on the benefits of membership, please visit our website or contact us.