The Effects of Surging Demand and Supply Chain Disruptions
How Covid-19, Consumer Spending Habits, & Bad Weather Have Put the Construction & Maintenance Industry in a Tough Position
Despite a slow but steady return to “normalcy,” the business world is still very much recovering. While restrictions are being eased and global travel is ramping up, there’s still a lot of catching up to do in the business world.
“People don’t realize just how far-reaching the effects of Covid will be in our industry in the coming years,” said Steve Hearon, president of BrandPoint Services. “Border closures, factory shutdowns, labor stoppages and losses. Manufacturing of most of our essential supplies and goods basically stopped. The full repercussions from just those early months of the pandemic are still being felt.”
Covid-19 brought global shipping to a standstill in March 2020, and because of its origins in the Wuhan region of China, manufacturing disruption was almost immediate. According to a report from the International Finance Corporation (IFC), “more than 200 of Fortune Global 500 Firms have a presence there.”
From there, the disruption rippled to every level of the supply chain. Per IFC, “cargo was backlogged at China’s major container ports, travel restrictions led to a shortage of truck drivers to pick up containers, and ocean carriers canceled (or blanked) sailings. The resulting shortage of components from China impacted manufacturing operations overseas.” The shortages impacted everything from plastics to lumber to paint to anything in between.
At the same time, consumer spending habits and attitudes, especially around home construction, changed dramatically. Millions of people suddenly found themselves at home, and spending a whole lot more time there than ever before. This led to “remodeling and replacement spending in home improvement [to rise] by 19% in 2020, or $27 billion in revenue. Much of this is concentrated in home improvement retail.” That demand, combined with an already-strained supply chain of building materials, has pushed the construction and development industry into a bind with no immediate fix.
“Now, post-pandemic, there’s this surging, pent-up demand that’s facing a market that can’t meet it,” said Hearon. “And North America isn’t the only player in the building supplies market, either.”
Hearon is referring to the rising demand for building and construction supplies around the world, specifically in Asia. However, the overseas increase in demand is facing yet another strained supply chain. The devastating ice storms that hit Texas earlier this year shut down hundreds of plants that were essential to refining and processing the chemicals needed for manufacturing paint. Worse, temperatures were so cold that much of the materials and paint literally froze, wiping out millions of dollars in product.
In response, major paint suppliers like Sherwin-Williams are predicting price increases, while Hearon himself is preparing for BrandPoint Services’ own path forward.
“For us, it’s reality,” he said. “Trade and materials costs are as high as they’ve ever been. Acquiring supplies and skilled labor is harder than ever before, thanks to a huge influx of demand that is meeting a depleted, decimated supply chain. In order to hold the line, to continue to provide the high-quality service that businesses have come to expect from us, something has to give.”
Above all, Hearon is focused on one thing: their clients and partners.
“They sought us out because they know our level of service. We’re fully committed to maintaining that standard, and focused on coming up with a solution that works for both BrandPoint Services and them. Ultimately, our goal is to bring stability to the industry by being ourselves as a company. We’re a vetted, reliable team with the size and capability to negotiate material costs, and that’s not going to change.”