Supply Chain Continues to Haunt Builders, Manufacturers
The Q4 2020 KMBI reports supply-chain shortages remain the top concern impacting the ability to do business — but they are easing.
By Robert Isler
The 4th quarter NKBA/John Burns Kitchen & Bath Market Index (KBMI) was a tale of good news clouded by a few key concerns. More than half of the respondents in the Building & Construction member segment reported that at least 80% of their active projects are on schedule, which is very similar to Q3 results. However, nearly 1 in 5 say that most of their project pipeline is behind schedule, with supply-chain issues and labor shortages the main culprits.
As the pandemic runs its course, many of the signs are encouraging. For instance, 58% of those taking the survey reported that they didn’t experience any cancellations or postponements in the quarter, a solid improvement over the 49% who said so for Q3. An additional 20% experienced postponements but no cancellations, with nearly two-thirds of them expecting resumptions by this June.
Nearly 6 in 10 of Building & Construction members did not experience any cancellations or postponements in Q4, compared with just under half in Q3 who could make that claim.
As for what most significantly impacts the ability to do business, topping the list are supply-chain disruptions (23%), followed by cost increases (19%), safety concerns (13%), and workforce disruptions (11%). In fact, many of the open-ended responses focused on that last topic. “A shortage of labor with an increase in demand has prompted us to redouble our recruiting efforts,” offered one respondent. Another said, “My subcontractors, especially specialty trades, are short on labor, which, in turn, affects us. We’ve been transparent in communicating timelines with our customers.”
Turning to Manufacturing, delays have been softening somewhat, but more than half the respondents in this segment still report that they’ve been running at five or more weeks. Hit hardest are appliances and anything related to wood. Meanwhile, average capacity stands at 81%, with 62% reporting utilization rates above 80% — pretty much the same as in Q3.
The good news is that severe capacity restraints are affecting fewer and fewer manufacturers, with 23% facing those issues, vs. 31% in Q3. Lead time for wood goods was a concern echoed by many. As one respondent observed, “Cabinet components are taking six to eight weeks to arrive.” As for issues most significantly impacting business, no surprise that supply-chain disruptions again led the field at 19%, with workforce disruptions (17%) and cost increases for parts (16%), close behind.