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Thursday, October 21, 2021

How the supply chain crisis is destroying Britain’s home renovation boom

Meanwhile, the shortage of HGV drivers has caused problems for all areas of the construction supply chain. This is getting worse, as other sectors poach drivers. “Developers are finding that HGV drivers are being poached by supermarkets in particular,” said Mr Francis.

Demand has made the problems more complex. Brick and concrete stocks, for example, were depleted as suppliers rushed to meet the spike in demand in the wake of the first lockdown and the sector has not been able to catch up since. Government data show deliveries are still outpacing production. 

The supply chain problems have pushed builders into turmoil. “These issues have major implications for specialist contractors working on fixed price contracts that were signed 12 to 18 months ago”, said Mr Francis, “their average profit margins tend to be only around 2pc to 3pc2.

Brexit, and the widespread return of EU workers to the continent during the pandemic have triggered a labour crunch. “Between the first quarter of 2017 and the same period in 2021, the EU construction workforce fell by 51pc in the UK and by 63pc in London as EU workers returned to their home countries,” said Mr Francis. Many of them have not been replaced because of the new points-based immigration system. 

Nearly 90pc of UK construction workers are employed by small businesses. “These are the companies that are least able to sponsor workers to come over at a cost of around £10,000 each, and that is assuming that they meet the skills requirements,” said Mr Francis.

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