By Craig Webb, Webb Analytics
Five executives at distribution companies that supply Florida with much of its building products say they expect continued delays and more price hikes into 2023, with Russia’s invasion of Ukraine triggering new problems.
“In Florida, I’m responsible for $40 million worth of commodity items,” Julie Condy, business development manager at PrimeSource Building Products,” said March 9 at a panel discussion in Leesburg, FL. “Not one vendor has told me it’s going to get better. They all told me it’ll be tighter.”
“We’re in for more of the same through 2022 and into 2023,” predicted Don Vizio, general manager for two BlueLinx facilities in Florida. “My customers are booked out through this year. I don’t see any easing of housing. My biggest fear is supply [challenges coming] from what’s going on overseas. A lot of scrap metal comes from Russia and Ukraine. That’s going to affect your businesses with rebar, nails. And there’s oil. …
"It’s more of the same, more shortages, and a challenge for us all," Vizio added. "We have 10,000 SKUs across every product category. I can put any product in there and it’s the same discussion.”
The panel discussion for central Florida builders was organized by RoMac Building Supply. The other panelists were Jim Kirkvliet, owner and CEO of Parliment Building Products, Greg Terlep of Huttig Building Products, and Jarrod Myers of Great Southern Wood. RoMac CEO Don Magruder led the discussion.
(Note: A video recording of the entire discussion is available at https://youtu.be/QBK32iFWvOc)
Discouraging news dominated the conversation:
Russia produces 10% of the world’s nickel and 6% of its aluminum, so sanctions against that country are expected to hit the price and availability of goods as varied as stainless steel products and aluminum mullions on windows. Russia also is a huge producer of pig iron, used to make steel, so products like rebar and garage doors will cost more.
The war-related surge in oil prices are certain to produce higher fuel surcharges on deliveries as well as lead to jumps in the cost of plastic-based products, such as vinyl shingles. “We’re seeing charges from suppliers that used to be $300 per truck is now $500,” Condy said.
One major manufacturer of exterior doors—capable of producing 50,000 doors a week—is so backed up it will stop taking orders in late March through April.
Delivery times remain inconsistent.“We have orders we’ve placed a year ago that haven’t arrived yet,” Turlep said. “We have other orders placed 3-4 months ago that have come in.” Added Condy: “I have containers on delivery that are over a year old … that I have no ETA on. It’s the same everywhere.”
Surprise price increases also abound. Jim Chaput, who heads RoMac’s garage door segment, said it used to be common to get price increase notices 90 to 120 days ahead of time. “Then it turned into ‘On Thursday I got a notice, and on Friday the price changed,’” he said. Magruder said a lot of pricing today is now based on the price as of the day of shipment, not the day of the order.
There’s a 52-week wait for new propane-fueled forklifts and a 30-week wait for electric vehicles.
Equipment for truss factories is 13-16 months out.
At RoMac, it’s taking 24 to 26 weeks to get a stock window, while a stock door can take 36 to even 50 weeks to arrive.
Rail cars to move wood out of British Columbia are in short supply—and workers at Canadian Pacific Railway have voted to go on strike March 13 if there’s no agreement on a new contract by then.
Concrete accessories are in such short supply that Condy knows of one customer who is served by four major distributors and yet couldn’t acquire as little as one month’s supply.
At RoMac, the average wait to get standard garage door is 13 to 15 weeks, with premium garage doors taking up to 20. Steel for springs is on allocation. And don’t forget that some parts in a garage door are made from aluminum.
There’s a shortage of OSBs and LVLs because producers of wood veneer have found it more lucrative to sell to plywood manufacturers.
There’s even a shortage of furring strips, used in concrete construction, because mills have improved their their cutting of logs to the point that there are fewer leftovers to turn into furring.
Kirkvliet, who has been involved in the steel business for 35 years and once owned a steel mill, said the industry’s consolidation has caused mills today to operate differently than in the past.“Where there used to be a lot of undisciplined chasing of volume, they’ve become disciplined and are chasing shareholder return,” he said.
Today, pricing for steel-based products “is scary,” Kirkvliet continued.
The only panelist who was relatively unworried about supply was Myers, whose Great Southern Wood is probably best known for its Yellawood treated product. But he said he was worried at how lumber prices—particularly 16-foot 2x8s—has risen so high.
“In March of 2020, 16-foot standard decking was trading at mill level of $500 per thousand. That’s $5 a stick,” Myers said. “Today’s it’s $1,600 per thousand and you can’t find it. My concern is that at some point it’ll be too expensive for a single project.”
Myers echoed the concerns of other panelists about finding workers, saying he has struggled for more than a year to find enough drivers for his two dozen trucks.
What to do about all this?
“You have to expect the unexpected and learn to adjust,” Terlep said.
Kirkvliet’s advice was this: “Make sure you’re communicating with your suppliers each and every day so you can navigate this as best as you both can. There’s much less risk [than] if you try to do it on your own.”