Home Contractor's CornerBracknell's View The price is right? Material costs and contractors

The price is right? Material costs and contractors

by Matt Downs

The issue of rising material costs is becoming an even thornier one than usual for roofing contractors according to Simon Smith, Divisional Director at Bracknell Roofing. In the first of a new, regular column, Simon says he sees a growing gulf between price rises that are justified and ones that feel like they are a step too far.

Brexit, currency fluctuations and global demand for raw materials are just some of the reasons why we have seen price rises across all of the staple materials we need to construct a roof.

In the last couple of years, we know that some of our suppliers have worked really hard to manage costs at their end and in turn to minimise price increases to their customers. For that they should be applauded because it demonstrates the importance placed by some on trust and positive working relations between contractors and suppliers. So, when prices have gone up, we know that these suppliers have made all reasonable endeavour to prevent this. Whilst nobody likes price rises, sometimes fair and reasonable increases are unavoidable.

Simon Smith | Bracknell Roofing Divisional Director

A double-whammy

However, what does stick in the throat is the fact that there are some sections of the supply chain that are hitting us with a double-whammy. In some cases, prices are rising well above historical trends experienced over the past ten years and beyond, yet without reasonable validation of the input cost impacts driving this approach. The effect of this is compounded for contractors, particularly in slating and tiling, where the availability and service level in some product sectors has been acutely strained over an extended period, resulting in significant impact to resource and material costs.

I know everyone is in business to make money but there’s a fine line between putting prices up because you have to, and putting them up to capitalise on market conditions. Of course that’s a matter of opinion, but it doesn’t sit well with me to know that we have suppliers that work with our customer base to get their products specified (fair enough) to the point of agreeing prices with them for extended periods, only to leave it to the last minute to advise us of significant price increases agreed with our customers without reference to us, which we are usually expected to start paying immediately and left to absorb the increased costs for weeks or months, until our contract next permits price renegotiation. To say this practice is unfair on contractors would be a massive understatement. This leaves me with the question: “do some manufacturers view roofing contractors as a valued customer, or merely a transactional link within the supply-chain?”

Notwithstanding my previous point, our business understands that the prices of some commodities like timber and metals are much more volatile and, as much as we are able to, we factor this volatility into our forecasting and projections. We also have a good bellwether on insulation and waterproofing – but roof tiles is one product segment that confounds me.

The supply of some roof tiles over recent-times has been worse than the market has seen at any other point in my 30-something years in this industry. The availability of materials such as concrete roof tiles has been severely stretched, with supply lead times reaching up to six-months in some cases. Although there appears to have been some improvement over the past few weeks, it’s too early to say whether this will be sustained and whilst I hope it will, the fact remains that contractors will continue to suffer the cost effects of this period of dysfunctional supply-chain performance for some time to come.

Rock and a hard place

I think the most galling part is that roofing contractors are stuck between a rock and a hard place. Yes, we can express our dissatisfaction but ultimately we have to work with these suppliers because of specifications, third party supply-chain agreements or due to the simple reality that we have projects that need completing to time and budget. What about passing on these rising costs? As most contractors will appreciate, this is a completely different ball game because in most cases our hands are tied under contractual pricing periods. We don’t have the luxury of continually renegotiating terms with builders and housebuilders. They just won’t stand for it.

For us, reviewing our costs is like a military operation because we may only get one chance a year to negotiate with our customers – so every aspect of our costs are scrutinised and justified. And no matter how prepared and well organised we are, we have to work very hard to ensure we are not left to absorb the burden of the pricing strategies and performance of the roofing material supply chain.


Related Articles

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More