Short Supply of Construction Materials
After the pandemic that led to the temporary closure of many construction sites last year, 2021 has been a year of recovery for the construction sector.
However, since the spring, there have been growing concerns. Why? An unprecedented shortage of almost all the raw materials used in construction – aluminium, wood, plaster, concrete, iron, etc. – together with a very significant rise in prices with direct repercussions on construction contractors but also on consumers. Faced with this shortage, the profession is organising itself, helped by the State and by the possibilities offered by digital solutions…
Why the shortage?
The first lockdown led to a slump in activity which resulted in a shortage of many raw materials and rising prices. The rapid economic recovery that followed and the purchase of materials in large quantities, particularly by China and the United States, also contributed to this shortage. This is the case, for example, of European wood, the shortage of which can be explained by the taxation of Canadian wood by the United States, which has pushed American companies to obtain supplies from European countries at high prices. This has resulted in a 30% price increase.
The consequences of the shortage on stakeholders in the sector
This shortage of materials has led to a price spike. Today, no company is spared, whatever its size and speciality.
To comply with their quotes issued before this spike, some are forced to reduce their margins, others find themselves engaged in loss-making projects. Only 26% of them were able to pass on these increases to the sales price of their services.
Another consequence is that building contractors and self-employed artisans are finding it difficult to complete their projects. They are encountering heavy delays in delivery, with extended construction deadlines and even postponements.
More and more of them are now having to reduce the validity period of their quotes so as not to find themselves in difficulty.
Measures to help the construction industry
To help businesses faced with this situation, some construction federations are asking the Government for aid such as the payment of furlough, the adjustment of schedules and the updating of prices.
On 15 June, the Government implemented measures to protect French companies: the suspension of late payment penalties for public contracts, the creation of a crisis committee, and the establishment of sector mediation to promote exchanges between the different stakeholders, joint discussions and identification of best practices.
The State has even recently gone further in supporting businesses facing supply difficulties or rising costs by announcing, on 13 December, a series of measures intended to support these economic players, including construction companies.
The Finance Ministry has therefore announced that the repayable advance system set up during the pandemic can now be combined with a loan guaranteed by the State (PGE) or a subsidised loan. It will also be possible to benefit from “payment facilities for certain welfare contribution and tax deadlines”, when shortages are the cause of difficulties encountered by the company.
Finally, among the measures put forward, the launch of a new type of loan: the “loan for industry”. This loan is intended to help companies finance their working capital needs with a total 700 million euros allocated to the scheme.
Digital technology to the rescue of shortages
In this transition period, which remains complicated, the solutions offered by digital technology can prove to be particularly useful for better planning a construction site while meeting deadlines.
Many solutions – software in particular – exist in fact to better plan construction sites, manage site activity, and ensure the quality of the work carried out in order to better control the quantities of materials necessary for projects and to better control the supply of materials and related logistics.
For example, a collaborative site monitoring platform like Finalcad One will allow operational staff in the field to:
– check the consumption of raw materials on site and anticipate supply delays;
– pool requirements, orders, logistics and delivery;
– optimise schedules;
– improve site purchasing procedures.
Supply problems have been going on for several months now and it is clear that there are no signals indicating a return to normal in the coming months. The stakeholders in the construction industry, who had hoped to see this crisis resolved before the end of the year, will therefore have to be patient. However, there is no doubt that the sector will once again be able to show resilience and creativity in the weeks and probably in the months to come to meet the unprecedented challenge it faces.