WASHINGTON, DC — Supply chain disruptions continue to wreak havoc on material prices, product backlogs, freight costs and kitchen/bath project timelines, although current conditions are likely a temporary speed bump rather than a lasting roadblock to future market growth.
That’s the view of most construction market experts, including leading manufacturers, who are forecasting that the current challenges impacting the kitchen and bath product supply chain are transitory rather than permanent, and should dissipate, for the most part, by the same time next year.
Product suppliers – as well as kitchen/bath designers, distributors, home builders, remodelers and others – have been facing a year-long “perfect storm” of surging demand coupled with materials shortages, logistical challenges and global factory shutdowns wrought by the COVID-19 pandemic. Specifically, while remodeling demand is soaring as vaccination rates increase and emerging lifestyles spark reconfigured home layouts, supply-chain disruptions have resulted in acute shortages of critical building products. Supply constraints, at the same time, have caused material costs to soar.
According to the National Association of Home Builders, materials shortages are currently more widespread than at any time since the 1990s, while higher costs coupled with shortages have seen builder confidence in the market decline to its lowest level in a year.
Some 90% of surveyed home builders reported a shortage of plywood, and nearly as many a shortage of windows and doors, according to a recent NAHB survey, which also found that the situation has deteriorated “drastically” since the same time last year. Shortages were also seen impacting a broader-than-ever range of products, including appliances, tile and cabinets, as well as plastic, stainless steel, semiconductors and other components essential to the manufacturing of refrigerators, ovens, dishwashers, microwaves, washers and dryers.
According to the latest Kitchen & Bath Market Index (KBMI), compiled by the National Kitchen & Bath Association and John Burns Real Estate Consulting, supply constraints coupled with rising materials prices and shipping costs are forcing a growing number of kitchen/bath design firms to cope with longer lead times, seek alternative supply sources and increase their prices in an effort to preserve profit margins.
Some 45% of surveyed dealers and designers reported that material shortages and product pricing are affecting project timelines, according to the Q1 2021 KBMI. 60% of surveyed manufacturing firms reported average lead times of six-plus 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 lead times on raw materials and significant freight delays. At the same time, 67% of surveyed building and construction firms reported a backlog of three-plus months, with 21% reporting a backlog extending all the way through 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 materials shortages and logistical issues that are impacting the supply chain.”
Those factors have caused longer-than-usual delays in delivering appliances (and have made it) “challenging to keep pace with continued high demand,” von Nagel said, adding that fulfillment for some products has recently been four to six months.
“The supply chain is fragile worldwide,” Von Nagel observed. “There are delays no matter where a product is manufactured (and) we expect conditions to be challenging for the foreseeable future.”
“We know this is frustrating for consumers,” Von Nagel added, 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 suppliers have done the same.
For example, in June, Delta Faucet Co. announced a decision to “prioritize production” for certain product brands or finishes, while temporarily pausing production for other collections and finishes. The pause is expected to be in effect until the fourth quarter of 2021, the company said, noting that while it won’t accept new orders during this time, it will fulfill existing orders.
“We estimate that market demand will begin to normalize during the second half of 2021, assuming that consumer spending patterns start to normalize by mid-year,” Electrolux CEO Jonas Samuelson recently told corporate shareholders, adding that capacity and electronic components availability will remain constraining factors into the second half of 2021.
“Because we recognize the situation is not going to change anytime soon, we’re working to be more proactive in alerting our customers to the delays so they can better plan,” Samuelson said. “By this time next year, we anticipate this situation will begin to balance across both demand and the shortages in materials and components needed to assemble the products.”
The post Lingering Supply Chain Disruptions Seen as Only Transitory appeared first on Kitchen & Bath Design News.
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