Big construction firms risk choking SMEs of key materials amid global shortages
Big construction firms have today been warned that they risk choking smaller companies of essential building supplies amid the current global shortage of raw materials.
The Construction Leadership Council (CLC) said that larger firms able to buy supplies in bulk were not yet feeling the pinch of the situation, which it said would get worse.
But, the government agency added, such bulk-buying meant that smaller firms were unable to get hold of essential materials like timber, cement, and roof tiles as easily as before.
“This not only impacts their ability to complete projects, but also the cash flow of their business”, it said in a statement.
In order to make sure that SMEs are not starved of materials, the CLC called on businesses to “work collaboratively to manage this unprecedented situation to everyone’s benefit”.
It said that businesses should not “over-order unnecessarily” and called for greater transparency when supplies were tight.
UK construction activity has soared this year, with IHS Markit’s construction PMI registering 61.6 in April, only fractionally below March’s record reading of 61.7. Any figure above 50.0 indicates an overall expansion of construction output.
Alongside commercial work and housebuilding, work on civil engineering projects has also grown at its fastest pace since 2014 since the lifting of restrictions earlier this year.
The CLC said that the “unprecedented” surge in demand would last another six months at least.
As a result, the Office for National Statistics (ONS) is forecasting a rise of 7-8 per cent in material prices, with materials like timber set to double in price during the course of the year.
Mace chief executive Mark Reynolds backed up the CLC, saying his firm was yet to feel the impact of the shortages.
He told Building Magazine: “At Mace we can’t see the impact at the moment. The information that we share when looking at procurement isn’t showing any significant issue around material supplies affecting us, apart from anything that has silicon chips.”