Delaware’s building industry has a long road to recovery ahead.
Both commercial and residential building professionals — including builders, contractors and related retailers — are facing a slew of challenges that are forcing new approaches to customer service and communication. The common underlying theme: the impact of the COVID-19 pandemic.
“We’re almost in a perfect storm situation where manufacturers were shut down, or at least slowed down, during the pandemic, which has had a significant impact,” said Bryon Short, executive director of the Delaware Contractors Association. “We’re definitely in the state, and in the nation, experiencing significant material inflation — if you can even get the materials.”
Supply chain disruptions, transportation interruptions, changes to tariffs and trade agreements with China and Canada, the ship-stuck-in-Suez Canal debacle and natural disasters have all come together in the last year during the pandemic to exacerbate the serious lack of supply in the face of ever-increasing demand for building materials, Short said.
“We have all of these variables coming together that it’s just driving up materials, again, if you can get them,” Short said.
Those variables have led prices of essential building materials, from lumber to steel to PVC products, to skyrocket. A study by the Associated General Contractors of America found that from March 2020 to March 2021, contractors are paying about 12% more for materials. Prices on diesel fuel have increased by about 80%, while prices for lumber have jumped by 63%, copper and brass by 44%, and steel products by 40%. And the increases have just kept climbing.
Meanwhile, the housing market is seeing sky-high prices, competitive bidding and a low inventory of available homes.
For contractors who are members of the Delaware Contractors Association, it means delayed projects and ongoing compromises with project owners. For large projects that were locked in before the market took a turn, original estimates are falling short of the actual cost of doing business. For some, that may mean shouldering a cost difference that could make or break a business.
That’s why Short is lobbying the state to consider creating a market index reserve fund with pandemic assistance money, most likely to help those working on public projects, such as roadway improvements, that take years to move through bidding, design and building processes. If bids were locked in before the pandemic, the true price of a project now exceeds what everyone agreed to pay for it — meaning that someone involved is going to have to deal with those losses.
“The worst-case scenario: they go bankrupt,” Short said. “In the best-case scenario, all the players come together … to [figure out] something where everybody survives and moves forward.”
That “something” for The Lewes Building Company, a small-scale custom builder in arguably the state’s hottest building market, is patience.
Like every other facet of the industry, Lewes Building Company is grappling with high demand and low supply of materials and land.
“Even our clients are shocked by how much prices have gone up,” said Kathleen Leebel, principal and co-owner at The Lewes Building Company. “We are shocked as well. Especially lumber, which has gone up over 100%. It’s definitely caused some people to put their building project on hold. Others have sold their home and they can’t put their building project on hold. They’re selling immediately, and they can’t stop their project.”
Leebel’s company, which she founded with her husband, John, handles about a half-a-dozen projects at a time, some years even fewer. But business is healthy so far this year, if the projects can get the supplies and labor needed to reach the finish line. They will, Leebel says, it may just take quite a bit longer than anyone planned or expected.
That’s why she reached out to active clients recently to let them know what is going on, not only with her business and the Delaware market, but across the country and the world, and to ask for their patience.
“It’s just frustrating because everything is taking longer and people don’t like to wait,” Leebel said. “And honestly sometimes they can’t wait.”
But in this market, some people may have no other choice.
At Millman’s Appliances, the market challenges have led owner Gary Chorman to make a new hire he had not been considering before the pandemic. In June, he welcomed a new customer advocate to “monitor and communicate all of the challenges and different things that are happening with customer orders.”
“I think we have to change. I think we have to adapt,” Chorman said. “We have to understand that both as a supplier and consumers and to look at the consumer’s perspective.”
Appliances have been long delayed by weeks or months, and now a shortage of microchips needed for some products has added a new layer of complications to the equation as well, he said. But after being in business for decades, Chorman understands that the market he works in can be volatile and fluctuate from year to year.
While this year brought many new customers into his store near Lewes, it also poses a significant customer service issue where people do not always have the patience needed to deal with another delayed delivery or deadline.
“Folks have to use understanding and patience,” Chorman said. “Talking harshly or being derogatory doesn’t fix the problem. Behind every storefront is a bunch of manufacturers. People have to understand that. I think that’s the biggest takeaway through this pandemic: people have to be more caring of others.”
So, is there a light at the end of the tunnel? Chorman says that every time he thinks he sees one, another variable dims it. Short, with the Delaware Contractors Association, said economics experts expect it could take up to a year for the industry to stabilize from all of the disruptions.
“It’s definitely challenging, but I think we can just get through it,” Leebel said. “I think we can all work together and be patient and understanding and it’ll start to look more normal by this time next year.”
