Further Construction Shortages Warning as Inflation Soars

IN THE LATEST CLC statement on construction shortages, warnings are that the conflict in Ukraine is likely to affect some timber supplies later in the year.

A good supply of most products and materials are reported but ongoing challenges continue to affect bricks, aircrete blocks, concrete products, PIR insulation products and gas boilers, all of which are on long lead times.

Construction Shortages

Most wood products, including structural timber, are fully stocked. While structural softwood will remain fully available, the availability of some other product groups, whose use is concentrated in the joinery, shopfitting and finishing sectors rather than housing, is less certain given their greater reliance on raw material supplies from Russia and Belarus. The most critical is Birch plywood, which will become increasingly scarce as summer progresses, as outside of Russia there is only limited production from Europe, principally Finland. If the UK market is offered Birch Plywood for later in the year from the Far East, it will be based on Russian Birch logs and will be illegal to import.

Although Siberian Larch cladding will disappear from the market eventually, there are plenty of alternative cladding sources. Similarly, there are alternatives to Russian redwood and whitewood used principally in joinery and shopfitting, although these are generally more expensive.

Construction Slowdown

Some initial signs of a slowing market are reported, pointing to a slowdown in starts on site during the three months to April 2022. It suggests that inflationary pressures are starting to influence client decisions in some sectors, continuing the trend seen with softening retail sales over the last few months.

Most regions are still reporting strong demand on the trade side, particularly from larger housebuilders and for infrastructure projects, including road building. SME contractors, however, are concerned that local authorities may delay regeneration projects until they can achieve more price certainty through the procurement process. We have also heard of delayed start dates for specialist trades at the end of the product building cycle, that may indicate projects continuing at a slower pace, which may impact both productivity and cash flow.

Price Inflation

Price inflation remains a critical issue affected by rising energy, fuel and raw material costs, increasing product prices. The latest data published by BEIS shows that annual material price inflation increased to over 24% in March for a basket of materials.

With further restrictions on Russian gas and oil imports across Europe it is expected that energy price movements will continue to be unpredictable. Some merchants and producers have also reported impacts on the availability of products caused by the outbreak of Covid in China and the restrictions imposed in response to this, which is affecting manufacturing and shipping from Shanghai.

Wage Inflation

Wage inflation is a further concern within the supply chain, with pay rises necessary to secure labour.

Those pay raises have helped to somewhat ameliorate the shortage of HGV drivers, with reports of a record number of HGV drivers taking their tests and estimates that the driver shortfall has reduced from 100,000 at its peak to 65,000.


Despite this, the high costs and risks around haulage and shipping persist. It is reported that some European lorry manufacturers are not taking orders either because backlogs were problematic or pricing of input materials for new vehicles was proving too uncertain. This may put greater pressure on companies to maximise the efficiency of their fleet and keep vehicles for longer than anticipated. Construction product manufacturers and distributors are amongst the largest users of the UK road network.

In the global shipping market, the price of moving a container from the Far East to Europe has dropped as much as 25% from its high at the start of the year. However, many forecasters believe that the elevated costs and volatile delivery schedules caused by the container crisis will nonetheless carry on to mid-2023.

The CLC statement is from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group.

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