Material Madness: Part Five

Follow us for our five-part investigative series discussing contributing factors to the roofing industry’s current supply chain challenges. We have researched the issues and will spend several weeks highlighting the circumstances affecting material shortages and price escalations.

Part Five

Covid-19

Covid-19 brought a myriad of uncertainty. As the U.S. grappled with shutdowns, and a lack of data of how to safely operate in a pandemic, suppliers to the roofing industry chose to reduce risk by greatly reducing inventory to levels significantly lower than in 2019. What was unexpected was the combination of low interest rates and cash flush consumers, leading to a spike in demand for everything. According to John Altmeyer, executive chairman of GAF:

The industry left 2019 in a “pretty stable” situation before demand slowed and supplies declined as the Covid-19 pandemic struck. Inventories throughout the supply chains were diminished. Fast forward to 2021, the economy rebounds. Demand picks back up again. The supply chains are stressed. They struggle to get those inventories built back up.

Covid-19 breakouts globally forced the temporary shutdowns in factories and ports. In turn, the manufacturing of goods was reduced and shipment of many items were delayed. The following graph from the US Chamber of Commerce Q4 2021 Commercial Construction Index shows material shortages ranking as contractors’ highest concern due to Covid-19:

The Chamber report notes that 95% of contractors report a shortage of at least one material with steel ranking highest at 27% and roofing products second at 19%.

The property insurer FM Global, summed the impact of Covid-19 to, “The pandemic has disrupted demand (as consumers have hunkered down) and product supply (as factories have suspended production), setting up a bullwhip effect of supply and demand mismatches.”

This complex set of interwoven issues has moved roofing manufacturers to no longer hold pricing on material quotes or guarantee delivery dates. Materials are priced at the time of delivery and the longer it takes to deliver, the more it currently costs. In a letter to roofing contractors, Jennifer Ford-Smith, Director of Marketing and Product Management at Johns Manville states, “due to unprecedented demand combined with raw material shortages, nearly all products are experiencing significant lead times into Q1 2023”. The manufacturers do not seem to see any relief from the myriad of issues affecting both price and lead time until at least 2023.

References:

Roofing Industry Leaders Discuss Supply Chain Issues

https://www.roofingexteriors.com/print/924

U.S. Chamber Commercial Construction Index - Q4 2021

https://www.uschamber.com/economy/us-chamber-commercial-construction-index-q4-2021

Commercial property insurer FM Global spotlights six key facets of current global supply chain strain

https://newsroom.fmglobal.com/releases/commerical-property-insurer-fm-global-spotlights-six-key-facets-of-current-global-supply-chain-strain?print=1