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Supply Chain Issues in the Local Construction Industry

10 Jun 2021 9:28 AM | Anonymous member (Administrator)

We all remember the shortages of toilet paper, disinfecting wipes and hand-sanitizer at the beginning of the pandemic.  Fortunately, those issues seem to be a distant memory, but supply and supply chain issues are hitting the local construction industry.

Currently, issues with PVC pipe, steel and of course lumber are the main issues GCBX members are dealing with most significantly at the moment.  There are several reasons for the shortages as I understand them from the people dealing with this daily.  The most obvious are due to the pandemic and manufacturing plants either shutting down during lock downs or operating with fewer employees due to distancing requirements, etc., but that is not the whole story.

As with many of the unusual issues we never knew or thought about prior to Covid, I’m learning a lot about the source of much needed supplies and supply chains.  It’s an interesting topic that many of us don’t think about on a daily basis, but a critical component of our economy that has been brought front and center of our attention this year (I definitely should have listened more closely during that economics course in college).

The most obvious factor deals with the lock downs and winter in Northern States.  The need for supplies such as lumber up north was greatly diminished during the pandemic and the winter, but the obvious good news is that things are opening back up and construction is up and running again for our northern neighbors, but now they are also in the market for these supplies as manufacturers work to catch up with demand. According to GCBX members, when they receive a quote for lumber to price a job, the quotes are good for 5 hours!  Yes, you read that right, not 5 weeks, not 5 days, but 5 hours!  The price per board foot has risen from $367 to approx. $1600.

The good news/bad news about steel is that a significant amount apparently comes from recycling things like stoves, washers, and dryers, etc.  That’s the good news, the bad news is that people did much less of that during the pandemic contributing to the current shortage and rising prices.

I am told and a quick internet search seems to back up that there are relatively few PVC resin manufacturers in the U.S.  At least two of the main sources are in Texas.  The severe winter weather in Texas this year knocked these plants off-line and the resulting shortage is having very real effects on pipe in the local market.  Additionally, some of the production components necessary for pipe comes from China and India.  While India is dealing with devastating effects of the pandemic it has understandably had an impact on their production capabilities.  Chinese ships, according to the suppliers I speak to, must quarantine off the coast of the Port of Los Angeles and undergo decontamination before containers can be off loaded and then there is a shortage of CDL drivers to transport the materials once on shore.

The bottom line is a job that was bid last October 2020 has risen 20% across the board.  To put that in perspective, if a commercial project was bid at $5M it is now $6M and most likely going up.

While it’s easy to list the problems and hope the supply catches up with demand in the foreseeable future, it takes collaboration, creative thinking and compromise to deal with the current situation.  Fortunately, staff in both Manatee and Sarasota counties are doing just that. In Manatee County they have waived certain requirements for laser etching to identify EPDM pipe until Dec. 31 to make it easier to acquire this type of pipe just without the etching.  Sarasota County is also reaching out and working with the industry to see how they can bid projects with so many unknowns and variables in pricing and to still work with local contractors and make the best use of taxpayer dollars.  At GCBX we believe this may be accomplished by utilizing Construction Manager at Risk as opposed to hard bidding projects.  This will allow the General Contractor to work with the Architect from the beginning of the project to develop the most cost-effective budget for these projects and the taxpayers.

To use the line so many of us have heard over the past 15 months, “we are all in this together”, we appreciate our colleagues in both counties that continue to work with the industry to seek collaborative solutions to a common problem.

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