A statement was released by the Construction Leadership Council’s Product Availability Group. The group is co-chaired by John Newcomb CEO of the Builders Merchants Federation, and Peter Caplehorn CEO of the Construction Products Association. The statement outlines the current situation in the construction industry regarding the accessibility and availability of products, subsequent to high levels of demand.
While the market is no longer experiencing the extremely high levels of demand seen earlier in the year, and UK manufacturers remain at full production capacity, demand continues to outstrip supply for certain products, particularly those being imported. Still the current picture is more positive than seen in recent months, with improved availability of most products across most regions. There are, of course, exceptions, with ongoing challenges in the supply of bricks, blocks and roofing products, where timber battens have overtaken concrete roof tiles as the most difficult to obtain, and certain electro-technical products.
Residential repair, maintenance and improvement activity remains robust with most SME builders reporting full order books well into 2022. That said, the sector has recently seen a small but noticeable slowing. This is thought to be partly as a consequence of delayed projects and increased costs and lead times (highlighted in previous PAG statements), and partly down to seasonality. This softening has in fact helped improve some stocks, such as cement, held by manufacturers and merchants.
Activity across the infrastructure, commercial and new housebuilding sectors continues unabated, however, and will likely remain so into the first half of 2022. Reports from larger housebuilders and contractors suggest that while a variety of product shortages persist, the situation for most remains manageable.
High demand for brick supply
More specifically, as also reported last month, brick supply presents a longer-term issue, and imported products are helping to meet a shortfall in current UK capacity until new lines come on stream in 2023 and 2024. The Brick Development Association suggests that with demand expected to remain high, lead times will be an issue for the coming year. For builders to ensure that they get the bricks they need, particularly if they are seeking non-stock bricks, they will have to work more closely with the brickmakers to ensure availability and to mitigate delays in delivery. While this may require flexibility around choice and specification, quantities should be sufficient to meet demand.
Consistently high demand over the past 18 months has also made it difficult for block manufacturers to build the level of stocks required to maintain regular supply throughout the year. Manufacturers are seeking to build stocks over the coming winter months while building sites are typically less active. Nonetheless, demand from new housebuilding is expected to put supply of blocks under pressure in early 2022.
Timber stocks show improvement
Stocks of timber – a largely imported product – have seen some improvement, though prices remain volatile. Market reports reveal significant delays at ports both here and abroad, having a knock-on effect upstream to the Scandinavian mills where production has been forced to slow. This suggests that supplies may remain uneven into early 2022.
In the electrotechnical sector, products with electronic components and those made from steel, such as cable trays remain in short supply, while twin and earth cable has become more problematic. Product pricing continues to be challenge, particularly for medium sized contractors working on tight fixed price contracts.
Reported constraints relating to a shortage of HGV drivers have lessened for the time being, though the pre-Christmas period may cause further pressure. However, imports, particularly from the Far East, continue to be affected by long lead times, delays at ports and high container costs.
Concerns for the future
Uncertainty is now cited as a broad area of concern. Examples include the uncertainty around inflation and the pricing of products, particularly in relation to steel, cement, bricks, blocks, glass and ceramic tiles, which are all impacted by rising energy costs. Uncertainty around potential spikes in the number of COVID cases over the winter having an adverse effect on product availability. The impact of full Border controls that come into force at the end of this year is a further unknown, as is the implementation of the new UK CA Mark and UK Registration, Evaluation, Authorisation & Restriction of Chemicals (REACH) regulations.
In response to this, the CLC will work with the Department for Business, Energy & Industrial Strategy to build on the industry-wide perspective of the PAG and the data it can access, using horizon scanning to identify medium term problems affecting materials and product availability that can be mitigated by an agreed, planned response.
As always, open lines of communication throughout the supply chain remain essential, and we encourage all sectors to continue to work closely and collaboratively to manage challenges and plan future work.