Record numbers of contractors report materials supply issues

Three out of four contractors are experiencing problems with the supply of materials and products.

Results from the Civil Engineering Contractors Association (CECA)’s quarterly Workload Trends Survey for Q2 2021 found that while civils workloads remain buoyant, a record proportion of British firms (73%) cited issues with the supply of materials and products.

Costs and tender price balances have also hit an all-time high, threatening to undermine the sector’s ability to deliver the projects and jobs necessary to drive the UK’s continuing economic recovery, CECA said.

CECA chief executive Alasdair Reisner said: “It will come as no surprise to anyone trading in the infrastructure sector at the moment that CECA members are experiencing rising costs and tender prices. While it is to be welcomed that order books in the industry are showing sustained growth, the challenges associated with the covid-19 pandemic and Brexit continue to place businesses under pressure.”

He added: “We call on government to work with industry to identify practical steps that can be taken to alleviate these concerns, and ensure that the infrastructure sector is able to deliver the planned pipeline of investment as efficiently as possible, to the ultimate benefit of businesses and communities in all parts of the UK.”

The survey reinforces a warning from the Construction Leadership Council over the shortage of lorry drivers, which was adding to the pressure of getting product supplies to site.

The co-chairs of the CLC’s product availability working group, John Newcomb, chief executive of the Builders Merchants Federation, and Peter Caplehorn, chief executive of the Construction Products Association, said: “Haulage and the lack of availability of drivers are now the major concerns affecting distribution with some suppliers asking builders merchants to collect their orders as they cannot get enough drivers to complete deliveries.”

The update also said imports from China were going to be held up because key ports in that country were operating at a reduced capacity amid ongoing restriction caused by the covid-19 pandemic.

Timber, cement, roofing products, bricks, blocks, insulation, steel and cable management systems remained the products in shortest supply, while global shortages of semi-conductors were a cause for concern in the lighting and appliance sectors.

Newcomb and Caplehorn added: “Although product and material price inflation has slowed, indications are that it will be 2022 before prices stabilise, with some manufacturers still to implement double-digit price increases to recover current and future cost inflation.”

Meanwhile, new figures released earlier this week pointed to increased cost pressures on clients and contractors. The Office for National Statistics showed a growth in orders for the second quarter of nearly 20%, while wages for skilled tradesman rose during July.

ONS reported that total construction new orders grew by 17.6% (£1,998m) in Q2 2021 compared with Q1 2021. This meant total new orders recovered in Q2 to above pre-pandemic levels for the first time at 1.6% (£214m) above the Q1 2020 level.