Construction Industry Facing ‘Perfect Storm’ of Supply Shortages

Written by: Keith Tully

Construction teamThe UK’s construction industry is facing a “perfect storm” of supply shortages in the coming months, which will likely leave companies struggling to meet demands for their services.

According to the Construction Product Association (CPA), the impact of the Covid-19 pandemic and the ramifications of Brexit are leaving construction firms short of skilled labour and essential materials.

Activity levels within the construction sector surpassed pre-pandemic levels in May and output is expected to grow over the course of this year and in 2022.

Demand for construction services is understood to be heightened across the UK this summer, with many people keen to carry out home improvements and businesses ready to invest in infrastructure and house building projects.

However, for service providers in the industry, there are now real challenges involved in securing the materials and the employees they need to get jobs done.

The UK having left the EU recently is viewed as a factor contributing to labour shortages, with people from the EU no longer able to live and work in the UK as easily as they were able to prior to Brexit.

Meanwhile, there is extra demand and reduced availability of essential construction materials globally because economies everywhere are drawing on the same resources as they try to get back to normal life and stimulate post-pandemic growth.

Noble Francis, economics director at the CPA, told the Financial Times recently that the situation represents a “perfect storm for the construction industry”.

“I’ve never seen a time when construction demand has been so high yet there remain so many supply-side risks and uncertainties in the industry,” he is quoted as saying.

Another issue for building companies particularly is the extra costs that the pandemic added to the price of shipping goods and materials from different parts of the world, most notably from China.

It is understood that overall construction sector activity in the UK will have been constrained during July and August by the so-called ‘pingdemic’, whereby many thousands of people across the country are all being told to self-isolate and not go to work to avoid potentially spreading coronavirus.

Smaller companies are thought to be among those most impacted by supply shortages because they typically have less visibility or certainty about demand so they tend not to buy their materials much in advance of needing them for specific jobs.

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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