Material Shortages Have Contractors in Crisis Mode

From paint shortages to labor challenges, contractors are faced with turbulent times as the economy is rebounding after the coronavirus pandemic, supply chain logistics issues and a fury of wild weather.

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Amidst a busy summer season, contractors are experiencing another interruption of work  nationwide resin shortage. Paint is getting harder to come by, not only for commercial usages but the homeowner who is looking to do home improvement projects might have to wait for supplies of more paint to hit the shelves of a store near them. Couple that with major disruptions of supply chains and wild weather, purchasing paint is becoming burden.

What Happened?

It has been an uphill battle for manufactures, especially for those plants in Texas and Louisiana. Factories had some shifts in production due to the disruptions brought on by the onset of the COVID-19 pandemic. Plants ran into staffing issues as production facilities, shipping ports and supply chain logistics all saw a slow down along with staffing shortages if employees were symptomatic. As a result, resins were already in a tight supply.

2020 also saw the busiest hurricane season on record, 12 named storms made landfall along the coast, two of which reached Category 4 status before making landfall in LA and TX. Fast forward to February 2021, winter storm Uri came in with a vengeance blanketing the Gulf Coast with snow, ice and freezing temperatures resulting in power outages across the country. 

Months have passed however, the gulf states are still recovering from the weather implicated shutdowns. As it sits today, the middle of summer, there is more demand than ever for paint as many contractors have used up their stockpiles and continue to complete striping jobs. 

Through the Contractor's Eyes

With the pent up demand and manufactures trying to rebound after back-to-back challenges, prices for commodities are on the rise, paint being one of the many products. Contractors are seeing these material shortages and price increases first hand across the entire country.

Nick Howell owner of T&N Asphalt Services in Utah said his next order from his supplier will be 37% more expensive than his last order.

"I have seen increases over the years but nothing to this extent," he said. "That is why I am so passionate about job costing. Truly understanding the labor and material prices to give an effective bid to a client is what they expect. We just have to be transparent about our side of the industry so the customer understands the situation we are facing."

Contractors are scouring the market for paint with their suppliers, industry groups and reaching out to other contractors for advice. To add to it, the fact that companies are also struggling to find labor. Throw that into the mix and it makes this year another turbulent one.

"As a company, we are trying to strategize the most effective way to operate, what do we do," said Howell. "Do we stay lean and mean with half crew scenarios? We are pretty much booked to the end of the season with our current capabilities however, if we could bring on more people, then we can open up more space for more jobs."

The southern contractors, specifically those in Texas, have been experiencing the shortages since the freeze in February.

"We started buying early and we are glad we did," said Mark Estrada, vice president of Marathon Solutions Group. "Buying started to really get hectic right around the start of summer, that was when everyone else really got the news. The shortage is hitting everyone now, from top to bottom."

Estrada said he and his team are holding meetings to strategically plan next steps for each job and project, reconfiguring everyone's direction and how to look at the situation as a whole.

"For our striping teams, it is getting down to using every drop of every bucket," he said. "We are holding workshops on how to consume the paint properly to be efficient with operations because right now it is really tight. You can't afford to have a bucket spill over by accident everyone needs to be cognizant of these things."

The pavement marking and striping industry isn't the only place where contractors are seeing shortages or price increases, it is hitting every industry across the board.

"I recently installed a sprinkler system, so I went to get hose clamps. There is a lack of clamps because of the steel shortage," said Chad Jung owner of Preferred Striping in Elk River, MN. "It is literally across the board. I can image it is difficult for the consumer because everything we buy is more expensive than it should be." 

Resin Shortages Reaches Farther than Anticipated

Everyday products such as electronic components, toys, fishing poles, product packaging are all made with different resins formulas. In a recent report released by AlixPartners, further price increases are now on the way for many other consumer products because of unprecedented shortages and disruptions in the fossil-fuel-based resin market. 

“U.S. consumers are already feeling the pinch in their household budgets, and it is likely to get worse before it gets better,” says Marc Iampieri, managing director in the operations and transportation and logistics practices at AlixPartners. "Rising demand for plastic products combined with recent supply disruptions has led to complications around quality, cost, and timeliness of delivery. Because these products often have low profit margins, those in the industry have no choice but to pass the higher costs onto consumers."

Moving Forward, Future Outlook

As manufactures continue to recover for these setbacks, contractors will still have to face much adversity with supply issues and labor challenges. Contractors must try to stay ahead of the curve, develop a plan to be proactive and keep an open line of communication between distributors and customers about ordering materials.

"I have never seen something like this before," said Jung. "But it's one of those things, like the old saying goes, when one door closes another one opens."