On the bright side, they will ease…
The supply chain issues that began in earnest due to the pandemic will continue into 2023. That is according to a recent article in the Harvard Business Review, “Today’s Supply-Chain Fluctuations Require Systemic Solutions,” (10/24/22). They approach the problem from a global perspective and suggest ways of improving the supply chain system. A November article in the New York Times focused specifically on the supply chain issues impacting the construction industry. You don’t have to read about it to know there is a problem. Anyone who has tackled a remodeling project or built a new home during the last two-plus years can attest to the supply chain difficulties.
How does anything get built?
You may be wondering how the construction industry manages to get anything done. Creativity, workarounds, higher costs and patience all came into play. During the shutdown, everything came to a screeching halt. Work was stopped. Orders for supplies were put on hold. When things opened up, everyone wanted their orders fulfilled immediately. As one person described it, the situation mimicked the backup that occurs when a highway narrows from two lanes down to one. With some supply items, it was more like a highway going from four lanes into one.
Even being restricted, metaphorically, to one lane, construction projects thrived. In fact, home renovations and home redecorating projects increased in 2021. They just came with more headaches.
What factors are at work?
The supply chain issue is global. According to a September airing of Marketplace, China’s lockdown (Zero-COVID policy) continues to impact the availability of certain materials mined or produced there. China currently ranks as the “world’s leader in making things.” That may be changing as companies look to other countries, like India, as emerging markets.
As Russia’s inhumane invasion of Ukraine continues, with the needless loss of life and destruction of resources, the world has experienced ripple effects. We’ve all seen higher gas prices. That impacts the delivery of goods. The disruption of digital services outsourced in Ukraine continues, along with higher energy costs.
In October, the Associated Builders and Contractors (ABC) released a statement that its Construction Backlog Indicator increased to 9.0 months in September, according to an ABC member survey conducted Sept. 20 to Oct. 5. The reading is 1.4 months higher than in September 2021. They went on to indicate a backlog in heavy industrial that increased sizably in September, spurred by a 21.5% year-over-year increase in manufacturing-related construction spending.
Inflationary prices for materials, rising interest rates and increased wages also factor into the mix. Add to all of the above, a shortage of workers in the construction trades and an almost nonexistent pipeline to train new tradespeople.
Still, the planning and projects continue.
As with many things in life, the present challenges are not seen as total obstacles. They are often viewed as hurdles to be gotten over. Informed homeowners can face a remodeling project fully aware of the delays they may encounter, along with the adjustments to material price estimates that might occur. Some individuals are choosing to work with a professional to help with the planning and guide the process to stay on top of changes that are presented along the way.
If you have a construction or remodeling project in mind AplosGroup would be happy to discuss your options.