The order books of the craft businesses in Germany are full. Nevertheless, things are not progressing on the construction sites. Because building materials are hard to come by. Plus, it’s more expensive than ever.
Summer is actually a good time to build. It’s warm outside and the days are longer. But this year everything is different. Almost everything that is needed in construction is missing on the construction site: wood, metal or copper. It starts with very basic building materials, on which a lot of other things are based, says Alexander Barthel in the ntv podcast “Another thing learned”. He heads the economic, energy and environmental policy department at the Central Association of German Crafts. “Every house needs a foundation. When the foundation is poured, the appropriate pipes must already be available. And pipes for sewers and power lines are plastic pipes. So if we currently have a massive shortage of plastics and these plastic pipes are not delivered then the construction project stops as soon as the foundation is laid. “
The material deficiencies have been around since the end of 2020, but they have worsened again in the past few months. Delivery problems are not only felt in new builds, renovations are also stalling. Andreas Rohde also noticed that. He works for a small property management company in Berlin. She actually only wanted to have a house facade repainted. But that was more difficult than expected. Because the color was no longer available from previous dealers. “But we had already ordered the scaffolding. The artist was ready, a few helpers were asked and suddenly the material wasn’t available,” says Rohde.
In the end, the Berlin property management team got hold of the facade paint through contacts, but had to buy it a little more expensively. Because that’s the second big problem. Not only is there too little material, these building materials are also much more expensive than usual. Industrial raw materials cost an average of 14.2 percent more in May than they did a month before, according to the Hamburg Institute of International Economics. Alexander Barthel reports price increases of up to 200 percent and more. An extreme example are chips that can control the energy supply in a building or network machines. “In the past, when things got high, that was five euros, you can no longer get them for less than 50 euros a piece.”
China and the USA are drawing on raw materials
Craft businesses cannot just buy these materials from the manufacturer around the corner. You are dependent on the international market. The delivery routes are long, the raw materials come from Asia or South America, for example. And there the manufacturers cannot keep up with production. Because they had assumed that the demand due to the corona pandemic would initially decline for a long time. That’s why they shut down their production right at the start of the pandemic. In the spring, however, the global economy picked up again. China and the US recovered the fastest from the corona lull. As a result of the rapid ramp-up of Chinese industry, for example, copper has become scarce, says Barthel.
The lack of wood had several reasons: a bark beetle infestation in the USA, a trade dispute between Canada and the USA and announced export restrictions by Russia. “All of this leads to material shortages, which then result in either massive price increases or significantly longer delivery times,” says Barthel. These examples make it clear: the delivery bottlenecks were not just for one reason, there were very different triggers at the same time.
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It will take months before the international supply chains have regained their place, says the Federal Association of Wholesale, Foreign Trade and Services. How is this noticeable in the craft firms? 84 percent of the companies had to postpone orders or cancel them immediately because the material was missing, according to a recent survey by the Hamburg World Economic Institute. That is why companies have to put their employees on short-time work – even though the order books are full.
Relocate production to Europe
The problems in the building trade have long since arrived in our everyday lives. If you need a craftsman, for example to have the kitchen expanded, you have to wait around two months, said Hans Peter Wollseifer, President of the Craftsmen’s trade, in the newspapers of the Funke media group. In the hardware store, people sometimes stand in front of half-full shelves and have to pay more money for materials. And rental apartments would be more expensive, as the price increases led to higher construction costs, said Berlin’s municipal housing company Howoge ntv.de. “Construction costs have to be refinanced – in the case of rental apartments, this is done through the rent.”
Crises such as the lull caused by the corona pandemic cannot be foreseen, but it is possible to prevent and learn from them, says Alexander Barthel. Namely, by simply producing more things ourselves again in Germany and Europe and not shipping them here from countries that are far away. Since global supply chains are very susceptible to failure, “we think it would also be a major economic challenge and task to restore the framework conditions in Germany and in the EU as a whole so that such strategically important raw materials and products can be manufactured again in Europe . “
The end of this crisis is at least in sight. Alexander Barthel predicts that the world markets will relax this year. The building materials will then be available again – but they will probably remain a little more expensive. The wood market shows how fast it can go. The index, which shows the future prices for wood, is now clearly pointing down again.