What’s keeping you up at night?
As always, we’re concerned with delivering the highest quality results and service to our customers and clients. At the same time, we are contending with supply chain chaos, chronic labor shortages, unprecedented demand, and, of course, the ongoing pandemic. It is a perfect storm — but this is who we are. Problem-solvers, makers, creators, thinkers, innovators, improvisers. Solutions to home industry distribution concerns for 2022 will call on all of these skills.
Top Home Industry Distribution Concerns for 2022
As COVID numbers and shut-downs surged across the country, so did demand for home improvement-based materials and products. Lumber. Vinyl. Gypsum. Steel. Windows and doors. As tens of millions were sent home, improvement and remodeling projects spiked. The thinking was that when home is now everything — the office, school, social center of your world — it may as well be comfortable.
From installing new heating systems to building additions, this is where people spent their money. At the same time, new home starts also increased ahead of a market that would soon get red-hot.
Remember the “lumber bubble”? Supply and demand issues had prices skyrocketing to a high of $1,515 per 1,000 board feet. That addition just became very, very expensive. Builders and consumers alike face enormous strains on their budgets, as well as on their schedules. Be prepared for a second lumber bubble, coming to a supplier or home improvement store near you in 2022.
Supply Chain Snarls
The supply chain is the route that goods travel to get from where they are manufactured, grown, or mined to the hands of consumers. It is usually invisible, and few gave it a second thought as they clicked “Buy Now” and a package arrived the next day. We’re accustomed to it running quietly in the background, but now, it’s kicking and screaming for attention. As the New York Times puts it, “We didn’t even have a logistics beat before the pandemic. Now we do.”
Pandemic-related slow-downs and shut-downs across the world sent ripple effects that spread close to home. Tisdel Distributing, Inc., for example, manufactures its products in the US but relies on components from overseas. They were seeing supply chain interruptions there already; port congestion and a shortage of cargo handlers and truckers to get product from port to plant only added to lengthy delays.
Alex Cain, Indiana territory sales manager with Tisdel, says, “There was no catching up. It was like quicksand.” Mother Nature didn’t do them any favors either: in February 2021, a freak storm knocked the power out at a Texas plant that supplies Tisdel with foam needed for their refrigerator doors. The factory was forced to shut down for a month, and Tisdel could only get their hands on 25% of their foam allotment.
Cain says, “There were literally refrigerator cabinets sitting like dead soldiers waiting for foam. We couldn’t put them out the door because we didn’t have the raw material.”
In Short Supply
It’s a story that repeated itself again and again. More than 90% of builders across the country say they struggled with shortages of appliances, framing lumber, oriented strand board, and plywood, while 87% reported shortages of windows and doors. Garage doors were in such short supply, for example, that Sacramento, California officials enacted a provisional policy allowing builders to close on homes with temporary enclosures.
The same storm that wreaked havoc on Tisdel’s foam impacted Straub Construction, based in Shawnee, Kansas. They couldn’t get the petroleum-derived roof insulation boards they needed, and waiting would have dragged their timeline out six to nine months. They had to find alternative solutions; many builders even started scouring box stores and hardware stores for product because typical supply lines were jammed.
Straub Construction president Parker Young says, “It’s unprecedented. I’ve been in the industry for 30 years, and I’ve never seen anything like this. I’ve learned more about refineries and resin plants than I ever care to know.”
While we are seeing some loosening of supply chain tangles, the problem will persist in 2022.
The Labor Shortage Continues
The home industry has been contending with a labor shortage… has it been forever? It seems like it. At any rate, a variety of factors, from an aging workforce to the lack of trade education in secondary schools, means that over a million jobs in the trades go unfilled each year. But again: think ripple effects. The industries that touch us are also impacted by shortages. From factory workers to cargo handlers to truck drivers, virtually every link in the chain from source to consumer is affected.
How bad is the shortage? Workers have started “ghosting” their employers. Bob Danielson, president of BDA, which represents manufacturers, says that on any given day, as many as 40% of employees at big manufacturing plants simply do not show up.
Danielson notes that he has increased pay and doubled what he pays for employees’ insurance. “In this era, you have to offer additional incentives.” In the plumbing sector, for example, it’s not uncommon for companies to offer $1,000 if workers stay for a month. If they commit to 60 days, they could pocket $5,000.
Incentives are part of the solution to labor shortages; other components include increasing educational opportunities, effectively marketing these jobs as viable career options, expanding typical applicant pools (e.g. targeting women, students, older workers/retirees), and implementing more internships, apprenticeships, community-based learning, and other on-the-job learning opportunities.
Now: The Great Pivot
AFFLINK, a sales and marketing organization made up of distributors across North America, surveyed its members about emerging industry trends. Their conclusion: “We are no longer in the ‘new normal.” We are in the ‘Great Pivot.’” COVID has changed everything and will continue to impact operations in 2022 and beyond.
However, AFFLINK notes, the pandemic has made us stronger. As one member put it, “Without realizing it, we have become much more resilient. This resiliency will help distributors and virtually all businesses tremendously in years to come.”
Resiliency takes different forms. For Alex Cain with Tisdel, it is effective communication. “The factory is very transparent. Our lead times, while not good, are accurate.” She communicates this clearly to customers, and when orders are pushed repeatedly, she gets on the phone — and often gets results.
For Susan Froehlich, owner of and designer with Corinthian Fine Homes, resiliency is managing expectations. Home industry distribution issues impacted everything from plumbing and lighting fixtures to permitting processes for remodels, reducing the options she could realistically offer to customers.
Froehlich says, “I educate them from day one that product selections are fluid.” She advises them to choose an Option 1 and an Option 2 in case availability is an issue. Froehlich is also upfront about timelines. “We’re not even starting a job until we know we can get appliances, cabinetry, lighting, tile, and all of those things… It’s frustrating for everybody across the board, but I work with companies who are communicating effectively in this new norm.”
What does resiliency look like for your business?
Building Better Businesses Together
Home industry distribution concerns for 2022 present challenges. At this point, they are not “unprecedented.” We’ve seen it; we’ve been dealing with it. We’ve become stronger and more resilient. While distribution trends have called upon all our skills, they have also given us the opportunity to develop new ones.
Home Artisans of Indiana is committed to helping home industry professionals build better (and yes, more resilient!) businesses. Despite challenges, we can do it. Together. Learn more at HAOI.