Coronavirus-related slowdowns poised to pummel construction supply chain
(The slowed down supply of materials, such as sought-after Carrara marble quarried in Tuscany, is impacting the construction and real estate development industries.)
While different cities grapple with how major construction projects should forge ahead—if at all—during the coronavirus (COVID-19) pandemic, the shipping and sourcing of the raw materials used in said projects has slowed to a trickle.
As the New York Times recently pointed out, real estate development is a wholly international affair when you consider that the disparate elements that comprise a single construction or renovation project come from, well, everywhere. A decent number of building materials such as concrete and lumber can be domestically sourced, but countries like Italy and China, both of which have been profoundly impacted by the pandemic, are major players in this normally robust global supply chain. In addition to items like Italian marble, Chinese copper, and ceramic tile from Brazil, Turkey, Spain, and elsewhere, a slew of materials and equipment sourced from across the globe—paving stones, lighting, electrical equipment, elevators, and so on—have become scarce or are at risk of becoming scarce stateside due to shipping delays, travel bans, shuttered factories, and decimated workforces.
As noted by The Real Deal, imports, including construction materials, arriving at the Port of Los Angeles from China were down 23 percent in February when compared to the same period the previous year. Per the Times, these delays, however, have not prompted widespread layoffs within the construction industry itself—or at least not yet.
“It’s not like when you build a house and can just go down to a Home Depot and get a different light fixture when you’re short,” Chris Heger, vice president of Seattle-based construction management firm OAC Services, told the Times. “This stuff is all designed and planned years in advance. I’ve been doing this for 30 years, and I’ve never seen anything like this.”
In-development projects have also been impacted by supply chain concerns, as lenders become increasingly uneasy about the unfolding situation and the overall viability of major developments that could potentially be halted mid-construction.
“Lenders want to make sure they’re not going to be stuck with a half-completed project,” Frank J. Sciame Jr., chairman of New York-based builder Sciame Construction, told the Times.
Many American builders already have the materials they need on-hand and, in turn, can commence with projects as planned (provided that the powers that be in some cities have deemed the project as being “essential”) according to The Real Deal. A number of importers have also stockpiled enough materials to keep the supply chain moving, albeit at a slowed pace, for a good while.
But for exactly how long “a good while” and how large the impact ultimately is on the construction industry both remain uneasy, unanswered questions.
“Have people experienced the impact yet? Probably not,” Mike Haller, president of Detroit-based builder Walbridge Aldinger Co., explained to Crain’s Detroit. “But will be impact come? Probably so. There’s regular building materials that come from China, for instance. There’s tiles that come from Italy. There’s stone that comes from Spain. There’s curtain wall systems that come from Europe… It’s gonna be impactful. How impactful, no one knows.”