Beat building blues after ‘perfect storm’ hits
A post-covid rush on home renovations and new builds has caused prices to skyrocket, frustrating delays and products to run out. Industry sources tell Jane Phare how to beat the building blues.
Fletcher Building’s CEO Ross Taylor doesn’t rate himself particularly highly when it comes to predictions. For example he, like most others in the building industry, predicted tight times after lockdown. Prepare for the worst, keep stocks under control, hunker down, that was the idea.
Well, how wrong Taylor and his colleagues were. Here’s another prediction for what it’s worth, he says. Prices will stay high — and may go higher — for at least another two years.
Get used to the high cost of manufacturing and building because he doesn’t see it easing any time soon. However, the good news is that he predicts the timber shortage will sort itself out by the beginning of the warmer months.
This time last year Taylor was preparing for a gloomy outlook. Covid-19 and long lockdowns had turned the world’s economy on its head, closed production factories and disrupted shipping.
“The forecast for what was going to happen with demand and the economy was very dire,” Taylor says.
Fletchers builds around 900 new houses a year but through its building products is involved in up to 30 per cent of housing in New Zealand, both new and renovations.
Inventory in Fletcher Building’s manufacturing plants — insulation, plasterboard, steel products, laminate surfaces, piping, aluminium joinery, roofing and flooring — was slowed as the company prepared to “weather a very difficult storm”.
Structural timber and plywood suppliers in New Zealand were no different. Instead of rebuilding stocks over the winter months as they would normally, ready for the next summer season, they eased back, bracing for leaner times.
But everyone got their predictions wrong, Taylor says. The expected drop in business didn’t happen. Kiwis, confined to their homes during lockdown and working from home, decided to renovate, build decks, pave outdoor areas and add on rooms. At the same time the housing shortage meant builders and developers were frantically building new homes. Suppliers and tradies alike were overwhelmed, manufacturers couldn’t keep up, imported products were held up in ports, and labour shortages compounded the problem. It was a perfect storm.
“It caught us all on the fly in timber particularly and they’ve never been able to catch up.”
But Taylor predicts construction will slow over the wet winter months, giving timber suppliers a chance to build up stocks.
“I think it will go a long way to solve it. We’ll get into September, October, the next summer season and I think things will have settled down a bit.”
In the meantime builders, architects, joiners, home renovation specialists and house building companies are all vying for the same products, trying to finish jobs on time and on budget. And testy clients want to know why they can’t have the flooring they chose and why the cost of the stone benchtop has gone up.
Those in the industry say there are ways to help ease the pain. The early bird gets the job done, they say, so urging clients to choose products and finishes months earlier than in the pre-covid era is paramount.
They warn if selection is not done months ahead, builders will go off to another job while they wait for the Italian tiles to arrive and might not return for months.
Be flexible, they say. Choice number one might hold up the job for months so be prepared to quickly change to options two or three, be it flooring or the colour of the steel roofing.
Judi Keith-brown, president of Te Ka¯hui Whaihanga/new Zealand Institute of Architects, says better and earlier communication between architects, builders, suppliers and clients will go a long way to easing the pain.
“If we pull together it will work.”
She talks regularly to the industry throughout the country, and says the problems are universal — shortages of timber framing, laminated joists, certain colours of steel roofing, kitchen and laundry appliances, carpets and timber flooring, and fabrics for curating and upholstery.
“Freight costs are high and it’s hard to predict when things will arrive.”
She’s heard stories of suppliers having to wear the cost of air freighting delayed products to meet deadlines pushed back by shipping delays.
“They [the suppliers] have promised a delivery date to the clients so they’re having to pay out megabucks to air freight it.”
Amy Hendry, co-director of Four Walls Architecture in Auckland, is another who predicted lean times after lockdown but now her company, like others, is turning work away despite hiring two new architects.
She’s telling her clients to choose finishes, fittings and appliances months before they’ll be needed.
“We don’t know what the lead times are. We tell them ‘you’re going to need this in six to seven months, go shopping, pick what you like, get a deposit down.”’
Builders, too, are making sure clients make up their minds early.
“We’ve got a couple of projects at the moment where the builders are really hounding us and the clients for decisions, and that is way sooner than normal.”
Hendry says developers are particularly conscious of shortages causing construction delays and budget blowouts.
Shortages aside, rising prices have alarmed everyone involved in construction. With increased costs in manufacturing, it’s a problem Taylor doesn’t see going away any time soon.
“Power is very dear. If you are manufacturing anything, electricity bills are double, triple what they were last year.”