The Construction Leadership Council’s (CLC) Material Supply Chain Group (formerly Product Availability Group) has reported that the beginning of 2024 has continued the trend of good levels of product availability and prices remaining flat or falling slightly which 2023 ended with.
As reported previously, the easing of pressure on product availability has largely been driven by continuing reduced demand across the different regions and sectors of the UK market, with those supplying housebuilders the worst hit.
New housebuilding continues to be held back by high interest rates and planning challenges. The report added that larger builders do not anticipate a second half upturn at this stage.
Regional mid-cap builders, however, cite the availability of small sites as their number one concern but expect to maintain current output levels throughout the year.
Trade routes changing
Any risks to product supply from the disruption in the Red Sea are yet to materialise, although the Group is monitoring the availability and cost of supplies from the Indian subcontinent and Asia such as decorative sandstone, plywood and sheet materials, hand tools, ironmongery and electrical goods.
A longer sea journey of 10-15 days has led to delays in deliveries, so the main concern here relates to five-fold price increases stemming from increased shipping and container costs for these products.
Brick manufacturers have adjusted capacity to meet anticipated demand for 2024, while balancing stock levels. They recommend that all customers plan ahead, placing forward orders to maintain supply.
High availability, low demand
There is good availability of aggregates, cement and concrete, with demand not forecast to markedly improve until 2025 in spite of the current pipeline of infrastructure projects. There is also a plentiful supply of steel, but the supply chain here is under financial strain due to the downturn in demand.
Otherwise, there are concerning reports that late payment for materials is creeping up in a number of regions, although it is being managed at this stage.
Obtaining trade credit insurance, however, is a bigger issue. Firms have complained of coverage costing more and being reduced or withdrawn as insurers become more nervous about the level of construction insolvencies.
The joint chairmen of this Group, John Newcomb of the BMF and Peter Caplehorn of the CPA, are meeting with members of the Association of British Insurers to promote a greater understanding of building material supply within the wider construction landscape, with a view to changing insurers’ current blanket approach towards risk management.
Labour costs and skills shortages
The issues of labour costs, availability and skills shortages continues to rank high for most of the Group.
This ranges from concerns around a lack of resources amongst building control teams from 6 April to difficulties finding enough qualified site staff to support the transition to newer, more sustainable technologies and products.
These concerns have been shared with the wider CLC and it is continuing to have discussions with the government and the Building Safety Regulator.
