After receiving an email from one of our readers regarding issues that have recently become worrisome in the industry, I made a few phone calls to friends who are either still in business or whose businesses are still in operation even though they have retired (sons, daughters or other people have taken the reins) and asked them about trends and problems that they or their surrogates are experiencing. The answers to my questions are pretty scary and don’t bode well for the nation in general and our industry in particular.
The first issue that everyone mentioned was manpower, or lack thereof (but we all know that) and the second was material availability. Everyone told me that getting even mundane and common materials is becoming an exercise in futility. This came from small service companies on up to larger commercial/industrial shops. Materials for both plumbing and HVAC projects are no longer “stock” items, and many must be ordered months in advance.
A plumber I know, who is a one-man show, told me that getting common material for small jobs is, in his words, “a crap shoot.” His answer to my question, “What are the most common materials that you are having trouble getting today?” is as follows: “PEX pipe and fitting, ABS pipe and fittings, some copper fittings [he never knew which ones he wouldn’t be able to get], even gas flexes! I couldn’t get gas flexes at the supply house, so I went over to Home Depot to get one and they were sold out, which I have never seen before. Even [named a large local supply house in the greater Phoenix area] is putting a limit on how much pipe a guy could buy at one time.”
This from a small shop. What about the mid to large shops? They also cannot get materials or equipment in a timely manner, and when they can, the prices are higher than they originally bid. They can either absorb the price increases to take the work, or default on their contract. Defaulting presents an entirely different problem with both their reputation, insurance, and bonding companies, but it beats working for nothing.
The supply chain has been broken on the national level, and no one seems too sure how to repair it. The present political climate is such that any coherent plan to address the problem is not going to be forthcoming in any meaningful way, any time soon either.
How this affects contract and contracting will be interesting to watch as well. One of my readers told me that he has been trying to order materials well in advance to make sure that he has them on hand, but there is only so much of that a company can do “on the come” so to speak. Tying up working capital on material, even material that you have historically ordered and used regularly, is only a stopgap.
The same reader related an issue which many subcontractors either have or will find themselves in: bidding a job, getting the job, and waiting a month or more before they get the go-ahead commitment from the general contractor to gear up, order up, and begin manning up to start the project.
The other side of the material availability coin is material costs. This past summer, lumber prices increased 158%! Plumbing and HVAC material and equipment have also increased, although not nearly as much. Add to the price increases, the lack of availability and you have a recipe for disaster waiting to happen.
Imagine bidding a project in June, being told that yours was the low bid. In years past, you would get on board with your supplier and begin assembling the materials required to do the job. You’d take stock of your present inventory and order up the materials in anticipation of the project start. Not so in 2021. If you bid a project in June, were told you had the job in July and the project was scheduled to start in September, the unknowns and variables might make it almost impossible to prepare.
The first variable would be availability of materials. The second would be cost of the materials and the third would be manpower. If your supplier gave you pricing to use in your bid, will they stand behind it three months from now, knowing that the market is so volatile? Will they be able to obtain the material, even with a three month lead time? Can you hold your price for ninety days based upon that scenario? What about manpower? Do you have enough personnel to do the project? If not, what are the prospects of recruiting enough new people to staff your business? Do you make the commitment to hire and integrate new people or wait until the last minute to fill the ranks? These questions need answers, and right now!
The general contractor has the same problem, but across the board, with all his subcontractors. Can they hold their price to the owner? What mechanisms are in place to protect the owner, general contractor, and subcontractors? The answer is “NONE.” This scenario is new and unique. Many contractors and subcontractors are trying to find their way through this swamp, but many are falling by the wayside.
Will the situation get worse? Is it getting better? Who knows where it will go and what will the “new normal” be? One thing is for sure, the landscape has changed drastically and the battlefield is already littered with the corpses of businesses that could not adapt to the changes. It is sad, but true, that you either adapt or die in our industry. The present reality is such that each participant needs to find their own solution to their own particular problems in their own particular area. A nationwide, or even regional solution, does not seem to be on the horizon. Good luck! You are sure going to need it!
The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].