by Christy Heitger-Ewing
Plan Early, Practice Patience & Proactively Communicate
When COVID-19 hit in March 2020, we were all collectively thrown for a loop. With life changing by the minute, none of us really knew what the future held. The road ahead for the building and construction industry was particularly unpredictable.
“Honestly, if I’d taken out my crystal ball back then, I would have guessed that we’d pretty much be back to normal by 2021. That, in fact, wasn’t the case,” says Alex Cain, Indiana territory sales manager with Tisdel Distributing, Inc. “And to further that pain, it got worse before it’s going to get better.”
Not only did production slow in all aspects of construction and the construction supply chain, but demand skyrocketed.
“There was no catching up,” says Cain. “It was like quicksand.”
Unprecedented demand, coupled with pandemic-related supply chain interruptions, meant that things got sticky fast, especially when combined with logistical issues and a lack of raw materials. Although Tisdel products are manufactured in the U.S., some components that they use are sourced from overseas vendors. That’s one interruption. Getting it to port is another, and then transporting it to a plant to treat said product is yet another disruption.
The domino effect of distribution issues can be demonstrated by a foam shortage that resulted from a freak storm in February 2021. The storm caused a chemical plant in Texas to lose power, which ruined the chemicals inside the pipes, forcing a month-long factory shutdown. That, in turn, meant that Tisdel only received 25% of their foam allotment (the foam goes into Tisdel’s refrigerator doors). Backlogs quickly mounted.
“There were literally refrigerator cabinets sitting like dead soldiers waiting for foam,” says Cain. “We couldn’t put them out the door because we didn’t have the raw material.”
Bob Danielson, President of BDA, a manufacturer’s representative, predicts that at least through the first half of 2022 supply chain issues will plague us. Since many companies rely heavily on China, that will continue to present its own challenges, whether it’s with microchips or bits and pieces.
“We thought as construction slowed down in the winter months that it might ease some of those challenges relative to shipping and supply, but that remains to be seen,” says Danielson, who notes that for most of 2021, they were on allocation regarding faucets, toilets, PVC pipe fittings, etc.
“Most of the manufacturers allowed my distributors to buy what they purchased in 2020 so if you bought 144 widgets in 2020, they allowed you to buy 12 of them a month in 2021,” says Danielson.
CHANGING EXPECTATIONS
Susan Froehlich, owner of and designer with Corinthian Fine Homes, found that initially it was mostly finish selections that were affected, especially plumbing and lighting fixtures as companies began streamlining their products, offering fewer options to customers. Doing so severely impacted builders’ ability to cater to their high-end custom homeowners. Unfortunately, things only got worse over time as it became difficult to obtain concrete, windows and doors, and even lumber for framing and trim options. Plus, it has affected the ability to get permits for remodels as what used to take two weeks is now taking six weeks, eight weeks or longer.
“We’re now not even starting a job until we know we can get appliances, cabinetry, lighting, tile, and all those things,” says Froehlich.
Cain, who oversees 14 showrooms in Indiana, expects that supply chain issues will continue into 2023 before things start to normalize. Serving as a resource for dealer sales reps and their customers, she acts as the liaison between the factory and her sales reps, letting them know ETAs and availability, which has been fluid since the pandemic’s inception.
“The factory is very transparent. Our lead times, while not good, are accurate,” says Cain, who candidly communicates the factors that are causing the delays with her customers because people appreciate forthright communication. When we’re left wondering what’s happening, we’re less likely to embrace patience. Understanding, however, breeds empathy. Still, everyone has a breaking point. For those customers whose factory orders have been pushed repeatedly, Cain personally makes calls to move things along and often is successful at doing so.
“We’re watching and are trying to be fair,” she says.
But since these issues aren’t going away anytime soon, to avoid frustration, experts advise that homeowners plan early and wait. When it comes to home building, consensus is that the most frustrating issue has been appliances.
“You’ve just got to set your mind to knowing you’re not going to get the appliances when you want them,” says Danielson.
In short, expectations have had to be radically revised. Lead times have changed from days to weeks and weeks to months. What might have once taken three to five days may now take two to three weeks. Water heaters, which were once ten days out are now 60. According to Cain, however, there are areas in which you can be strategic in your selections in order to get items sooner.
“Doing so might mean getting something in 20-25 weeks rather than 42 weeks. That’s a win,” says Cain.
In an effort to stay ahead of the game, when Froehlich meets with her clients to make selections, she asks them to pick option one and option two. This way in the event that a product is no longer available or is on backorder for six months, the homeowner doesn’t have to come back in and completely reselect.
“I educate them from day one that product selections are fluid,” says Froehlich, who strongly relies on her sales people at each company to keep her informed about what is currently available and can be expected. Yet they don’t have crystal balls, either.
“They’re making their best educated guess for that day as to what we can get, but who knows what will be available a month from now?” says Froehlich. “It’s frustrating for everybody across the board, but I work with companies who are communicating effectively in this new norm.”
HOW LABOR SHORTAGES CAN AFFECT THE SUPPLY CHAIN
One issue that everyone expects will remain is the immense labor shortage. According to Danielson, on any given day, as many as 40% of employees at big manufacturers do not show up for work.
“We offer good perks to our associates, but my payroll has had to go up,” says Danielson, noting the importance of elevating benefits. He has also doubled what he paid for insurance for every employee. “It’s the right thing to do, and if I don’t do it, someone else will. In this era, you have to offer additional incentives.”
He says in the plumbing contractor business, employers are offering $1K to those who promise to stay for 30 days. To those who vow to stay 60 days, it might be $5K.
“We’re really being hit from all angles, whether its labor or supply of integral parts,” says Danielson. “There are thousands of new Ford pickups parked at the Kentucky Speedway that are ready but can’t be sold because they don’t have chips in them.”
Moving forward, Cain says they’ll continue to do their part to improve product availability, keep lines of communication open with consumers and dealer partners, and ultimately deliver on their promise to provide the quality products that customers have come to expect.
“We’re always going to do it the right way. If something isn’t ready to go out the door, we’ll tweak it before releasing it,” says Cain. “It’s that attention to detail that produces customer satisfaction. The timing right now is painful, but for the most part, people have been understanding.”
Though crystal balls don’t work, we now have a better understanding of what to do in the future.
“Take care of your people, be upfront with your customers about the challenges we’re facing, and one year from now we’ll be in a better position than we were prior to this pandemic,” says Danielson.
