A rise in construction materials costs is the latest setback to hit the industry.
‘The increases are due to very severe supply shortages,’ says Martin Mackey, chief executive of the Hardware Association of Ireland
It won’t be news to anyone that the construction industry has been released out of lockdown straight into high demand for building projects of all kinds – it’s busy out there.
As much as builders would love to tackle this demand head on, it is met with a new obstacle: increasing material prices & decreasing supply.
This hampers timelines for delivery of construction projects in an immediate way but it also affects planning for new projects as there is a lack of confidence: what will happen to pricing in the 3, 6, 12 months before we start on site?
“Getting supply is the main issue right now.”
Suppliers across the industry have been finding it difficult to meet demand and material costs continue to rise unabated. Builders will quickly find themselves caught in the middle since current contracts were mainly agreed before this abnormal price inflation. Irish builders are paying top dollar for everything and have already lost more than a quarter of the year to lockdown and it’s scrambling to catch up. Price increases will erode any margins and will leave builders reluctant to progress projects until things hopefully settle down.
Interestingly, pandemic and global factors can’t be solely blamed for the astronomical price hikes in timber products.
Normally the Republic produces more than enough timber domestically and exports it. “However, delays in processing licenses, needed for tree felling and planting, have created bottle necks here that prompted sawmills to begin importing timber last year, simply to meet orders.” Delayed licensing applications (for which the Department of Agriculture, Food & Marine has hired more staff) and new legislation in the appeals system, should help relieve the problems & backlog but forecasters predict it won’t be felt here until 2022.
Reasons for price increases and supply issues:
Covid-19 lockdown affecting production world-wide
Rising demand from home owners renovating & extending
New homes demand & planning permission backlog
Bad weather in the USA affecting manufacturing of oil derivatives
US President, Joe Biden’s, $2 trillion recovery package reduces availability of US exports
Shipping supply route issues
Products affected by price increases of up to 20% so far:
Timber, OSB, steel, cement aggregates, insulation, plastic piping, pipes, PVC windows, drainage fittings, electrical equipment, paint, fire-proofing materials, plastic sheets, skylights, polystyrenes, felt roofing, flooring, silicones, glues & chemicals, decking and even garden furniture & barbeques!!
“Barbeques simply cannot be had anywhere!”
This is a summary of some key points in these articles by Barry O’Halloran.
For those with an Irish Times subscription read the articles in full here …
Irish Times – Builders facing double figure raw material price hikes
Tue, Apr 27, 2021 – Barry O’Halloran
Irish Times Business, Construction – Rise in cost of building materials and tight supply put construction on the back foot.
Fri, Apr 30, 2021 – Barry O’Halloran
Irish Times Business, Construction – Problems mount for builders as suppliers close order books.
Mon, May 24, 2021 – Barry O’Halloran
Rte News site – Concern at impact of increased cost of building materials on affordability of homes.
Tuesday 25 May 2021
Builders facing double-figure raw material price hikes
Suppliers warn customers of price increases ranging from 5% to as much as 20%
Rise in cost of building materials and tight supply put construction on the back foot
Disruption to supply of raw materials and pandemic behind 5-20 per cent hike
Deepening raw-materials difficulty due to accelerating global demand as economies reopen
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