The COVID-19 pandemic has disrupted global supply chains, leading to increased prices and slower availability of products and materials. U.S. construction firms are facing high prices due to ongoing materials shortages, high logistics and labor costs, and global conflicts. Home builders are struggling to find basic materials to complete backlogs of construction projects, with the House Builders Association reporting that in 2021, more than 90 of builders were unable to find the necessary materials.
UK contractors are also facing shortages of building materials due to the pandemic, with lumber being the most-cited material shortage. A sharp increase in global demand for building products during the pandemic is causing delays on Australian construction sites and prompting calls for changes to the HomeBuilder scheme. Factors contributing to the rise in building materials worldwide include factory closures, price inflation, higher energy prices, and supply chain issues.
The supply chain crisis has led to skyrocketing prices and huge lead times on materials such as timber, playing havoc with projects up and down the industry. Solutions for the disruption include realtime materials tracking technology, which can help reduce costs and improve supply chain efficiency.
In conclusion, the COVID-19 pandemic has caused a significant rise in building materials worldwide, with factors such as factory closures, price inflation, higher energy prices, and supply chain issues contributing to the disruption. Realtime materials tracking technology can help address these challenges and improve construction profit margins by providing alternative suppliers and addressing supply chain issues.
📹 Building Material Supply Chain Is Breaking Down
The most common but vital building materials are coming in short supply. Things are going to get expensive.
What are the causes of short supply?
A shortage is a situation where the demand for a product or service exceeds the supply at the market price. It can be caused by an increase in demand, a decrease in supply, or government intervention. Types of shortages include food, goods, shelter, water, energy, healthcare, and jobs. Shortage should not be confused with “scarcity”. In a normally functioning market, there is an equilibrium between the quantity demanded and supplied at a price point, which is determined by market forces. Shortage types can include food, goods, shelter, water, energy, healthcare, and jobs.
Are we running out of building materials?
Home building delays are primarily caused by material shortages, labor availability, planning problems, and land availability. COVID-19 has further exacerbated these issues, with increased demand and natural disaster insurance repair work dominating trade contractors. A major labor issue in New South Wales has been roof tilers, with a spike in demand and many NSW roof tilers going to Queensland for roof replacements due to hailstorms.
This issue is not expected to be resolved soon, so iron roof options are being considered for upcoming home builds. The recent flooding disaster in South East Queensland and Northern New South Wales has caused significant damage to nearly 200, 000 homes, involving many of the region’s construction workforce.
What is causing supply shortage?
Supply chain issues arose during COVID-10 lockdowns due to shifts in demand, labor shortages, and structural factors. The Russia-Ukraine conflict and China’s lockdowns have exacerbated these issues, affecting sectors like metals, mining, chemicals, automotives, semiconductors, and technology. Possible solutions include increased capacity or a fall in demand. The Russia-Ukraine conflict and China’s lockdowns have further exacerbated these issues, affecting consumer goods, metals, food, chemicals, and commodities.
What is causing the material shortage?
Material shortages can be caused by various factors, including supply chain issues, external factors like port congestion, and business process and quality defects on the buyer side. These issues can range from simple miscounts to complex global IC chip shortages. The chief procurement officer and engineering leadership must address these issues, which fall into three categories: business process and quality defects on the buyer side, business process and quality defects on the supplier side, and external supply chain issues and disruptions.
Business process and quality defects on the buyer side, such as unexpected demand increases, poor planning and forecasting, inaccurate lead times, and transportation planning and capacity problems, are the most controllable material shortage issues. These issues may be identified as exceptions by the MRP process and are the responsibility of planners to follow up.
How do you solve material shortage?
To effectively manage material shortages and disruptions, supply chain leaders should invest in digital technology, look beyond inventory planning solutions, understand supply chains end-to-end, boost collaboration across departments, optimize processes, and add intelligent automation. Disruptions to supply chain operations are set to stay, including geopolitical conflicts, demand spikes, inflationary pressures, weather hazards, and labor shortages.
Marisa Brown, Senior Principal Research Lead at APQC, confirms that geopolitical developments and technological advances continue to affect how supply chains and companies conduct business in early 2024.
What material is in short supply?
Global shortages in various materials are causing challenges for supply chain planning teams to predict demand, ensure supply accuracy, and coordinate the flow of goods into customers’ hands on time. Supply Chain Work Management, running on the TraceLink Opus Digital Network Platform, offers real-time access to suppliers, complete visibility into all supply chain issues and planning exceptions, and collaborative workflow-driven processes that can help manufacturing organizations resolve material shortages up to 65 times faster.
The technology can make supply chain planning teams more agile and resilient by addressing top issues that lead to material shortages and create exceptions to supply chain planning processes, which can escalate into full-scale disruptions if not resolved promptly.
What are the three main causes of shortage?
A shortage occurs when the demand for a product or service exceeds the supply, leading to a market imbalance. This can occur due to an increase in demand, a decrease in supply, or government intervention. Types of shortages include food, goods, shelter, water, energy, healthcare, and jobs. Shortage should not be confused with “scarcity”. In a normally functioning market, there is an equilibrium between the demanded and supplied quantities, but a shortage occurs when demand exceeds supply, often temporary.
What is the main cause of shortage?
A shortage is a situation where the demand for a product or service exceeds the supply at the market price. It can be caused by an increase in demand, a decrease in supply, or government intervention. Types of shortages can include food, goods, shelter, water, energy, healthcare, and jobs. Shortage should not be confused with “scarcity”. In a normally functioning market, there is an equilibrium between the quantity demanded and supplied at a price point, which is determined by market forces.
What is the easiest way to eliminate a shortage?
Shortage issues are a significant challenge for manufacturers, but there are several ways to prevent them. One effective solution is to expedite parts, which involves paying extra fees for faster delivery and quality assurance. This method is typically used for larger projects where a delay in delivery could be detrimental to the manufacturing process and the company. However, this method can be costly and uncertain, but many manufacturers believe that the cost of expediting the parts outweighs the cost of late deliveries to customers.
Additionally, developing a Shortage Attack Team or better shortage management processes, improving supplier collaboration, ensuring accurate inventory data, and regularly updating PFEP are also essential steps to take.
Will we ever run out of sand?
The Earth’s estimated weight is 1. 3 x 10 25 pounds or 6. 5 x 10 21 tons, with the crust making up 1% of that total weight. The world consumes about 50 billion tons a year, which means we will run out of sand from the Earth’s crust in 360 million years at current rates of consumption. However, not all sand is created equal, and some is unsuitable for industrial purposes like making concrete or proppants in hydraulically fractured oil and gas deposits (fracking).
Sand grain shape and uniformity are crucial in certain uses, such as proppants. Sand casting requires a mixture of three different kinds of sand, each with a different chemical formula. High-purity sand is required for glass-making, solar panels, and computer chips. Desert sand is too fine and wrongly shaped for almost all industrial and consumer uses and is never used for concrete. Most sand in the Earth’s crust is not uniformly distributed or available due to its deep location, running 5 to 10 kilometers deep under the oceans and 30 to 50 kilometers deep under continents.
What materials are in scarcity?
Scarce materials, such as timber, water, and minerals like antimony, gallium, magnesium, and tantalum, are known to be scarce or unsustainable. This guidance focuses on procurement of products or services containing these materials. It may be considered alongside Construction Policy Note 1/2023, which highlights the publication of a new chapter in the Client Guide to Construction Projects. The guidance outlines the client’s role in planning for sustainability in construction projects, particularly during the project initiation phase. It is part of a series of guides supporting sustainable procurement duty tools for public sector organizations.
📹 Building Supplies and Subcontractors in Short Supply
Building and construction crisis due to material shortage and contractor availability.
Hey Uneducated Economist: YOU SAVED MY BROTHERS BACON! He follows your website like I do. He lives in SW Washington like I do but he is building a house in Montana (framing mode) and he saw that you were concerned about prices shooting up because what you were seeing in the futures market so he went ahead and put in a huge lumber order and right after he did the prices shot way up. You saved his butt on that so thank you so much for taking the time to do these articles!!!! 😇
A friend of mine works for an electrical supply company and he says that almost all circuit breakers are on backorder for months. The construction industry is going to have a hard time. Whats the point in building a house if you cant get final inspections cause you are missing critical electrical components.
Seems a “self fulfilling prophecy” will come to pass with your well intentioned advice……unfortunately. Its falls under the “hoarding” category. Inflation via recession. Now that’s one doozy of an economic klusterfuck to figure out how to solve/stave off. Only quickie way out IMO is, Canada, Brazil, et al., kick up their lumber industries to meet world demand. Any other ideas for solutions?
the question i have is, do you think they are deliberately slowing down on lumber processing to make supply low and demand high in order to raise home prices or prevent another market crash in homes? if they control the output and manipulate the prices then they can have some control of the housing demands. another thought came to mind is if they are adjusting their prices according to the inflation that is about to come with all this money printing. we see trillions of dollars are printed, the wealthy people who benefits from this trillions of dollars printed most would just go in and buy up all the real estates if prices are at where they are now or lower in the future. – this is the educated un-economist. “you let me know”
I shared with you when this article came out that Tennessee building supply chain was still good. As of now it is not. My husband is a carpenter as many people in our area are. He over heard another carpenter and Hispanics talking about not being able to get supplies to finish building houses. Just passing information along.
One thing I wondering about is the fact, that to produce Plywood, there is not a big supply-chain involved. Beside of the production-line you just need the logs and the glue. No semi-finished products involved. So I cant really understand how this situation is possible. Same for the other wooden construction-material. It doesnt make sense. So how will it look for other products/industries that depend on many parts from different suppliers?
Average size house used $45,000 in lumber as of April 8th….. If that doubles it’s $90k in lumber. Along with all the unemployed people that are about to get evicted how are houses going to sell for more? I just looked at DR Horton financial statements and it seems their profits are 20 to 22% per home. So they can survive with no profit. But companies don’t build stuff for no profit, they stop building and lay people off.
well I will say that if the builder is on contract to finish the job by a specific date then yes they may be forced into paying whatever price need be to finish the project…. however that can cause all kinds of financial shortfalls because they more than likely gave the contract price when there was no shortage there was no problem in prices were normal… so in other words I’m saying is it now that there’s the chance of price hikes due to shortages amongst other problems okay how many of those builders do you think you’re going to get slaughtered during this because they may finish the job but they’re not really going to have any money to show for them and how much money do you really project these guys to ultimately end up losing over the course of the next eight weeks see that’s something that I’m interested in!! Now if it’s a home builder like your typical developers like MI or Dominion homes something to that effect now those guys can basically stop stop construction unless they’ve already got the house sold and in many cases they are all big on prefab as in they’ll go ahead and build it and then they’ll decide to sell it sometimes it sells in the middle of construction so those guys I think have a little bit of leeway on what they can do because they’re not so bound up on time constraints….. the only problem is is their business largely functions on making the houses available in other words they’re all about sell sell sell so if they reach a point where you can’t get importantlumber or especially sheeting or something to that effect right if they can’t get the necessary materials then they’re basically going to have to tell their sales people to shut up and don’t not promote the homes because they don’t actually have any to sell.
Well you give a good explanation of the on-the-ground supply specifics. But you don’t say or speculate on why these shortages exist. I am a small wood products retailer up in Canada, and personally I like to understand the dynamics behind these things and not just what some wholesaler is telling me. In the midst of this whole bug thing and on the edge of a depression we are having a housing bubble going on. Frankly bizarre. Ridiculously low interest rates and people leaving the big cities, buying and building in small towns are the big drivers on the demand side. Supply side, First, the major cutbacks in Canadian lumber/wood production is finally cutting in. Like it or not Canadian wood is the marginal price setter. This is permanent and not driven by any economic factor. The Mountain Pine beetle and a few fires over the last few years have shut down a lot BC mills and logging. Including plywood. Second. The bug driven wage subsidies and various other government business ‘aids’ are having marginal price effects. Third, some supplier’s might not be starting up because of the fear of lawsuits wiping them out if a worker gets the bug in their plant and starts a class action… Very US .
I wish i would’ve been on top of this. I started putting up privacy fence a few months ago. 6 foot privacy using 10 foot post. I’ve already put up about 160 foot and still have another 120 foot. 4×4×10 cost me just under $10 but are now $22. 2×4×8 did cost just under $5 and are now 6.50ish. Pickets were $1.35 and are now $1.70. I used 2×6×8’s for bottom strap which went from $6ish to $9ish. All from my local Menards. Its the land next to my house and I’ve been doing it myself and my own pace so I would buy what i could fit in my truck. Put it up and go get more. If i would’ve known this I would have gladly paid Menards delivery fee when i started and got all the wood then. Unreal how much more this shit is gonna cost. Stupid stupid stupid. I refuse to pay the current prices.
As anyone knows, the desperation comes from inappropriate species choice for construction, caused by deforestation. The correct species for construction varies from country to country. I’m in the UK, we have some Douglas Fir, it’s tricky to saw it but it’s incredibly strong and durable. It requires no pressure treatment. Insulation material we use hemp/lime spray. No membranes, no foam, no glue, no paint. Roofing is slate or tin. Whole building is breathable, structure is 100% recyclable. Traditional materials are the best. Modern architecture is a disaster. Concrete and steel and osb and foam and plastic it’s just rubbish.
Most interesting. I typically don’t buy pressure treated anything nor do I purchase sheeting material. I will tell you that dimension lumber is becoming very expensive and the quality is absolutely 💩. The cost of a 2X6X8’ KD Doig Fir has increased 15% in less than a week. I live in in the greater Boise area and the number of abandoned job sites is becoming more obvious everyday. Construction has always been feast or famine it’s been that way for 60 years, yes I’m that old. My concern is that the mills are getting rid of everything thing they can and only producing for the orders they receive, that’s why for the late September arrival of sheeting material. Houses are only being built when there is a contract/sold. If you do some checking I think you’ll find that evictions, foreclosures, and bankruptcies will begin to increase. Pretty soon there will be new and existing home inventories like crazy. If some doesn’t call BS to Covid-19 it will happen.
Damn you just opened my eyes. There isn’t just metals, stocks and land that you can buy. If you know the industry you could buy tons of a specific material and then resell it when the supply is going down. Pfffff thanks a lot for the info. Keep up the great work (And please never become a full time youtuber, that’ll just destroy you)
The global supply chain is rebooting but it takes months to organize ships back into maritime routes after being mothballed in safe ports for months. If building supplies require a component from e.g., China, it means a delay. Further, economies like China that are export-driven had to shutter factories and halt production due to the worldwide collapse of demand, and it take time to reboot them now that things are loosening up. Covid also revealed a fatal dependency on outsourcing manufacturing globally, hence the supply chains are being reworked to bypass extended and complex chains, get closer to the market e.g., too much dependency on pharmaceuticals from China meant shortages in North America when it was most needed. All of these changes take time to effect. So if a lumber product needs a manufacturing ingredient that is imported, big delays.
People on unemployment dont make a product. There is a lack of lumber because people on unemployment dont make a lumber product. The lack of lumber is why the price is costly. People getting $600 a week of unemployment is another reason for a lack of lumber making the price even more costly. This causes inflation, which caused more layoffs last week, so more can get on unemployment. Unemployment should be stopped so people should go back to work. The low interest rates is making a lack of lumber to be more costly. with the new homes that just now are starting to be built. It will all collapse soon.
I do the same thing with pipe. Manufacturers will also allocate truck loads to their biggest customers too. Depending on your ability to turn the product you get to allocate truck loads by placing POs. So the product is essentially sold before its even made. Construction took on an even bigger boom cause of covid since people weren’t traveling they were remodeling their homes and alot of them made their backyard their new vacation spot. Which means they were fixing that fence that looks like crap or added that patio extension they been talking about.
The mills are simply behind because they scaled back production in March and April thinking that COVID-19 would cause much lower demand. It seemed like a good call at the time because it did; April and into May really sucked for lumber manufacturers and distributors. They were just slow to bring the mills back online. Some of that was from being cautious to what the market was doing and some was to ensure that they could protect their workforce from getting sick. Not saying that was the incorrect decision, who knows, if they hadn’t, maybe they would be even further behind. Now they are playing catch up as the retail never really dropped off and the wholesale is roaring back trying to make up for lost time before the winter slows them down again. Simple supply and demand, they can only produce this stuff so fast, and a two month hiatus didn’t help. You all need to understand the recession hit the building material industry HARD, and none of them have forgotten how it is to be sitting on inventory they can’t move. This memory caused a bit of an over-reaction this time. I would be surprised if the prices are still at record highs in 3 months. By then the mills should be caught back up.
I drive a mixer, we’ve been pouring house slabs 4 at a time couple days a week, for months,(NC) apartment complexes too, Covid didnt seem to slow construction (workers in open air, not crammed on top of each other) interest rates low, safe place to put money or get a return on it. I figure. probably same everywhere, guess they’re burning through that plywood…
With all the ghost buildings and housing that will be available when many of WeThePeople are forced to live in RVs and Cars and Trucks and Vans and Caves and Tents, not so much building materials will be needed. Lots of glue and tent repair Kits, maybe. And chains to attempt to hold these new domiciles down during tornadoes and hurricanes and storms and floods, perhaps.
I own a small farm in rural FL, and I often have projects that require lumber. I’m building a new chicken coop right now, and a run-in shelter for my horses. Lumber isn’t in short supply here yet, but I assume that it is coming, considering the demand is way up, even just from anecdotes. I’ve been stocking up on lumber in anticipation of whats to come. I think the effects of all of this will start to show in 6 months-1 year from now, but who knows. Most businesses build stock based on predictive models of consumption. No one predicted this lockdown, and the resulting demand in certain sectors. Once the 2020 stock that was prepared in 2019 runs dry, things will start to shutter in US. The sad thing is how many people dont seem to realize that things arent even bad yet. The depression started a while ago, but it wont be felt for a while yet.
And the FED is printing more…. haha what an upside down world we live in! Inflation, welcome! We thought you had left us for good^^ If they ignore these changes in price and keep the interest rates this low, we bout to see some real nasty shit… Venezuela will dwarf what’s about to put the nail in the US economy.
Man, we got some crazies here. The lumber industry has consolidated. All those anti-government people out there, this is what happens when a few suppliers start dominating the supply in the supply- demand curve. The world isn’t ending, the lumber suppliers are profit taking and risk averting at the same time. This is the California energy crisis of 2001. Suppliers are bitch slapping the market to find the top price. They started in the most expensive product, pressure treated, and then going to the most popular sheet good. They have figured out the non 2×4 goods that are constraints in all builds. 2x4s would have been too obvious and too commodity. You right wingers should be proud, this is the future of corportism, soon builders will own lumberyards, and maybe a big box chain, and Quicken Loan and team up with service companies to create three giant home supplier entities to create “efficiency”. Next stop Toll Brother Home Store (orange). Also keep on mind that UE, as smart and well read as he is” works for a lumber supply store in a low growth, low population area. I imagine the sales from his store is low compared to other areas of high growth and high margin building. So as a lumber buyer he might be victim of account prioritization. Add onto the fact the US exports a bunch of raw and process lumber, means that maybe the rest of the world is competing for the same “measured” supply . UE has more investigating to do.
I’m assuming a lot of this 7/16 lumber is in a direct reflection of the rioting and all the boarded-up buildings that we saw in every major city. I live in a city of about a million people. Our entire downtown was trashed, and everyone boarded up all their buildings with 7/16 plyboard. This would have to be a direct reflection of what you’re talking about
The government shouldn’t have the power to shut down the economy like this. They’re going to do it again too, I’m guessing. They should have just left everything open and mandated masks. We could have dealt with that. We need a new amendment to the constitution or something preventing the shutdown of businesses during pandemics.
Maintaining the housing market is critical to maintaining the economy as a whole, I’m wondering if the strangulation of wood supply is intentional to reduce the number of new homes becoming available so as to prop prices up. I figure they’ll do anything to avoid a crash before the elections, they might even print a ton of cash! Ha ha
So, can I finally sell that 2 x 4 for a profit? (Fingers Crossed!) BTW, you look at Ag today? I hope to have secured another 25 oz @ $39 CAN. (Confirming tomorrow morning) Insane. But, when you look at what’s going on, I truly believe Silver will do a Bitcoin 2.0. Too many cracks in the dam. They’re having a very hard time containing the price on the Crimex. And with the Robin Hood users about to find out what the difference is between SLV and Physical…….”Pow Alice!! To the Moon!!!!” Cheers Bud
I think it’s based on some of the supply lines on the chemicals and solvents used in the many industries that prepare, clean, and treat. Across the board. Hording of these chemicals have also started to begin as they are using supply and demand to drive sales. Greed is running the markets now and because the demand is high we are okay. Once the weaker hands fails there will be a drop like we have never seen, but maybe it will be very difficult to recoup the pace, and flow we now have. Difficult times for many. Very sad. Great insights. Thanks for posting. The good news if you choose to see that the world markets will then explode and I am thinking when the election is over we will have an open market again only because Wall Street wants it.
You are awesome. You’re NOT “exciting”, but ‘Very interesting’, with your ‘pulse’ on building materials. It’s Cool, because no one else, like you, is doing this(videos) and works where you work. We will probably never meet, but I can give you ideas to join with your own, and may you & your family, Pro$per. When/if you’re a Money-man, you can pass “tips” on. Can you “get-together” with a “Money-man”(investor) and get-into “pressure-treating” non-mill-sawn lumber? Can you “join{form/make-up}” your OWN “‘green’ conservation-group” to “rescue/(retrieve)” fallen-timber, using a small flat-bed with a heavy-duty winch & a small crane? Also, there MUST be a mill that’s shut-down, somewhere close? Getting your own saws’d be Better. Any empty, nearby-barns/Storage spaces, that can be sealed to “Pressure-treat”? Buy a storage shed wide enough for several pallets and however long CDX is in length. It could be that 1/2″ CDX could be your “ticket” to great personal wealth. Good thing you’re NOT near Portlund. You could lose the yard you work in to fire “by accident” from the fabian-socialists (–fbi hates Trump ) if you were near those crazies. I could barely see a grey-painted ship behind you in the vid,–I LOVE big ships,–used to spend HOURS in the family tub with “toy-boats.” Some cereal brand used to offer “baking-soda” powered subs, and sooner or later,–all my toy-boats’d get “torpedoed.” I only later got destroyers to “sink” my sub. I saw ALL the episodes of the ’50s/60s TV-docu-drama “Silent Service.