Supply Chain Issues Create More Challenges

Lumber has finally come back to a reasonable level. We feel we are going to see some additional ups and downs in the lumber market but unless something drastic happens we may be at or near our new normal. I say this with a sigh because of the other issues that are now peaking their heads. Supply chain issues are arising every day. Truss plates have been the big topic of concern over the past several weeks. This shortage is due to a diminished steel supply and labor volume vs the current increased housing demand. Shipping has raw materials sitting on ships shortly offshore, in port waiting to be offloaded, or in a trailer waiting on a rig and driver to deliver these goods to their destination. Companies are streamlining their offerings by eliminating SKUs in hopes of taking the capacity allotted to a lower-performing product and moving it to a top-performing product to increase supply. These changes, while the intent is good and, in our opinion, the right decision, disrupt the market in and of itself. They also take a great deal of time to implement thus exacerbating supply issues further in some cases.   

This burden on the supply chain is creating a backlog for manufactured goods like nothing we have ever seen.  Window manufactures are being crippled not only by labor shortages but raw material supply chain delays from PVC resin to glass. Glass manufactures are being delayed due to a lack of some raw materials and chemicals. The chain reaction is astounding. A byproduct of the climate we are in that will show itself possibly in the future is inflation. While the Fed is stating they do not intend to increase rates to offset inflation currently a key indicator the Fed uses to measure an inflationary future rose in July 3.6% which is the highest level in 30 years, since May of 1991.

While we have at this point made headway in regard to lumber prices it is our position that there are many new challenges we will have to face over the next few years all steaming from the onset of COVID 19. The conversations we are having are around communication and setting proper expectations both externally and internally. Communicating no matter how tough the message may be the truth so that we all as partners can make the best decisions for our businesses and ultimately the clients we serve. These challenges are going to become emotional and have great effects on a company’s workforce. We speak about coaching and guiding our team through ever-changing times. We are all going to have to become very nimble and accept changes to the path and schedule we have set. It is our belief that as long as the construction community truly understands these issues are real, we can work toward a combined end result that is mutually beneficial. That we will thrive and come out on the other side of this time in our business lives smarter, stronger, and better than we all were when we were forced in.