You don’t have to look very far to see the repercussions of the cost-of-living crisis.
From day-to-day essentials to the materials that you require for your housebuilding projects, prices have been going up.
For businesses in the housebuilding sector, the impact can be catastrophic, affecting everything from cash flow, to margins and confidence in the sector.
This blog explores what’s behind the uncontrollable cost of building materials, but also presents a simple means by which costs can be offset.
Energy Costs Having An Impact
From the second half of 2021, wholesale energy prices have increased rapidly. By October 2021, there was a rise of 12%.
In the next 6 months, to April 2022, it rose a further 54%.
The problem is being felt nationwide and the concern for business owners is that there are no price caps like there are domestic.
Bills could get larger still.
It’s a cyclical issue that means prices have to go up to offset the increase, but without rising salaries, you’ll be on the back foot. Finding suppliers who have found ways to protect themselves, and your business, from these costs, is crucial.
On top of this, petrol prices are also rising. This doesn’t only impact the day-to-day commute, squeezing your bottom line, but also the cost to run certain tools and machinery.
While prices did appear to dip somewhat throughout the summer months, according to the Organization of the Petroleum Exporting Countries (OPEC) meeting in October, that fall has now been reversed and prices are back on the rise.
Are your suppliers doing everything they can to offset this? Those that consider the success of their customers are helping combat the rising costs in all areas.
Uncontrollable Cost of Materials
Energy is only one area where costs are becoming uncontrollable.
The day-to-day materials that you need for your housebuilding project are also continuing to rise, adding to the pressure the sector is consumed by.
In May 2022 alone, the costs of materials shot up by a third compared with the previous year. The result of these material costs means that the cost for all new construction work increased by 27.2% year-on-year, new housing costing went up by 23% and repairs and maintenance rose by 25%.
Whether it’s timber, plaster or steel, the material shortages aren’t helping with the cost crisis. Limited availability is as equal a factor in cost as the other factors we’ve discussed.
The Impact of Rising Costs
This uncertainty is undermining business confidence.
With costs rising, margins are being squeezed and access to finances is becoming more restricted.
It’s also potentially jeopardizing the number of projects available.
With uncontrollable costs, it’s less likely for developers to purchase new plots of land. If profits are going to be reduced, why take the risk?
At a business level, cash flow also becomes more uncontrollable. Balancing the book is far more difficult when you are squeezed on costs from the supplier, and any developers are slow to pay. It’s unsustainable and hampers your growth.
Addressing this will ease the pressure.
Staircase Success: Suppliers To Help Offset Costs
The question is ‘how?’
There are ways to offset these increasing costs and it is simpler than you might think.
One solution is to work with innovative local manufacturers who are finding ways to keep their own costs under control. Those that are sourcing locally and maintaining short supply chains can pass these savings on to their customers.
It’s about economies of scale, those margins made at the supplier level, are passed down to you, creating breathing room between you and your diminishing margins.
While no one is immune to inflationary pressures, these suppliers are a safety net.
Cost also comes from quality.
Focusing on higher-quality products, and guaranteeing fit-first-time installations, actually reduces the lifetime cost of a product.
Local suppliers are generally more committed to making sure the products delivered to the site have been tested and approved before being shipped. This is done through processes like dry-fitting. The fewer snagging issues the better it will be for your bottom line.
They are also generally more able to be flexible with delivery times, and able to work to your timetables. This allows you to make sure each delivery arrives on time, to make sure your program doesn’t stop.
This is the foundation with which Multi-Turn has built its reputation, supplying high-quality staircases to housebuilders in Southern England.
Ensuring success on all projects is achieved through high-quality products and craftsmanship, Multi-Turn works with dependable local supply chains.
With over 30 years of experience and knowledge, offered through a service called staircase success, allowing you to meet the demands of the housebuilding sector through bespoke staircases.
Find out more by speaking to our team at 01962 712299 or emailing us at web-enq@multiturn.co.uk.