Building Material Supply Chain – Will the Shortages Continue?

Building Material Supply Chain - Will the Shortages Continue?

It’s no secret that the building and housing industries have been booming in recent years. As a result, the demand for construction materials has shot through the roof. Coupled with labor shortages and reduced access to raw materials, this led to shortages of lumber, drywall, and other building essentials. The question on everyone’s mind is: will these shortages continue into 2023 and the years to come?

The Current State of Building Material Shortages

The building and construction industry is facing major disruptions due to a worldwide shortage of various materials. Factors such as production stoppages beginning in 2020, supply chain slowdowns, and limited stockpiling have all resulted in reduced availability and higher costs of construction items. Many of us who wanted to remodel during the pandemic found it difficult to purchase materials including:

  • Lumber
  • Drywall 
  • Nails
  • Shingles
  • Insulation

This made it difficult for both small- and large-scale projects to get off the ground, literally. The industry is still dealing with the initial situation created in 2020. As a result, many companies and potential home builders have had to pivot in order to move forward. As the industry navigates these shortages, builders must find ways to adjust their timelines and budgets to account for potential product-related risks. To avoid further financial ruin or delays with projects at hand, it is essential that those in the business of building can identify alternate methods of sourcing materials while budgeting diligently.

How the Pandemic Affected the Supply Chain – Then and Now

The onset of the pandemic drastically affected the supply chain as businesses around the world experienced forced closures. With production halted and workers encouraged to stay home, many sectors of industry could no longer generate the materials needed for residential and commercial construction to continue.

The closures created a ripple effect of job loss and economic disruption. Demand for supplies was reduced, so industries in construction scaled back to save money. The ripples continued to expand and created reduced trade and a collapse of tourist activity. While many companies have shifted to remote working or adopted more agile processes to reduce costs while increasing agility in times of crisis, it has not been enough to make up for the crippling losses they have incurred due to the pandemic. As we move forward into recovery mode, it is essential that businesses review their supply chain operations holistically and prioritize resilience in order to prevent any future disruptions or downturns as much as possible.

Tips for Improving Supply Chain Management as a Business

It is essential for businesses to plan ahead and ensure their supply chains are robust enough to withstand any external shocks or disruptions. Sequoia Group, a business dedicated to helping industries with innovative management solutions, has suggestions for improving supply chain agility, which can be found in-depth HERE. Below, discover some more tips for improving supply chain management:

  • Create a risk-management strategy – Identify potential risks and develop plans to mitigate them by having alternative sources of supply, adequate inventory levels, and flexible contracts with suppliers.
  • Cultivate relationships with suppliers – Develop long-term partnerships with reliable suppliers in order to ensure stable access to the materials you need.
  • Work closely with customers – Establish relationships with your clients that allow for flexibility when it comes to dealing with unexpected delays or changes in orders.
  • Invest in innovative technology – Utilize cutting-edge technologies like blockchain, IoT, and AI to better manage your supply chain and reduce the possibility of disruption.
  • Implement optimization processes – Analyze data from various sources in order to optimize operations across the entire supply chain.

Will Building Material Shortages Continue?

Unfortunately, the shortages are likely to continue into the future as the current demand for building materials is far outpacing supply; experts predict that shortages and inflation will continue into 2023. However, federal funding is expected to be provided for industrial and infrastructure projects around the country. So while residential projects may continue to suffer financial roadblocks, others may not.

Some data indicates that prices and lead times are stabilizing for certain materials, such as:

  • Lumber and plywood
  • Steel mill products
  • Flat glass
  • Aluminum
  • Insulation

Contractors are having more difficulty sourcing and affording cement and diesel fuel, and it looks like those struggles will continue well into 2023. Additionally, even as supplies become more readily available and affordable, labor shortages are still presenting problems for contractors. The Bureau of Labor Statistics did report at the close of 2022 that more jobs were being filled than vacated, but that the available job positions continued to rise.

Tips for Builders, Contractors, and Homeowners for Coping with  Materials Shortages

Coldwell Lakota knows how important it is to invest in quality materials to increase the value of your home, whether it’s your primary residence or a rental. If you’re curious about which upgrades have the highest rate of return, you can see their data here: High ROI Upgrades for Your Rental Home.

But what do you do if the materials you want are difficult to source? Here are some suggestions that could help alleviate some of the stress and difficulties caused by materials shortages. 

  • Plan ahead and order necessary materials as early as possible 
  • Explore alternate shipping arrangements
  • Switch suppliers if possible to procure a material that’s in high demand
  • Maintain a good relationship with suppliers

Smitty’s Quality Glass has seen the effects of materials shortages, as they specialize in luxury bathroom and home amenities for both residential and commercial projects. However, even if glass and mirrors are back-ordered, they recommend focusing on the following upgrades as the materials may be more readily available:

  • Luxury soaker tub
  • Heated bathroom lights
  • Heated tile flooring
  • Heated towel racks
  • Updated paint
  • Updated faucets and fixtures

If all else fails, it may be time to pivot and purchase alternative products that give you the look you want without the price tag or wait time you don’t.

The Impact of Building Materials Shortages on Home Buyers and Sellers

The current building materials shortages are having a widespread impact on both home buyers and sellers. For buyers, the cost of construction is increasing as the demand for basic materials such as lumber, steel, and drywall continues to outstrip supply. Home sellers have also felt the ripple effects of these shortages; skyrocketing prices have caused some potential buyers to pull out of the market, leaving home sales figures lower than expected in recent months. And yet, even with many buyers opting to wait to make a home purchase, demand for homes still exceeded the available supply.

If potential home buyers opted for new construction versus purchasing an existing home, they continued to experience back-ordered supplies, delayed deliveries, and fewer people available to carry out the work. This challenge is forcing both sides of the transaction to contend with higher costs, fewer inventory options, and projects with much longer timelines than anticipated.

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