That’s not my view, although I agree with it. That is the view coming from a range of financial and manufacturing institutions that have been weighing in on the growing global crisis in the supply chain.
We all know well in UK fenestration how much the supply chain is strained right now, and with absolutely no sign of demand about to go in the other direction, things are about to get pretty hairy.
The problems we are now beginning to see manifest themselves in our sector and others have been predicted for a while now and they appear to now be having real-world impacts on the ground. All last week I read reports each and every day of problems on sites where no materials have meant no work can take place. For example, a number of sites in the West Midlands have been placed on “tick over” status as materials in the area are running very low and going to other infrastructure projects such as HS2. You can read more about that particular story here.
Last week also saw warnings from Timber Trade Federation and the Construction Leadership Council. They have stated that crucial building materials such as timber, roof tile and roof membranes are all becoming difficult to get hold of. They have also sounded warnings on the availability of steel, warning that the squeeze on the availability is going to get worse in the coming weeks and months.
Our industry is also seeing problems. Incredibly high demand and tight supply on resins, glass, steel and other raw materials are pushing prices rapidly higher, with increases coming on a weekly basis. There are increasing reports of delayed deliveries, missing materials and continuing extended lead times. I sense that we are only a few weeks away from bigger, more widespread problems which could affect operations more widely. Only last week two major glass companies in or sector warned on imminent shortages that could cause problems.
All of this is coming against a backdrop of intense spending from the public on their homes and from countries on infrastructure and constructions projects around the world. Let’s be clear, this is not a UK problem, this is a global problem. In the US, where most homes are built from timber, the price has risen more than 200% with no signs of slowing. I have been told Germany is in a very similar position to the UK in terms of building materials. So consider this; Scotland is now back at work in our sector, so expect more orders to be placed in the coming weeks which will place a further strain on the supply chain. Then, think about the rest of the world that is now opening up, including major economies such as the US and Asia. There is going to be increasing spending for months to come as other countries come back online, and the demand on the increasingly scarce supply of raw materials.
The result is going to be further shortages hitting our industry in the coming weeks and lead times extending further. At this point, communication is going to be vital to ensure that we all manage expectations for those further down the supply chain and indeed the end-users. In our case, the homeowners.
When will demand slow down to more sustainable levels? That was one of the big questions asked on the FENEX Virtual Pub live stream on Friday evening with Alan Burgess of Masterframe and Timberweld. As Alan put well, there is a lot of money in a lot of pockets here and around the world as Governments splashed the cash to keep economies afloat during the crisis. It is going to take some time for people to spend all that money, and it’s likely to go on big-ticket items like home improvements, at least until foreign travel remains a realistic prospect. The consensus on that stream was that 2021 was going to stay like this all year. Indeed demand could stay this high or get higher for the next couple of years.
You can sense two feelings at that prospect. Joy at the idea of people so willing to freely spend their cash. It’s what is helping to rebuild our economy. But for those involved in the supply chain, dread. Things are already beyond stretched as it is. Any extra demand or shocks to the system and things could derail completely.
How to manage
During the live stream on Friday evening, Alan was able to explain to us what happened in the 80’s when VAT was introduced to our sector. He explained that this was the only other period where he could remember demand being as high as it is right now and the supply chain coming under such strain. People rushed to place their orders before the VAT kicked in and cost them extra money. The difference back then of course was that was a UK issue and not a global issue like we have now. And that was a single event where there will have been a cut-off point where the VAT came into force and things likely would have calmed after that.
This time round we have an entire planet waking up and everyone wants to start using that money to build back better, as the saying goes. That means demand for almost everything is going to go through the roof, and keep doing so for months, if not longer. So what do we do?
In the short to medium term, I’m not sure there is anything we can do, either as a sector or a country. As was talked about during the video, communication has to be front and centre for every company. Installers have to be honest with their clients that lead times are going to be significantly longer than normal and may rise further even after contracts have been signed, and that supply could be patchy for a while. Fabricators have to communicate pretty much the same thing to their installers, and syscos have to be clear to fabricators what supply issues there are as quickly as possible so they can speak to their customers in time. If communication breaks down in the midst of all of this then this is going to cause serious strain where no more strain is needed.
In the long term, what I hope is that we all learn, both here and abroad, that domestic manufacturing is more important than we thought. A global supply chain works well when things run smoothly. Right now we’re far from that and it’s showing. Going forwards I would like to see this as an opportunity to expand once again UK manufacturing to safeguard our own supply chain, to create jobs, to build up stocks of everything we consider important in construction and other sectors. We are quickly re-learning how vital each part of the supply chain is to each other. Just one missing component on a product can hold up the entire process, causing delays to the installer and delays to projects, which we’re now seeing in the West Midlands and other places.
For now, we have to be loud and clear to everyone about the problems the supply chain is having and manage expectations with all end-users about lead times and the potential for future delays. So long as everyone knows the lay of the land, tempers should be calmed and the process can play out with as little stress as possible.
To get weekly updates from DGB sent to your inbox, enter your email address in the space below to subscribe:
By subscribing you agree to DGB sending you weekly email updates with all published content on this website, as well as any major updates to the services being run on DGB. Your data is never passed on to third parties or used by external advertising companies. Your data is protected and stored on secure servers run by Fivenines UK Ltd.