Supply chain problems are called transient
WASHINGTON DC – Supply chain disruptions continue to wreak havoc on material prices, product backlogs, transportation costs and lead times for kitchen / bathroom projects, although current conditions are likely to be a temporary slowdown. rather than a lasting obstacle to future market growth.
This is the view of most construction market experts, including major manufacturers, who anticipate that the current challenges affecting the kitchen and bathroom supply chain are transient rather than permanent. , and are expected to dissipate for the most part around the same time next year.
Product suppliers – as well as kitchen / bath designers, distributors, home builders, renovators and others – have faced a year-long “perfect storm” of high demand coupled with materials, logistical challenges and global factory closures caused by the COVID-19 pandemic. Specifically, as home improvement demand skyrockets as vaccination rates rise and emerging lifestyles trigger reconfigured home arrangements, supply chain disruptions have resulted in an acute shortage of construction products. essential. At the same time, supply constraints have driven up material costs.
According to the National Association of Home Builders, material shortages are now more prevalent than at any time since the 1990s, while the higher costs associated with these shortages have caused builders’ confidence in the market to plummet to its highest level. low level in one year.
About 90% of home builders surveyed reported a shortage of plywood and almost as many shortages of windows and doors, according to a recent NAHB survey, which also found that the situation has deteriorated “drastically” since the same period. ‘last year. Shortages have also been observed, affecting a wider range of products than ever before, including appliances, tiles and cabinetry, as well as plastics, stainless steel, semiconductors and other critical components. the manufacture of refrigerators, ovens, dishwashers, microwaves, washers and dryers. (see graphic above).
According to the latest Kitchen & Bath Market Index, compiled by the National Kitchen & Bath Association and John Burns Real Estate Consulting, supply constraints associated with rising material prices and shipping costs are forcing a growing number of kitchen / bathroom design companies to face longer lead times, seek alternative sources of supply and increase their prices in order to protect profit margins.
According to KBMI Q1 2021, 45% of resellers and designers surveyed said material shortages and product prices were affecting project lead times. 60% of manufacturing companies surveyed reported average lead times of more than six weeks, a significant increase from the previous quarter. 78% of those same manufacturers reported severe capacity constraints – also up from the previous quarter – due to extended delivery times for raw materials and significant freight delays. At the same time, 67% of building and construction companies surveyed reported a backlog of more than three months, with 21% reporting a backlog extending to 2021.
According to Christofer von Nagel, CEO of BSH Home Appliances, the company’s brands – Bosch, Thermador and Gaggenau – “are facing unprecedented consumer demand coupled with global material shortages and logistical issues impacting on the supply chain.
These factors caused longer-than-usual delays in the delivery of devices (and made it) “difficult to keep pace with continued high demand,” von Nagel said, adding that the delivery of some products has recently been four to six months.
“The supply chain is fragile all over the world,” observed Von Nagel. “There are delays no matter where a product is made (and) we expect conditions to be tough for the foreseeable future.”
“We know this is frustrating for consumers,” said Von Nagel, noting that BSH has hired additional employees, increased production and constantly monitored and adjusted its supply chain and manufacturing processes.
A growing number of other providers have done the same.
For example, in June, Delta Faucet Co. announced its decision to “prioritize production” for certain brands of products or finishes, while temporarily suspending production for other collections and finishes. The hiatus is expected to be in effect until the fourth quarter of 2021, the company said, noting that while it will not accept new orders during this time, it will honor existing orders.
“We estimate that market demand will start to normalize in the second half of 2021, assuming consumer spending patterns start to normalize by the middle of the year,” the CEO of Electrolux, Jonas Samuelson, to company shareholders, adding that the capacity and availability of electronic components would remain constrained. factors in the second half of 2021.
“Because we recognize that the situation is not going to change anytime soon, we are working to be more proactive in alerting our customers of delays so they can better plan,” Samuelson said. “Around the same time next year, we expect this situation to begin to balance both between demand and the shortages of materials and components needed to assemble the products. “
– ELIOT SEFRIN