Material Shortages and Price Increases - Why?
As if the last 18 months has not thrown enough uncertainty at the world, the construction industry and customers thereof have now been dealing with some of the worst material shortages since the war and price increases that make investing in timber seem more lucrative than gold!
Material shortages. From timber products, steel products, cement products and even paint or pre-painted products, there seems to be shortages and long lead times causing havoc with project timeliness across the country, but why? The reasons can vary depending on the product but in most cases, it is not any one single reason that has caused the shortage, in many cases we are hearing the term 'The Perfect Storm'. From my understanding this storm seems to have combined a gust of Brexit, a flurry of China, a downpour of shipping issues and a tornado of Covid 19. You could probably write a book about each of these weather fronts, and throw a few more in for good measure, but this storm has left a trail of destruction in its path and many industries will take several more months to clear up the debris.
Price Increases. I have heard and read various comments regarding price increases and one myth I'd like to dismiss is that merchants are simply hiking up prices 'because they can'. It is certainly not the case. The administration involved when implementing price increases is often a mammoth task with so many SKU codes to update. No business in their right mind would want to do it four times within a six-month period, but unfortunately that is the frequency we are receiving increases from some suppliers. Whilst we have been known to swallow a few percent of margin or delay our increase for the good of our customers, it's simply not possible to absorb what has been coming our way in recent months.
So why the increases?
As with the shortages there are many reasons. Importing products or raw materials from Europe post Brexit has become more expensive. Sea freight rates from Asia to the UK have over trebled in the last 12 months. But most of all, when demand outstrips the supply capabilities, it forces prices up.
What does the future hold?
If someone has a crystal ball, give it a good polish and ask it the question, because it is clear the current situation is unsustainable. At some point supply will catch up with demand for building materials (hopefully before consumer spending forces the situation). Once supply does catch up, prices will correct themselves. It is only a matter of time and thankfully already there is light at the end of the tunnel for some products groups.
How is Southern Sheeting dealing with the situation?
With regards to price increases, Southern Sheeting is working tirelessly to ensure timely updates are supplied to customers. Wherever possible we will offer 30 days’ notice in writing to our merchant customers which means they have time to update their own systems and chase up existing quotes with their own customers.
Southern Sheeting are also in a very healthy stock situation for most of our products. One of our greatest strengths is having a large volume of specialist roofing and cladding products 'off the shelf' and we recognised early on that we must protect this reputation against all odds. Forward ordering and increased storage facilities have been vital to ensure Southern Sheeting have the stock to keep our customers projects on track. Stocks of profiled Sheeting and Cedral Cladding (two key lines) have never been higher. We cannot predict the future, but at the time of writing, if it is a stock line for us and we have not got it, there’s a strong chance nobody else have either and that we'll be first in line to have stock replenished.
Another leap forward for Southern Sheeting was the launch of the new website this year which now shows live stock availability against each product. Customers can now see exactly how much stock we have available and place their order 24 hours a day, 7 days a week.
Lastly, Southern Sheeting are trusted major distributers for the products we sell. We have great relationships with our suppliers which in some cases span several decades. The value in these relationships have come in to their own during these difficult times as we secure stock allocations and keep in close communications about the ever-changing situations. Information is key and we thank our suppliers for being proactive in their approach which gets fed down to our customers and end clients.
Who knows how long it will last, but for now, I guess we just need to batten down the hatches and weather the ‘perfect storm’ for a bit longer?
Author: Duncan Kingston - Sales Manager at Saint Hill Farm
