Short-time work and delivery bottlenecks: construction industry in distress despite the boom

Created: 05/17/2022, 02:12 p.m

By: Lisa Fischer

 Delivery bottlenecks, scarce material, exploding costs for important building materials and a shortage of personnel are making life increasingly difficult for building contractors.

(Archive image) © Soeren Stache/dpa

Rising material prices are hampering building contractors in their work - with serious consequences for companies and customers, warns craft president Franz Xaver Peteranderl.

Munich – Delivery bottlenecks, scarce materials, exploding costs for important building materials and a shortage of staff are making life increasingly difficult for building contractors.

As a result, many companies cannot complete projects, have to reject customer inquiries or even apply for short-time work - despite full order books.

spoke about the situation in the industry in Bavaria with Franz Xaver Peteranderl, President of the Chamber of Crafts for Munich and Upper Bavaria - and himself a building contractor.

Mr. Peteranderl, interest rates are rising – building is becoming more expensive.

There have already been reports that builders are putting the first projects on hold.

Does the craftsman on site feel it?

Peteranderl: Yes, he will feel that.

At the moment, however, we have no information that there are any bottlenecks.

At most, there will be shifts in some areas and therefore individual games will be free.

This allows the companies to prioritize one or the other order.

But the order books are still full.

Franz Xaver Peteranderl, President of the Chamber of Crafts for Munich and Upper Bavaria - and himself a building contractor.

© Falk Heller/Imago

Actually a reason to be happy.

Peteranderl: The bigger problem for the companies is the increasing material prices.

Companies have often agreed on fixed prices, which they then have to adhere to.

This leads to a loss of earnings for the farms.

You will rarely find a client who will pay a few thousand euros more on their own.

You said that orders can be brought forward.

Does this give me a better chance of, for example, having a heating system repaired?

Peteranderl: Getting a new heating system at short notice could be problematic.

Rather, it can happen that you have to wait several months.

Either because the installation company already has so many orders in advance.

Or because not all products are in stock.

Does that mean that the question of deadlines is more of a question of materials?

Peteranderl: Yes.

And it also depends on the trade whether an order has just been canceled and capacities become free.

It also depends on whether you work for private clients, the public sector or commercial customers.

For companies with many commercial orders, the calculation is different.

Because the prices there are running away too quickly as far as the material is concerned, for steel, wood, concrete and the like.

What is missing and why?

Peteranderl: Above all, it is steel and wood, but also insulating materials.

Russia and Ukraine, for example, are important producers of structural steel.

And many preliminary products, for example for the manufacture of tiles, also come from the Ukraine. 

Does it only affect products from these countries?

Peteranderl: No, in Poland, for example, aluminum plants were shut down because they use too much electricity or gas in production.

This made aluminum scarce.

Which, in turn, affects aluminum cables.

A lot of copper comes from Eastern Europe, and there are also bottlenecks there.

This has led to an increase in the price of copper cables and copper elements for electrical engineering.

There are also bottlenecks in the plastics sector because the production requires preliminary products from the refining of crude oil.

A long rat tail...

Peteranderl: Yes, a lot depends on it.

It is also possible that individual elements are missing, especially in the area of ​​heating and plumbing, such as plastic seals.

If these are not there, the order may not be able to be completed.

What does this mean for companies and customers?

Peteranderl: For example, it has happened to carpenters in kitchen construction that the dishwasher, washing machine and refrigerator could not be delivered.

Semiconductors and chips are installed in these devices that are currently missing.

Then the carpenters can assemble the kitchen cabinets, but not install the appliances.

Or the tiler cannot tile the floor.

In construction and expansion nowadays, a lot of cogs have to mesh before a trade can be completed.

How does the lack of material affect the daily work on the construction site?

Peteranderl: That depends on the company.

On large construction sites, the delay can perhaps be bridged with other activities.

Other companies either have to register short-time work or compensate for the delay by reducing overtime.

Sometimes you can also put a small order in between.

In addition to all this, there is a lack of staff.

Peteranderl: Yes, the shortage of skilled workers is still great.

In certain areas there is a desperate search for qualified people.

In the heating and sanitary trades alone, there are said to be around 60,000 vacancies nationwide.

Critics say the construction industry would be more effective if it were more digital.

How do you see it?

Peteranderl: That is the subjective impression from outside.

The construction trade is more digital than many other sectors.

Of course, there are still companies that largely do without digitization and work as they did 20 years ago.

But we also have companies with a high degree of digitization.

They use all the tools, from the drone for the roof inspection to the full scanner that is set up every evening to document the construction progress.

We are in the process of using robots for repetitive tasks, such as cutting slits for electricians.

However, it must also make economic sense for companies to purchase such devices.