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Price Rise Warning Amid Shortage Of Building Materials

Price Rise Warning Amid Shortage Of Building Materials

It has been reported that contractors have been sent letters from Creagh Concrete detailing 15% price rises across its range of concrete products.

The increase came into force from September 1st and is the latest materials price hike, following sudden rises in the price of steel and bricks. Contractors say they are experiencing challenges in the current market, but this is a real blow as Creagh imposed increases at short notice and they may be passed on to customers who have already committed to fixed price contracts with their clients.

Creagh is a major supplier of concrete products across the UK, from its manufacturing bases in Northern Ireland, Scotland and England.

At the same time, Jewson has warned price rises due to a supply chain crisis that has meant cement, plasterboard and insulation materials are being rationed by manufacturers. They have told customers that prices for a range of goods will rise by as much as a fifth amid growing evidence from across the construction sector of severe and sustained disruption linked to Covid and Brexit.

In a further sign of the fallout in the UK from the coronavirus and exiting the EU, the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) revealed a decline in growth across housebuilding, commercial work and civil engineering for the construction industry, as the restricted supply of materials and transport issues weighed on activity.

Brian Berry, the chief executive of the Federation of Master Builders, said: “Builders throughout the UK, particularly smaller firms, are struggling to recover from the pandemic as a result of the continued materials crisis.”

Reflecting intense disruption across the industry, Jewson said that some building materials producers were using an “allocation process” to limit the supply of in-demand products. This would, in turn, affect its wholesale customers

It said Hanson was allocating cement to ensure “fair supply in the market”, which had led Jewson to limit certain products to five an order. British Gypsum had introduced an allocation process for plasterboard, while the insulation firm Recticel had taken similar steps.

Jewson said soaring demand for certain products and supply shortages had forced it to put up some of its prices this month, such as a 10-15% increase for wheelbarrows, a 5-20% rise for sealants, adhesives and chemicals, a 12% increase for glass wool insulation and a 20% jump for MDF mouldings.

It also told customers to expect longer delivery times for kitchen appliances with in-built microchips, such as combi and microwave ovens, amid shortages of chips worldwide. Travis Perkins has also warned of shortages of timber and plasterboard, while firms including Ikea, B&Q, Homebase and Argos tell of supply chain problems.

Business leaders have said chronic shortages of workers and key materials are beginning to weigh on Britain’s economic recovery from the winter lockdown, with disruption to global supply chains caused by the pandemic exacerbated by Brexit migration rules and border controls.

Economists have said that higher costs facing industry are likely to be passed on to British consumers in the form of higher prices for a range of goods and services.

Construction firms said their costs rose at the second-fastest rate in the 24-year history of the PMI survey, surpassed only by a record rise in June 2021. It has been reported that contractors have been sent letters from Creagh Concrete detailing 15% price rises across its range of concrete products.

The increase came into force from September 1st and is the latest materials price hike, following sudden rises in the price of steel and bricks. Contractors say they are experiencing challenges in the current market, but this is a real blow as Creagh imposed increases at short notice and they may be passed on to customers who have already committed to fixed price contracts with their clients.

Creagh is a major supplier of concrete products across the UK, from its manufacturing bases in Northern Ireland, Scotland and England.

At the same time, Jewson has warned price rises due to a supply chain crisis that has meant cement, plasterboard and insulation materials are being rationed by manufacturers. They have told customers that prices for a range of goods will rise by as much as a fifth amid growing evidence from across the construction sector of severe and sustained disruption linked to Covid and Brexit.

In a further sign of the fallout in the UK from the coronavirus and exiting the EU, the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) revealed a decline in growth across housebuilding, commercial work and civil engineering for the construction industry, as the restricted supply of materials and transport issues weighed on activity.

Brian Berry, the chief executive of the Federation of Master Builders, said: “Builders throughout the UK, particularly smaller firms, are struggling to recover from the pandemic as a result of the continued materials crisis.”

Reflecting intense disruption across the industry, Jewson said that some building materials producers were using an “allocation process” to limit the supply of in-demand products. This would, in turn, affect its wholesale customers

It said Hanson was allocating cement to ensure “fair supply in the market”, which had led Jewson to limit certain products to five an order. British Gypsum had introduced an allocation process for plasterboard, while the insulation firm Recticel had taken similar steps.

Jewson said soaring demand for certain products and supply shortages had forced it to put up some of its prices this month, such as a 10-15% increase for wheelbarrows, a 5-20% rise for sealants, adhesives and chemicals, a 12% increase for glass wool insulation and a 20% jump for MDF mouldings.

It also told customers to expect longer delivery times for kitchen appliances with in-built microchips, such as combi and microwave ovens, amid shortages of chips worldwide. Travis Perkins has also warned of shortages of timber and plasterboard, while firms including Ikea, B&Q, Homebase and Argos tell of supply chain problems.

Business leaders have said chronic shortages of workers and key materials are beginning to weigh on Britain’s economic recovery from the winter lockdown, with disruption to global supply chains caused by the pandemic exacerbated by Brexit migration rules and border controls.

Economists have said that higher costs facing industry are likely to be passed on to British consumers in the form of higher prices for a range of goods and services.

Construction firms said their costs rose at the second-fastest rate in the 24-year history of the PMI survey, surpassed only by a record rise in June 2021.

Among those materials reported as up in price, the most common were concrete, fuel, steel and timber. Businesses noted a continued resumption of projects that had been delayed because of Brexit and Covid but said client confidence was being hit by shortages of raw material supplies and increased cost burdens.

Duncan Brock, the group director at Cips, said: “A combination of ongoing Covid restrictions, Brexit delays and shipping hold-ups were responsible as builders were unable to complete some of the pipelines of work knocking on their door.

Time to check your BI indemnity period?

The Allianz Global Claims Review, (2015), identified that the growth of complex supply chains, ‘just-in-time’/’lean manufacturing’ practices can be a driver for increasing Business Interruption losses. Businesses traditionally insure against events such as property and plant damage rather than ‘non-damage events’. With recent events in the supply chain caused by Brexit issues and the lack of lorry drivers, it may be time to look at your Business Interruption insurance policy to ensure that the indemnity period is sufficient to cover your business until it is able to trade again normally. What might have been adequate at your last insurance review, may not be enough to cover changing circumstances for your business.

Construction insurance from Towergate

We can offer specialist construction insurance policies covering a wide range of industries, tailored to you from a wide range of insurers.

Business insurance from Towergate

At Towergate we don’t just offer traditional insurance broking: we believe that prevention is better than cure. That is why we have our own risk management consultancy focusing on pre-loss mitigation and business continuity, and have developed our own business interruption calculator.

We engage actively with insurers and our clients to obtain protection for businesses of all sizes. Our wide range of covers help protect your organisation should the worst happen.

See our range of specialist business insurance or contact your local office.

We are passionate about tackling the unprecedented levels of underinsurance in the UK: watch our video on how to avoid this for your business:

 

Mark Brannon Cert CII, commercial, sales, broking and client directorAbout the author

Mark Brannon Cert CII is a respected industry leader with over 17 years’ industry experience in a variety of roles within the business insurance sector. He works across a wide spectrum of insurance product and policy development, delivery and optimisation for clients, including claims, insurer relationships, marketing and communications, and risk management.

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