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Research from Construction Leadership Council working group concludes that technologies such as boilers and air-source heat pumps may be hit by a shortage of semi-conductors

A shortage of semi-conductors linked to ongoing supply challenges in the UK could risk constraining the availability of boilers at a time of high demand, construction experts warn.

A joint industry statement published by the Construction Leadership Council (CLC) has warned that the limited availability of semi-conductors used in boilers and other heating systems risked being prioritised by other sectors.

Builders Merchants Federation chief executive John Newcomb and his Construction Products Association counterpart Peter Caplehorn said there were concerns about how the semi-conductor shortage may impact heating and other building engineering systems.

Their joint statement read, “Due to the size of their orders, there is a natural bias in the system towards automotive and electronics firms, which may cause issues for manufacturers of boilers and building related electrical systems.”

Alongside boilers, semi-conductor are important components for construction products such as lighting, fire protection and air-source heat pump systems.

As co-chairs of the CLC’s Product Availability Working Group, Mr Caplehorn and Mr Newcomb said it had not seen direct evidence that a shortage of chips was currently affecting production.  Yet, there are concerns that boiler availability could yet be directly affected.

Their joint statement said, “We will be increasing market surveillance to spot any early signs of market disruption.”

2021 supply difficulties

The warnings were made as part of the working group’s latest analysis of the supply chain for vital construction products following a challenging period for availability over the course of 2021.  Factors such as the impacts of the UK’s Brexit withdrawal agreement on customs arrangements, as well as the ongoing pandemic were cited as being among a range of factors that were creating a ‘perfect storm’ of disruption for the country’s supply change.

Despite these issues, sales of construction products, which include a range of building materials and components, were found to have remained strong in the latest research.  The statement said that a seasonal reduction in demand over Christmas, particularly for domestic repair, maintenance and improvement work, had helped drive an improvement in supply.

It stated, “Going into the new year there are relatively good stocks and availability of most products, including timber where prices have also fallen from their peak.”

“However, as reported in previous statements supply challenges continue to affect bricks and aircrete blocks, roof tiles, steel lintels, manhole covers, plastic drainage products and certain sealants, coatings and paints.”

Alongside concerns about chip supply, rising energy costs and price inflation were expected to be an ongoing concern in 2022. The CLC working group said that price inflation of between seven to ten per cent was expected with the possibility of multiple increases for the costs of certain products.

2022 supply predictions

The emergence late last year of the Omicron variant of Covid-19 had so far had a limited negative impact on the construction supply chain when compared to other sectors, the working group statement said.

It added, “Absence due to Covid-19 remains a risk over the winter period but appears unlikely to cause major disruption at current levels.”

Raw material supplies of plastic products were found to have stabilised over the last quarter of 2021 leading to some hopes of improved product availability.  However, the working group said that order backlogs may still not be cleared until the second half of 2022.

The working group also warned that delays and volatile prices for global shipping were also expected to continue until the third quarter of 2022 at the earliest. It cited China’s ‘zero’ policy of limiting Covid outbreaks as one reason for this.  The health policy has seen additional shutdowns and delays in shipments to try and limit infection risk.  China houses seven of the world’s 10 largest container ports and delays at these sites has further impacted supply bottle necks, the joint statement said.

The working group added, “Furthermore, with the Beijing Winter Olympics taking place in February, factories will be closed in 64 northern Chinese cities to improve air quality.

“This will almost certainly affect some construction products, which will have a knock-on effect of levels of inventory later in 2022. While the issues previously affecting timber and cement availability have eased, they have not been fully resolved, and longer lead times may return as the volume of demand increases later in the year.”

Particular concerns were also raised in the findings about the continued high levels of demand for brick and rooftiles.

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