Construction Insights

Construction industry supply chain shortages: The key facts you need to know

By 4th December 2021January 4th, 2022No Comments

It’s well known that the construction industry in the UK has a skills and people shortage. It’s also experiencing significant supply chain problems too. The pandemic, a lack of delivery drivers, border control changes as a result of Brexit, and even the blockage of the Suez Canal in March 2021 have all had a big knock-on effect on the UK construction industry’s supply chain. 

These are the key facts stakeholders in construction and property need to know. 

Building material prices have risen by 24-26% 

The Department for Business, Energy and Industrial Strategy (BEIS) say material costs have led to building work prices increasing by 24.5% in 2021 compared to 2020. Repair and maintenance costs have risen even more – 26.2%. This is affecting everyday customers that need supplies and expertise to renovate their own homes as well as large companies and professional housebuilders.  

Roof tiles, cement, and steel are the worst affected materials 

These three key materials are in demand but supply is low. The National Federation of Roofing Contractors (NFRC) say it can take up to 36 weeks to get hold of roof tiles, British Steel has reported “extreme demand” and put a temporary block on orders in May 2021, and cement production is down 11.4%. Prices have also risen across a wide variety of other construction materials, including timber, insulation, plumbing items, and electrical components.  

The lack of HGV drivers is still having an impact 

Most supply chains have experienced problems in 2021 because of the shortage of HGV drivers and construction and building materials are no different. It’s estimated that an extra 100,000 drivers are needed in the UK.  

Logistics UK says this shortage is easing but the industry is facing a backlog. A survey conducted by the Builders Merchants Federation in September 2021 showed that 67% of builders’ merchants and 86% of suppliers were having problems with haulage deliveries and lead times.  

60% of our materials come from the EU 

This is according to the Construction Leadership Council (CLC), who say the combination of newly complicated border control and a lack of drivers from the EU is having a big impact. The smallest businesses and independent contractors are being squeezed the hardest by this because they have fewer buying options and a massive post-lockdown demand for their skills.  

Output is down as a result 

A shortage of materials and a problematic supply chain means construction has slowed down. Everything came to a standstill because of the pandemic during the first lockdown and picked up again positively when construction restarted, however, output dropped by 1.5% in the third quarter of 2021.  

Positively, supply shortages are now settling down 

While many construction stakeholders say ‘we’re not out of the woods yet’, many agree that the worst of the supply chain shortage is over and HGV driver recruitment has picked up again. A December 2021 survey reported by Construction Index shows the industry is regaining confidence and the number of businesses experiencing long lead times has dropped by 30%. 

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