Page 25 - HW June-July 2021

trade focus
and that trade customers will have relationships with multiple merchants.
This would not necessarily be the case, however, were it not for perfect storm of unlimited demand and limited supply.
“I feel the industry is wanting closer relationships with people that add value,” he says.
“But it’s times like these where material shortages in many instances force people to have more options,” he says, warning that those builders who don’t have a good relationship with their supply base right now are going to be “feeling it”.
Having said this, Derek is convinced that NZ’s small to medium, 1-10-house-a-year builders have not only shown themselves to be resilient but have also shown “a level of agility” that has set them in good stead through good times and bad.
However, additional compliance and legislation have heaped pressure onto small to medium builders who must manage more administration as well as physically building homes.
And as we all recognise, many if not most smaller builders are builders first and businesspeople second – and may well prefer to be “on the tools” than doing the admin...
Christchurch builder and sometime developer Carl Taylor is also one of the leading lights behind the CBS Co-op buying group with its 530-odd shareholders who are mainly, but not exclusively, smaller scale operators.
Describing shareholders as “absolutely busy”, Carl also
freely states that, although there’s “a huge shortage of building materials”, more concerning is a “lack of communication” around known but uncommunicated shortages that may put a hold on their latest project moving to the next stage.
“It’s the old story. When you are busy, whether you like it or not, customer service does tend to creep out the door a little bit. The merchants would probably disagree, but it actually does.
“And it’s not just our shareholders having the issues. I know other guys in the game that are having the same problems – can’t get nails, can’t get timber – and it’s causing quite large delays on projects.
“We’re advising suppliers of the jobs coming through [but] that doesn’t really seem to be helping the cause.”
YOU CAN’T CHARGE FOR TIME LOST
Reporting that members large and small have plenty of new build and reno work booked for the next 18 months, David Kelly of Registered Master Builders is also hearing that timber is “still very tight” and frame & truss capacity is “very much at a premium”.
Smaller builders are “a bit more challenged” in terms of not just of materials, but also subcontractors in some cases.
“There’s a range of things that are making it difficult. Availability of materials, of subcontractors, issues with consents. There’s plenty of work on but definitely also frustration with delays.”
In some cases, jobs are simply going to take longer and therefore cost more, says David Kelly, adding that the builder cannot just charge a client for that.
Anticipating upward pressure on material prices to continue
for the next six to 12 months, he adds: “There is now quite a bit of concern amongst constructors big and small about these price increases.
“Even if they have escalation built into their contract, as I would hope they have, it’s still a difficult conversation to have with a client.”
How about the evident need to plan further out for especially smaller builders?
“Well, there always is, but if you don’t know what the prices are going to be, how do you plan? That’s the challenge.”
“You’re running a business and can control some things but can’t control others.”
The outlooks included in this article may sound negative, warning as several do that there may be moderation ahead for the new home market.
Pragmatic David Kelly looks at it this way: “We have to be careful that we don’t start sounding like the farmers – it doesn’t matter what going on, it’s all terrible!
“Actually, a better problem to have is that you’ve got too much work, along with some constraints, because there’s so much work going on.
“There’s a lot of demand and people value their homes and they’re interested in new homes. So that’s positive and we’ve just got to deal with that.”
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JUNE/JULY 2021 | NZHJ 23