Material Shortages Continuing With No End in Sight
In July we reported on the ongoing material and employee shortage throughout the construction industry and instead of improving, it’s unfortunately proving to be a long-lasting issue. After monitoring this issue over the last few months, overhearing office conversation, and doing some additional research, I wanted to know more about what might be causing this shortage. I landed upon the article “Supply Chain Challenges Aren’t Going Away Anytime Soon” by Joe Dunlap posted on ConstructionDive.com . According to Dunlap, the shortage and delay in materials is “creating a cycle of sustained high demand on short-supply items and perpetuating a logistics nightmare we cannot seem to escape.”
As seen on many news outlets, there is an abnormal excess of container ships waiting to unload at various ports around the country. As a result, material is delayed from and takes longer to get to the consumer. As you can imagine, this is taking quite a toll on the construction industry. As mentioned in the article: “Construction materials such as steel and lumber have been in short supply, with demand increasing steadily over the past year.”
“Currently, according to CBRE, there is 410 million square feet of new product under construction in the U.S., a record high. However, a disturbing trend has emerged as completions have declined two quarters in a row – 54.66 million square feet in Q1 and 51.67 MSF in Q2. This is considerably below the five-year average of quarterly completions of 64.3 MSF. Projects are breaking ground and stalling out due to lack of materials at a time when more product than ever is needed. With vacancy at record lows and rental rates at record highs, a dearth of new product will continue to put pressure on costs.”
So what does this mean for Albion and other construction companies in the industry?
This information reiterates the importance of identifying long lead time items even earlier than ever before. Staying proactive is key in this environment of high demand and little supply. We’ve enacted on identifying the materials needed for a project prior to receiving the NTP. This has also affected our projects in progress and their schedules. We are committed to doing all we can to ensure our projects stay on time and the budget is not greatly affected by the rise in prices.
We will continue to stay ahead of the curve and monitor all impending shortages in order to keep our projects on time and on budget!