Gulf rebuilding will see delays and extra costs
Joe Sobol, owner of Big Easy Construction in New Orleans, has bad news for homeowners who’ve been calling about roofs damaged by Hurricane Ida or to get an update on renovations that were scheduled before the storm ripped through the area.
The job will cost a lot more than usual – and take much longer, too.
Ida slammed into the Gulf Coast – then took its destruction to the Northeast – at a time when building contractors were already grappling with severe shortages of workers and depleted supply chains. The damage inflicted by Ida has magnified those challenges.
The struggle to find enough skilled workers and materials will likely drive up costs, complicate planning and delay reconstruction for months.
“My expectation,” said Ali Wolf, chief economist at the real estate research firm Zonda, “is that it only gets worse from here.”
Consider that Lake Charles, Louisiana, 200 miles west of New Orleans, still hasn’t recovered from the damage left when Hurricane Laura tore through the area a year ago.
The challenges facing construction companies stem from what happened after the nation endured a brutal but brief recession when the viral pandemic erupted in March 2020: The economic rebound was far faster and stronger than anyone expected. Businesses of all kinds were caught off-guard by a surge in customer demand that flowed from an increasingly robust economic recovery.
Workers and supplies were suddenly in short supply. For months now across the economy, businesses have been scrambling to acquire enough supplies, restock their shelves and recall workers they had furloughed during the recession.
Construction companies have been particularly affected. Among building executives Zonda surveyed last month, 93% complained of supply shortages. Seventy-four percent said they lacked enough workers.
And that was before Ida struck. “Natural disasters do cause a strain on building materials, reconstruction materials and on labor,” Wolf said. “The difference today is that the entire supply
chain has been battered even before Ida’s occurrence. You really have all these things hitting at the exact same time. Frankly, the last thing the supply chain needed was extra strain.”
A result is that the cost of materials and supplies has been surging. Combined prices for windows, doors, roofing and other building products jumped 13% in the first six months of this year, according to Labor Department data. Before 2020, by contrast, such aggregate prices would typically rise a bit more than 1% annually, on average, in the first six months of a year.
Prices for steel mill products were up more than twofold in July from a year earlier.
Gypsum products, which are needed
for drywall, partitions, ceiling tiles and the like, were up 22%.
Henry D’esposito, who leads construction research at the real estate services company JLL, said the toughest challenge in rebuilding now is the delays in acquiring drywall, glass, steel, aluminum and other materials.
“A lot of the materials that you would need for any project and especially something this urgent – you’re not able to get on site for weeks or months,” D’esposito said.
“We’re having to jump through hoops,” said Robert Maddox, owner of Hahn Roofing in Boyce, Louisiana, 200 miles northwest of New Orleans. “We’re having to pay more for labor. We’re having to pay more for supplies. We’re having
to bring supplies in.”
Jacob Hodges, co-owner of a family roofing business in Houma, Louisiana, complains that shingles are in such short supply that it’s hard to buy them in the same color consistently. One day, they’re available only in black; the next day, only gray.
Hodges takes what he can get. So do his customers, who are desperate to have their roofs patched up or replaced after the storm.
Then there’s the labor shortage. Among workers in short supply are framers, who build, install and maintain foundations, floors and door and window frames; carpenters; electricians; plumbers; and heating and air-conditioning specialists.