Opinion

Hey there, time traveller!
This article was published 27/12/2021 (529 days ago), so information in it may no longer be current.

Over the past two years, the COVID-19 pandemic has introduced several new expressions into our everyday vocabulary. We are learning the Greek alphabet (Alpha, Delta, Omicron), and terms such as herd immunity, vaccine efficacy and flattening the curve have become part of regular conversation.

And more recently, we have been learning a lot about the global supply chain.

We live in a highly connected world. The homes we live in, the smartphones in our pockets and the cars we drive are the product of labour and materials brought together from around the world, through an interconnected web called the global supply chain.

The global pandemic has exposed the fragility and interdependence of the connections in this web, and the construction industry has been on the leading edge of its challenges.

At the beginning of the pandemic, owing to its critical economic role as an employer of more than 1.2 million Canadians, the construction sector was deemed an essential service. An industry already focused on job-site safety quickly adapted to new protocols and routines in response to COVID-19.

Initially, new development slowed in reaction to market uncertainties, but as the economy began to rebound in 2021, low interest rates and pent-up investment demand fuelled a construction boom across the country. The value of new building permits in Canada saw its peak this past summer, reaching levels almost twice that of the previous year.

As the construction world ramped up and demand spiked, an industry requiring the just-in-time delivery of thousands of interdependent components, sourced from across the world, quickly hit the supply-chain wall. The first alarm bells sounded in May 2020, when the cost of lumber began to skyrocket.

Over the next 12 months, prices would increase by 130 per cent, and then drop by 40 per cent. The story of lumber has become a familiar one, mirrored by numerous other materials and building components in the past year.

When the pandemic hit, the sourcing of raw materials was impacted first. Less raw material meant mills had to reduce capacity, with health restrictions and outbreaks further reducing productivity for the materials that were available.

With the world plummeting into economic uncertainty, demand also dropped.

As the economy roared back to life in 2021, demand soared and all industrial manufacturers, including lumber, struggled to keep up. With thousands of jobs having been lost, it was difficult to ramp up the entire production chain immediately.

Shipping challenges created further issues, with many people walking away from the difficult conditions of the trucking industry during the pandemic, leaving more than 18,000 trucking jobs vacant across the country this summer. With low output and fewer ways to get lumber to market, shortages occurred and prices soared.

This scenario has played out across several manufacturing sectors, and with construction reliant on so many different components, the industry seems to face a new challenge every day. In the past year, the cost of structural steel for rebar, columns and beams spiked to twice its previous level.

As the supply of wood began to stabilize, resins and adhesives used for making plywood and related products became scarce. Even small components that rarely garner much attention, such as the little metal gusset plates that hold wood trusses together, created impactful delays when supply became short.

Adding to these material shortages, available labour remains a challenge to the construction industry with a Q3 vacancy rate of 5.8 per cent, one of the highest among all economic sectors. As well, overloaded ports on North America’s West Coast are nearly doubling shipping times for overseas materials.

Compounding all of this is the sudden increased impact of climate change. A devastating winter storm in Texas, followed by record hurricanes in Louisiana, shut down petroleum refining and petrochemical plants, crippling the continental supply of raw materials such as polyethylene, PVC and nylon, and slowing production of many critical building components. Flooding in British Columbia recently shut down trucking routes and further delayed material supply.

With unprecedented demand, intensified by the effects of a pandemic and climate change, 2021 has been a perfect storm of supply chain disruption, which has pushed costs higher and strained development economics. Contractors, trades and construction managers have responded by stockpiling common materials, locking in orders early, tracking supply chains and commodity futures, and building flexibility into schedules and budgets.

Architects and engineers are pivoting to different materials and building systems in response to market fluctuations. As an example, during the summer wood-frame projects were switching to steel studs, and in the autumn, steel-stud projects were switching to wood.

The challenges of the last year have been unprecedented, with construction relying on supply chains that begin half a world away, impacted by waves of COVID-19 washing across different places at different times. The industry is accustomed to dealing with volatility in supply and commodity prices, and its creativity and adaptability has been an asset through a difficult time of supply chain disruption.

Stability is on the horizon, and the resiliency of the construction industry will allow it to once again be an economic driver that leads the country into a strong pandemic recovery through 2022.

Brent Bellamy is senior design architect for Number Ten Architectural Group.