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Rising prices, shortages making operations more difficult for construction industry

  • Workers from Davis Construction work on a house in Francestown on Friday.

  • Workers from Davis Construction work on a house in Francestown on Friday.

  • Workers from Davis Construction work on a house in Francestown on Friday.

  • Workers from Davis Construction work on a house in Francestown on Friday.

  • Workers from Davis Construction work on a house in Francestown on Friday.

  • Workers from BD Salo Masonry work on a home in Francestown on Friday.

  • Workers from BD Salo Masonry work on a home in Francestown on Friday.

  • Workers from BD Salo Masonry work on a home in Francestown on Friday.

Monadnock Ledger-Transcript
Published: 4/17/2021 9:43:36 PM
Modified: 4/17/2021 9:43:35 PM

Brad Davis, owner of Davis Construction in Peterborough, N.H., said his company is the busiest it’s ever been.

With 15 to 20 jobs either already in the works or lined up for later this year, he’s already scheduling projects into 2022. While many business sectors have been greatly affected by the COVID-19 pandemic, one that hasn’t slowed at all is construction. It’s gotten even busier with more people at home and looking for upgrades.

“We didn’t skip a beat,” Davis said. “We haven’t missed a day, never shut down.”

Despite soaring costs for materials and shortages in the supply chain, construction jobs are forging ahead. But it’s a different world for both the builders and companies that supply the materials locally.

Materials

Mike Shea, president and CEO of Belletetes, the building supply company with nine locations including in Pembroke, Jaffrey and Peterborough, N.H., said the rising costs for materials has been a concern for some time.

“As a matter of fact, it’s gotten worse,” Shea said.

He said because of the constant changes in the market, they can very rarely hold prices for more than a week.

Shea said many products are seeing shortages. Anything with resin — vinyl windows, PVC boards, plumbing pipes and electrical conduits — are tough to get, let alone keep in stock.

“It’s still very challenging to make sure everybody has the materials they want when they need them,” Shea said, adding that demand is high across the board.

Other affected materials include siding, foam insulation, exterior doors, anf lumber and composite materials like decking.

“(Contractors) definitely need to plan in advance for specialty order items,” Shea said.

Davis equates the shortages in certain materials to the empty toilet paper shelves in stores across the country in March 2020.

“There’s a scramble to get stuff,” he said. “And it has been extremely stressful. You’re juggling many more balls in addition to being busier than we’ve ever been.”

He said previously he could order windows and have them in two weeks. Now it’s more like five or six weeks. Siding is now a month-and-a-half wait.

“It’s because the inventory has been depleted at the corporate level,” he said.

Antrim Lumber owner David Boule said his company has been crazy busy since last March and even more so now with the spring project season unfolding. And it has been difficult trying to serve customers on many fronts.

He said sometimes he has to call two or three places just to see if he can find certain materials.

“Last year pressure-treated (lumber) was impossible to get; this year it’s not as bad,” Boule said. But it comes at a premium cost that is constantly changing.

“You definitely don’t extend quotes out more than a couple days,” he said. Some products have more than doubled in cost and certain suppliers say they can’t hold a price more than two days.

One challenge Boule runs into is storage to build up his inventory.

“I tell them if they want to buy it, they’ve got to take it,” he said.

Dan Fougere, owner of Fougere Homes in Rindge, said it all comes down to planning when thinking about jobs coming up.

“It’s knowing what you can get and can’t get,” Fougere said.

Fougere said he tries to stay at least 30 days ahead in the planning process.

Due to the lack of inventory, prices have steadily increased over the past year, and so far there is no indication that will change in the foreseeable future.

Fougere said he could get one flooring product for $32 a sheet in March 2020 — currently it’s $67. He is constantly looking at prices and stocking up when he can.

“I have not seen anything go down in the last year and a half to two years,” Fougere said.

Some plans have been altered and redesigned due to certain products being unavailable, most notably windows.

“You make do with what you get,” he said.

Moving forward

Fougere said he has four new homes already in the works for 2021, including two in Jaffrey.

Not only does Fougere have to worry about rising costs, but there’s the whole aspect of permitting and road weight limit restrictions to consider this time of year.

“You’ve got to time all of it,” he said.

From what Shea has seen, contractors are still getting the go-ahead from customers.

“I think people are just anxious to move forward,” Shea said. “In spite of rising lumber and building material prices, people are electing to go ahead.”

And the shortages and rising prices are coming at an inopportune time.

“Coming out of winter, especially when road bans are lifted, we see a seasonal uptick in business,” Shea said. “So it’s been very difficult.”

Despite the rising costs of projects and shifted time lines due to product availability, Davis said all of his customers are still moving ahead. Some projects have been scaled back or adjusted to what materials are available, but “nobody’s canceled on us,” he said.

Davis said he has a couple new constructions in Francestown that are nearing completion, and three other foundations already poured. There are also additions on the schedule, as well as kitchen renovations in partnership with his wife, Renee’s, Union Street Kitchens.

Boule said he talks to contractors and builders all the time to get a picture of what to expect.

“They’re telling me their phones are ringing more than ever,” Boule said.

Changes

For the first time ever, Davis has been putting escalator clauses in his contracts. It’s a necessary part of the process now, considering over the last year it has been hard to predict what materials will cost when a job comes up that was planned months prior.

“It’s not uncommon to see a 5-10% increase in costs,” Davis said. He will cover up to 5% of the increase, but when materials double in cost, he has no choice but to pass it along.

“That can put companies like me out of business,” Davis said.

Fougere said when he signs a contract, he’s locked into that price. So he carefully looks at his proposals and anticipates what the materials and labor will be.

“Because if you get an increase, it’s coming out of your pocket,” he said. “You can get caught very easily if you’re not planning.”

Boule said all of the changes added up have altered what was usually the typical way of doing business.

“You could give someone a price in the spring for a summer project and they’d come in and it would be the same,” he said. “That’s no longer the case.”

Shea said the pandemic caused a host of issues for manufacturers; increased demand only exacerbated the shortages.

He said because of the need to make more materials, facilities have been working essentially nonstop and it has led to some issues when it comes to maintenance and breakdowns.

The future

Davis said inevitably there has to be a change.

“Something has to happen with building costs as far as materials go,” he said. “It’s not sustainable.”

Right now, he said, forget about finding land, because property is being scooped up, likely due to red-hot home sales over the last year, causing a shortage of inventory.

“It’s like a boom at the worst possible time,” Davis said.

Fougere said in his opinion for pricing on materials to come down, interest rates have to go back up.

“Everybody’s talking about when it’s going to pop,” he said. And really, it’s his customers that bear the brunt of it all.

“The consumer at the end of the day is getting the increase,” Fougere said.

Shea called it all a perfect storm. Increased demand, rising prices and lack of availability have all converged.

Boule said it’s all about weathering the storm at this point when it comes to cost and availability.

“I don’t see it going down anytime soon,” he said. “It all depends on the housing market, but I don’t see it changing – at least not this year.”




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