Construction Industry Navigating Spiking Prices and Supply Chain Delays

Construction industry professionals have plenty to be excited about with the pandemic reaching its end and unemployment shrinking by the day. 

However, issues with spiking prices for building material and supply chain delays are causes for concern throughout the industry. Construction Leaders who successfully navigate these issues will gain a competitive edge. 

Building Materials Are Soaring in Price 

Daniel Profrett, the national director of analytics and forecasting at Cumming – a construction cost tracking firm – explains that lumber and steel have recently jumped in price by 20% to 25%

These are primary building materials, speaking to the challenges facing the construction industry. 

Piling onto this issue is the 73% spike in soft lumber prices. Beyond that, iron and steel scrap prices have risen by 50.8% in the last years. 

ABC.org points out that – amongst many other factors – these skyrocketing prices show the potential for a failing stimulus, enormous national debt, increased capital costs, and tax hikes. Altogether, these factors could do a number on contractor health. 

The Construction Industry Has Forward Momentum–Can it Be Maintained? 

Despite rising costs in building materials, the construction industry is in an “all systems go” phase right now. 

The same ABC article discusses the 931,000 jobs added to the sector since April last year. That amounts to an 83.6% recovery of lost jobs caused by COVID-19. 

As such, this current climate is a double-edged sword scenario for builders. There is an array of growth opportunities, but it’ll be harder to turn profits with the soaring prices of construction materials.  

Industry leaders must ask themselves: with home prices soaring along with the cost of building materials, is it possible for this post-COVID growth to maintain itself? 

More to the point, how can industry leaders navigate these cost-related challenges to keep the positive momentum going? 

And soaring costs aren’t even the only problem for contractors right now. There are also supply chain woes causing headaches for many companies throughout the industry. 

What Supply Chain Woes Are Plaguing the Construction Industry?

According to Associated General Contractors of America Chief Economist Ken Simonson, the lingering effects of COVID-19 are still hampering the construction supply chain. 

He brought up how – back in February – 37 ships anchored off Southern California, halting goods shipments from China and elsewhere. An outbreak of COVID-19 amongst dockworkers further clogged the harbor, meaning there weren’t enough people to unload the ships. 

Simonson then discussed the empty shipping container shortage in China, leading to insufficient places to pack goods. 

These types of lingering supply chain snags could stop the construction industry’s current momentum in the 2nd half of 2021, says Simonson. This notion will ring doubly true in markets where contractors deal with lack of supply, high costs, or both.  

How to Manage the Supply Chain Challenges in Construction 

The Tampa Bay Business Journal offers potential solutions for the staggered supply chains in construction. 

Namely, it starts with reimagined, resilient supply chains that proactively minimize disruptions. 

How can you be prepared for these disruptions? The answer is simple: planning for them in advance by keeping up with the trends. 

Here are a few factors leaders in construction must consider if they’re going to build resilience in their supply chains: 

●       Reevaluating business models

●       Building efficient industrial supply chains

●       Reducing pandemic-related weaknesses by building manufacturing/distribution facilities 

The Need for Cutting Edge Talent 

Given the unpredictable nature of the current market, you need talent in your construction company who can navigate these ebbs and flows. Having the right people in place will give you a leg up against the competition, helping you leverage the glut of building projects lying in wait. 

You can find top construction talent who’ll set you up for the future by contacting RHM Staffing today!