blog header image

Posted : 22 Jun 2021 at 08:17:15
Category: News

Share this article

Covid-19, Brexit and booming demand are combining to drive up prices for the essential materials the UK’s construction sector desperately needs. Bluebeam takes a look at the 2021 building materials shortage

The UK government has made much of its ambition to “build back better” as part of its strategy to drive growth across the economy. “Build, build, build,” it cries. Build more and better homes, deliver new transport infrastructure—roads, railways, airports, etc.—and get cracking on more commercial, office and retail space.

It sounds great. But as laudable as the government’s building ambitions are, the emergence of the Covid-19 pandemic, coupled with the impact of Brexit, has created problems for the country’s construction industry, one of them being a building materials shortage.

Demand for materials has inevitably risen, yet supplies have slipped, and prices are rising.

The good news is that after a torrid 2020, construction activity regained some momentum in the first weeks of 2021, with projects previously delayed by the pandemic starting to stir.

A slowdown in homebuilding was “more than offset” by the sharpest rise in commercial work since last September, according to the latest IHS Markit/CIPS UK Construction Purchasing Managers Index.

“Survey respondents commented on contract awards for commercial building that had been delayed earlier in the pandemic and some reported a boost from infrastructure work related to major transport projects,” the report said.

However, it has taken longer to get things started than many would have liked. Why? The pandemic has certainly played a major role. But there are other factors.

Shortages: A perfect storm of cost burdens

According to IHS Markit, February saw transport delays and stronger demand conditions, stretched global supply chains, greater shipping charges and rising commodity prices. These combined to deliver the sharpest increase in average cost burdens across the construction industry since the summer of 2008.

Brexit, billed by the government as the chance for the UK to forge its own destiny, has come in for a lot of flak in recent months. The UK’s departure from the EU has been cited as creating a potential shortage of labour in the domestic construction industry, as foreign workers have chosen to leave the country or stay away after trips home.

Meanwhile, changes to customs rules immediately following Brexit have slowed imports of building materials and other goods, as border officials grapple with new paperwork covering trade between the E.U. and U.K., putting more pressure on prices and creating a building materials shortage.

Yet the latest IHS Markit survey suggests the worst of the Brexit squeeze may have eased.

According to Duncan Brock, group director at the Chartered Institute of Procurement & Supply, which teams up with IHS Markit to collect industry data, “supply chain managers found themselves spinning a number of plates with creative ways to get stock, including sourcing more local supply for some”.

Looking closer to home for vital materials may work for some, but many firms are still reliant on them being shipped to the UK from overseas.

Complex situation

joint statement by the Builders Merchants Federation (BMF) and Construction Products Association (CPA) suggests that while the ongoing impact of Covid-19 has been behind a series of shortages and price increases, the overall picture is “more complex”.

For example, strong global demand for steel is resulting in shortages, order backlogs and increased prices for most products. And while supply and demand issues were likely to rebalance within the next few months, “global dynamics may continue to drive prices up”.

The U.K. construction industry should be prepared for the high price of timber to continue for the foreseeable future, the BMF/CPA said, with production in traditional timber-growing countries easing off in 2020 vs. 2019. Sweden saw production down 7%, while in Finland production was 15% lower.

John Newcomb, chief executive of the BMF and co-chair of the Construction Leadership Council’s Brexit movement of building products and materials group, said recently that timber prices were surging by 20%.

This is telling, not least because timber has undergone a surge in popularity among many house builders, being seen as an effective and environmentally friendly solution to delivering new homes quickly.

It also ties in with the push for the use of modern methods of construction across the country. While the construction industry has been relatively slow to take up new technology, some U.K. companies have taken advantage of overseas interest—and welcomed inward investment.

Tokyo-based housebuilding giant Sekisui House, for instance, took a 35% equity stake in Manchester-based housebuilder and developer Urban Splash two years ago. Yoshihiro Nakai, president of the Japanese firm, noted that the use of modern methods of construction to build high-quality homes with short build times was “one of our company’s great strengths”.

Modern methods, market forces

The use of modern methods of construction and factory building programmes will go a long way toward improving quality and production efficiency, but manufacturers will still be at the mercy of market forces when it comes to the building materials shortage.

A separate CPA survey conducted in January found that nearly a quarter (23%) of its members involved in heavy activity—that is to say aggregates, cement, ready-mix concrete, structural and reinforcing steel—believed getting hold of the building materials they needed would be the primary constraint over the next year, the highest such proportion since the CPA began polling its members in 2008.

When it comes to another construction staple—roofing— material supplies are also an issue.

Nearly half (49%) of member firms of the National Federation of Roofing Contractors (NFRC) said the lack of roofing tiles topped their list of concerns.

According to the NFRC, building materials shortages were having a knock-on impact on material prices, with three-quarters (76%) of firms reporting inflationary pressures in the past year, and more than two-thirds (65%) of roofers saying that prices have increased in the previous quarter.

Builders are no strangers to shifts in the price of the raw materials. But few would have forecast the near-perfect storm that has swept through the sector in the past year.

Thanks to Covid-19, Brexit and other factors, the past year has given the UK construction sector little comfort. It is only now starting to recover, and tentatively at that.

The industry will be hoping for calmer and more predictable conditions in the year ahead.

Original source; https://www.pbctoday.co.uk/news/planning-construction-news/building-materials-shortage/94515/

SIMILAR NEWS

blog header image
NEWS
DEMAND FOR CONSTRUCTION WORKERS CLOSE TO 20 YEAR HIGH

The staff shortage in construction is continuing to bite, with 33,000 job vacancies for the period of April to June according to the latest figures from the Office for National Statistics. It is the s ...

blog header image
NEWS
MORE THAN 160,000 STILL FURLOUGHED AT END OF APRIL

More than 160,000 construction workers remained on furlough at the end of April, new figures have shown. Data released by the government this week showed that 166,600 roles in the sector were bei ...

blog header image
NEWS
CONSTRUCTION LEARNERS TO GET SITE SKILLS CARDS

Construction trainees will soon be given their own skills cards to help oversee work placements. The new Industry Placement Card will help support learners transitioning from the classroom into the ...

blog header image
NEWS
NUMBER OF FURLOUGHED CONSTRUCTION WORKERS FALLING FASTER THAN WIDER ECONOMY

Number of furloughed construction workers falling faster than wider economy  Latest HMRC data shows size industry’s furloughed workforce shrank by 15% in March The numbe ...

blog header image
NEWS
WILL THEY COME BACK? WHY BRITISH CONSTRUCTION LOST ITS EASTERN EUROPEAN WORKFORCE

In recent weeks, a persistent rumour has been circulating about migrant workers in construction. The specifics differ, but the central premise is the same: ‘foreign workers have taken the govern ...

blog header image
NEWS
CONSTRUCTION OUTPUT GROWS BY 1.6% IN FEBRUARY

Construction output grew by 1.6% in February 2021, largely thanks to a 1.5% increase in new work and 1.9% increase in repair and maintenance, as the industry maintains its recovery The level of constr ...

business-directory Business Directory
smartbusinessdirectory Payroll Services Business Directory
truebusinessdirectory payroll-services Directory
payroll-services Directory