Product supply continues to improve, with the availability of building
materials and products overall now at its best since pre-pandemic levels last
seen at the end of 2019.
The restricted supply of semi-conductors, however, continues to challenge
manufacturers of electro-technical products and gas boilers, though stock
volumes are recovering.
With current demand in the UK still outstripping supply, coupled with
ongoing capacity and logistics issues in Asia, extended delivery times are
likely to remain until the middle of 2023 and inflationary pressures will
persist for these products.
In the latest statement from John
Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of
the Construction Products Association, co-chairs of the Construction Leadership
Council’s Product Availability working group, they say there is
a plentiful supply of timber in the UK and prices have reduced for popular
groups such as CLS; however, log prices in Europe and North America are still
strong and production is being reduced to reflect demand in the UK and Europe
This could lead to gaps in the supply chain if demand rises suddenly but
should not be a major issue if demand continues at current levels.
“As mentioned in previous statements, birch plywood – currently a sanctioned
good from Russia – is in short supply and some sectors will need to look at
alternatives,” the statement continues. “Birch plywood can be legally sourced
from Finland and Latvia but users should request full due diligence. Any
imports of birch or birch furniture products from China and Vietnam will be
manufactured from wood from Russia, which cannot be legally sold in the UK.
“Inflationary pressures rather than availability present the main challenges
for energy intensive products such as glass, concrete, cement, PIR,
plasterboard and bricks. A warm autumn has helped reduce demand for gas but
going into colder winter months prices may rise again. It is also unclear what
financial relief from government will be available to energy intensive
manufacturers in the spring when the current scheme is due to finish.
“In his Autumn Statement, the Chancellor of the Exchequer announced a
package of tax rises and spending cuts intended to stabilise the economy and
lay the foundation for growth. Nonetheless, the near-term outlook will be
challenging. While large-scale infrastructure projects will continue and larger
housebuilders are currently maintaining volumes, we are already seeing a slight
decline in starts by smaller housebuilders and a steady erosion of work in the
home improvement sector as homebuyers and customers feel the pressure of rising
living costs and interest rates.
“We are also seeing a sustained, high level of construction firm
insolvencies, particularly amongst SME builders and specialist contractors.
This is in part the result of firms that became vulnerable during the pandemic
now being wound up due to pandemic support being withdrawn. Other insolvencies
are linked to economic uncertainty and the difficulty of reconciling fixed
priced contracts with price inflation and reduced cash flow. Collaborative risk
sharing will be key to preserving industry resilience and capacity moving
forward.”
