Problems mount for builders as suppliers close order books

Construction faces a further slowdown as builders’ suppliers have shut their order books this month due to a deepening raw materials crisis.

Growing global demand as economies reopen combined with a shortage of raw materials have squeezed supplies of insulation, plastics and other components to the construction industry.

Letters sent in recent weeks to hardware suppliers show that manufacturers have shut or limited their order books for May, blaming the ongoing shortages that have been growing since early this year.

The manufacturers’ move came just weeks after construction fully restarted across the Republic following months of Government-imposed lockdowns that froze house building, among other activities.

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A letter from insulation maker Xtratherm, sent in the middle of this month, states that the company is "suspending our May order book", blaming demand and a shortage of raw materials.

The company adds that it will re-open its books on Tuesday June 1st and will not process any orders until that date.

Irish manufacturer Mannok also told customers that it had not been able to source enough core raw materials for some insulation products to maintain supplies.

“We therefore need to implement an allocation mechanism with immediate effect and, as a result, will not be accepting further orders,” says the company’s letter. However, Mannok confirmed that, after writing to some clients, it has “sourced complementary supplies” and expects to resolve the problem by late July.

“In the interim Mannok will continue to accept orders and all customers will receive an allocation broadly corresponding to the volumes they received in 2020, less a small reduction.”

The manufacturer added that the allocation mechanism would allow it support loyal customers and manage its order intake.

Xtratherm did not comment when contacted at the weekend.

Exceptional demand

Pipe manufacturer Wavin has told customers to expect longer lead times to fill orders and said it will focus on key product lines for the moment.

Raw material shortages stem from a halt in petrochemical processing in the Gulf of Mexico during bad weather in February. The oil industry is responsible for many of plastics and polystyrenes used in making insulation, piping and other key building materials.

Manufacturing halted temporarily as global demand began accelerating, aggravating the shortage.

Mannok explained this week that exceptional demand, interrupted production and shipping delays have hit the supply of some raw materials used to make polyisocyanate, or foam, insulation.

Shortages of timber, steel, insulation and other materials are forcing prices up by as much as 20 per cent in some cases, say industry figures.

Surveys earlier this year showed that builders either faced difficulties in sourcing materials or had seen prices rise sharply. Materials account for about 13 per cent of the cost of building a typical home in the Republic, industry figures say.