Last year’s COVID-19 pandemic, compounded by Winter Storm Uri in Texas, severe weather in the Midwest, high consumer demand, a container shortage, embargoes, employee shortages and the Suez Canal blockage created the perfect storm that led to today’s challenging construction environment, according to presenters at a recent workshop hosted by Western Specialty Contractors.
Representatives from Western Specialty Contractors, Sika Corp. and Rooftech/Pavetech Consultants conducted a workshop this summer, outlining the circumstances behind the construction industry’s product shortages, long lead times and price increases, plus offered their outlooks for the year ahead. The online workshop was offered free to facility managers, building owners and customers.
Much of the nation’s construction projects were halted by the COVID-19 shutdown in 2020 when devastating Winter Storm Uri crippled Texas in February 2021. The complete shutdown and damage to manufacturing plants in the state halted raw material production for several weeks, which in-turn caused construction material manufacturers, such as Sika, to produce less for its customers. A dip in Texas’ oil refinery production was also a major contributor to the raw material shortage, according to workshop presenter Mike Mastro, vice president of Sika. Sika is a specialty chemicals company based in New Jersey that manufactures concrete admixtures, specialty mortars, epoxies, structural strengthening systems, sealants, adhesives and more.
“Much of the manufacturing plants are built around the oil refinery industry, meaning that a lot of these raw materials, such as PVC, Poly O, MBI, TDI are basically centered around oil and that centered around Texas,” Mastro said. “After companies were able to start back up, they started allocating the raw materials to manufacturers to make products, so that is where the time lags started, and while we have an increased demand for our products year over year of 20 percent, we now have a reduction in the ability to manufacture products by about 80 percent due to the raw materials shortage.”
Strong consumer demand, combined with raw material shortages, freight delivery backups and a tightening of the labor market will continue to challenge the supply of construction materials through the summer, with prices predicted to rise consistently through mid-2022, according to Mastro.
Workshop presenters offered their advice on the best ways for facility managers and owners to move forward with 2021 capital improvement projects considering the year’s unprecedented challenges.
“We recommend getting the project under contract and moving forward with an open mind,” said David Grandbois, assistant branch manager at Western’s Minneapolis Branch. “Plan ahead for long lead items, identify them early and get in contract with the pricing for those items. Keep an open dialogue between the consultant, owner and contractor as things change daily and hourly. And finally, be flexible to allow for material price increases as they come along.”
Tanya Shepherd, senior business development manager at Western Specialty Contractors, added that communication between the manufacturer, owner and contractor is key to navigating today’s construction environment.
“The biggest thing is just honestly being able to communicate to your ownerships or your asset managers and explain to them what’s going on,” Shepherd said. “If you put capital money in 2021, then a lot of ownerships say that is has to be completed in 2021 and that just may not be the case, so communicating with your engineers, your consultant, your contractor and your ownership is probably the best thing you can do at this point. There are going to be a lot of question marks about lead times and completion dates that you aren’t necessarily going to have answers for.”
Transparency about what can and can’t be done on a project is one of the best ways to move forward, Mastro added.
“A lot of these projects, you normally have a monthly project meeting, it should probably be bi-weekly or weekly now because this process is changing and it’s so dynamic and changing so fast that I think it is important for everybody,” Mastro said. “From the manufacturer to the specifier to the owner to the contractor, everyone should be having these conversations together because I think it is going to require a lot of creativity to move around the job site in a different order or focus on different things.”