Construction materials availability returns to pre-pandemic levels

The availability and supply of construction products and materials has recovered to its 2019 pre-pandemic levels, according to a report from the Construction Leadership Council (CLC).

In the joint Product Availability Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the CLC’s Product Availability working group, revealed that the supply of materials was at its best level since the end of 2019, before the impact of the Covid-19 pandemic began to be felt.

While supply of most products is now plentiful, particularly timber which is seeing production fall in response to lowered demand, global semi-conductor shortages continue to have an impact on manufacturers of electro-technical products and gas boilers and are likely to persist through to the middle of 2023. Supply of birch plywood was also being impacted by sanctions on Russia, the major producer, with products made from Russian birch and manufactured elsewhere also affected, although Finnish and Latvian producers were making up the shortfall.

Inflationary pressures are continuing to be felt across the construction sector due to increased material costs, however, the driving force behind price rises has now shifted from supply issues onto high energy costs, particularly for the most fuel intensive materials: glass, concrete, cement, PIR, plasterboard and bricks. In their statement, the CLC opined that a cold winter could see demand for gas, and therefore energy prices, rise, leading to further increases in prices for these materials.

Commenting on the wider economic challenges affecting the construction sector, John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association said:

“In his Autumn Statement, the Chancellor of the Exchequer announced a package of tax rises and spending cuts intended to stabilise the economy and lay the foundation for growth. Nonetheless, the near-term outlook will be challenging. While large-scale infrastructure projects will continue and larger housebuilders are currently maintaining volumes, we are already seeing a slight decline in starts by smaller housebuilders and a steady erosion of work in the home improvement sector as homebuyers and customers feel the pressure of rising living costs and interest rates.

“We are also seeing a sustained, high level of construction firm insolvencies, particularly amongst SME builders and specialist contractors. This is in part the result of firms that became vulnerable during the pandemic now being wound up due to pandemic support being withdrawn. Other insolvencies are linked to economic uncertainty and the difficulty of reconciling fixed priced contracts with price inflation and reduced cash flow. Collaborative risk sharing will be key to preserving industry resilience and capacity moving forward.”