A CAPEB study on the shortage of price materials and increases

The shortage of materials is hitting small construction companies hard, which have suffered price increases of between 20 and 70% according to a study by Capeb*.

Aluminium, wood, steel, copper, zinc… we have known since the beginning of the year that the shortage of materials is primarily due to a global imbalance between supply and demand. The strong post-Covid crisis recovery in activity has destabilized all of the companies' supply circuits while generating price increases.

Good news, however, in the Building sector, activity is doing well and the volume of activity is progressing for all trades with 111 days of order books at the beginning of July (see box below), reveals the Capeb in his half-yearly study.

La Capeb presented a study carried out among 1,700 construction companies with fewer than 20 employees. First observation: 76% of them suffered significant increases in the price of materials.

In detail, certain trades were more impacted, in particular (and unsurprisingly), the carpentry-locksmithing sector (consumer of wood and metal), that of roofing-heating-plumbing (81%, due to tensions over deliveries of boilers and hot water tanks hit by shortages of electronic components) but also the plastering trades (80%).

Explanation for this last sector: the installation of partitions with plasterboard requires components such as metal rails but also paper for the manufacture of plasterboard.

Some professions are more affected than others: 86% of locksmiths-metal workers are affected compared to 57% of electricians

Price increases between 20 to 70% for materials

In general, increases in the price of materials vary between 20 and 70%, notes Capeb, hence the necessary repercussions made by craftsmen on their quotes... but not systematically.

Indeed, while 26% of the companies surveyed have passed on these price increases to their quotes, nearly 39% have not done so, while the remaining 35% have done so “but not all the time”.

Remember that, in addition to the price of materials (25% to 50% of the estimate depending on the sector, underlines David Moralès, plasterer), an estimate is also composed of a price of labor. is a bit of an adjustment variable in the passing on of costs” comments the president of Capeb, Jean-Christophe Repon.

Pay attention to the validity period of quotes

Regarding the price increases that were passed on to the quotes, the study does not specify their exact amount. According to the "feeling" of Capeb and its president, this increase could be around 10% on the overall estimate if the prices of materials have increased. But it is only a feeling, strongly insists the president.

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In the meantime, the professional organization has recommended that its members be particularly vigilant about the validity period of quotes. "Previously, they were valid for about 3 months, but today, this validity should not exceed 8 to 10 days due to unpredictable price increases" insists Jean-Christophe Repon.

As for the margins of companies, they have deteriorated a little but the craftsmen are not bloodless, observes Jean-Christophe Repon: "We have lost a lot of profitability over the duration of the works, but our companies have the capacity to break up their worksites, which implies going back and forth between different worksites and therefore a lower performance in terms of profitability".

A “good understanding” with customers and a few price revisions helped to manage the situation. “We have lost margins but we are happy with the high level of activity which will allow us to regain our margins later” assures the president of Capeb.

A return to normal is expected for the first half of 2022, hope the supplier partners of the craftsmen interviewed.

Supply difficulties and project postponements

Building craftsmen also had to manage supply difficulties and 57% of them were impacted according to the study presented. In detail, 67% of the companies questioned suffered occasional delays, 24% experienced postponements of construction sites and 29% even changed distributors. Finally, 19% of them used substitute materials.

However, this phenomenon, which has lasted for more than 6 months and which was considered to be temporary (after the summer, things should have settled down according to most players in the sector) does not seem to be resolving immediately. .

La Capeb, which has questioned its suppliers, construction manufacturers and distributors, remains optimistic. The return to normal is indeed planned for the first half of 2022, hope the craftsmen's partners. But there can always be surprise price increases...

And if the situation were to deteriorate in certain sectors, companies will be able to ask for aid, such as partial unemployment, estimates Capeb. “We are not adapted to “infusion”, but rather to adaptation to help a sector in difficulty” concludes Jean-Christophe Repon, who remains optimistic about the evolution of the situation.

*Confederation of crafts and small construction companies

Many construction or renovation project deadlines have been extended. Thus, this renovation operation started in March (disability adaptation) in Eure is already 2 months late. The owners should be able to invest the premises at the end of June but will not be able to take delivery of the work before the beginning of October; "There were planning management problems because some workers were ill, then, we were told without knowing why, new delays, the works manager seems overwhelmed and otherwise lacks staff... said the individuals interviewed.

Source: batirama.com/ Fabienne Leroy