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Taking a pulse: Local supply chain insights

Category: Build-Remodel-Topics
07/07/2021

As our high-demand construction climate continues, HBA of F-M asked supply-chain experts for their perception on changes coming and tips to cope until things improve.

 

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Terry Lipp | Ferguson Bath, Kitchen & Lighting Showroom

I was at a golf club this spring when the season was just starting, visiting with the owner of the course and he was speaking of how his Titleist golf balls were all on back order and Foot Joy would only allow him to order one month’s supply of what he purchased last year. This conversation was enlightening, as it told me that it does not matter what industry you’re in, we’re all being impacted by supply chain issues.

The availability of plumbing, HVAC, and appliance product is starting to improve in certain categories, and others we expect to continue well into 2022.

Although prices are more than 50% higher than last year, availability for PVC pipe and fittings and water heaters is starting to improve. Other products such as fiberglass tub and shower units, PEX piping, HVAC equipment and appliances will be a bit more challenging through this year and allocation to the industry will continue.

We have seen a 60% increase in housing construction April 2021 versus April 2020. Last April was the first full month that we navigated through the pandemic but all signs are still pointing to this trend continuing. The median home price last April versus this April is up more than 10%.

That said, we haven’t seen these levels since 2004 but the main difference now is the cost it takes to build a home. The National Association of Home Builders estimates that the rising cost of lumber is adding an average of $36,000 to the price of a home. While that is a national statistic it still has relevance locally. 

Our region is in dire need of additional affordable homes and this trend will no doubt continue as supply is weak and demand is strong, leaving homeowners no option but to pay the increased prices. Although supply rebounded to that of pre-pandemic levels, the increase in demand was even greater. By all accounts this demand will continue though roughly Q2 next year, and some builders I’ve talked to believe even beyond that.

 

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Darin Underhill | Butler Machinery

We are fortunate to be living in a thriving area-where the economy does not seem to be slow down, pandemic or not. A booming housing market, increased demand for new building construction and local infrastructure projects (in the works or on the horizon) are all wonderful things for local businesses. The other side of the coin to all this thriving development includes the various shortages and price increases that have come about as of late.

Shortages have affected just about every aspect construction. Whether it includes lumber, concrete, tires, microchips or labor. I’d bet that everyone has been affected in one way or another.

The heavy equipment industry is not immune to these shortages either. Local and global demand for heavy equipment has increased significantly. The added demand mixed with delays from factories getting back online due to COVID-19-related setbacks has created less new inventory for equipment dealers across the industry and, in turn, intensified pressure on the used equipment market as well.

Though new inventory is still arriving daily, in many cases new inventory is pre-sold before it ever hits the ground at dealerships. Used trade-in machines are often being sold sight-unseen before they have had a chance to be received into the dealership from a customer.

My advice for anyone looking to purchase or rent heavy equipment is to start planning as early as you can. For example, if you are looking to make year-end purchases, now is the time to start thinking of it.

Reach out your local sales representative or account manager and let them know what you are looking for. That way they can be on the lookout for you and let you know when a machine order from their original equipment manufacturer (OEM) may be arriving and you can reserve it or if the right used piece arrives they can let you know right away.

 

compiled by Mark Puppe, HBA Communications & Public Affairs Strategist