One of Britain’s biggest builders’ merchants has warned of material shortages as Britain’s construction industry struggles under mounting pressure from the deepest supply chain crisis in decades.
Jewson has told customers that prices for a range of products – including timber, wheelbarrows, insulation and adhesives – will rise by up to a fifth this month amid growing evidence of the whole the construction sector from severe and sustained disruption related to Covid and Brexit.
He said supplies of cement, plasterboard and insulation were being rationed by manufacturers, forcing him to limit the availability of some products, while other products would rise in price or take longer. to deliver to customers.
In another sign of the UK’s fallout from coronavirus and exit from the EU, the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) revealed a drop in growth in the construction of housing, commercial works and civil engineering for the construction industry last month as restricted material supply and transportation issues weighed on activity.
The monthly Purchasing Managers’ Index fell to 55.2 in August from 58.7 in July on an index where anything above 50 separates growth from contraction. City economists had forecast a reading of 56.9.
Brian Berry, chief executive of the Federation of Master Builders, said: “Builders across the UK, especially smaller businesses, are struggling to recover from the pandemic due to the continuing materials crisis.”
Reflecting the intense disruption in the industry, Jewson said some building materials producers were using an “allocation process” to limit the supply of in-demand products. This would in turn affect its wholesale customers.
He said Hanson was allocating cement to ensure “a fair supply in the market”, which had led Jewson to limit certain products to five per order. British Gypsum had introduced an award process for plasterboard, while insulation company Recticel had taken similar steps.
Jewson said growing demand for some products and supply shortages forced it to raise some of its prices this month, such as a 10-15% increase for wheelbarrows, a 5-20% increase for sealants, adhesives and chemicals, a 12% increase for glass wool insulation and a 20% jump for MDF moldings.
He also told customers to expect longer delivery times for kitchen appliances with built-in microchips, such as combination and microwave ovens, amid chip shortages around the world.
“We understand the importance of providing you with everything you need when you need it. However, our suppliers sometimes inform us of problems in the supply chain, which means that certain products may not be as readily available as we had hoped,” he told his customers.
It comes as leaders in the construction industry voice concerns over severe disruption to the sector. Travis Perkins last month warned of wood and plasterboard shortages, while companies including Ikea, B&Q, Homebase and Argos also warned of supply chain issues.
Business leaders said chronic shortages of workers and key materials were beginning to weigh on Britain’s economic recovery from the winter lockdown, with disruption to global supply chains caused by the pandemic exacerbated by the Brexit migration rules and border controls.
Economists said the higher costs facing industry are likely to be passed on to UK consumers in the form of higher prices for a range of goods and services.
The Bank of England expects inflation to hit 4% this year, the highest level in a decade, before moving closer to its target rate of 2% as temporary pandemic-related issues ease. . However, some economists warn that the inflation rate could remain high as long as the temporary disruptions persist.
Construction companies said their costs rose at the second-fastest rate in the 24-year history of the PMI survey, surpassed only by a record increase in June 2021. Of the materials that rose in price, the most common were concrete, fuel, steel and wood.
The companies noted a continued recovery in projects that had been delayed due to Brexit and Covid, but said customer confidence was affected by raw material shortages and rising costs.
Duncan Brock, Group Director at Cips, said: ‘A combination of ongoing Covid restrictions, Brexit delays and shipping delays was responsible as builders were unable to complete some of the pipelines jobs knocking on their door.
“Material and personnel costs have soared as hiring has accelerated to fill capacity gaps left by employee relocations, the availability of overseas workers and caused by skills shortages. “