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Price and Supply Constraints, and What it Means for You.

20 Jun 2022 by Fairview

Recent global events have had a considerable impact on all businesses, but Australia’s construction and manufacturing industry appears particularly hard hit and is struggling to manage the volatility. Companies have collapsed, prices continue to rise, and skilled labour and materials are in short supply.

The price increases manufacturers face is cascading through the supply chain and have truly begun to impact the end consumer.

“The Construction industry has always been fast-paced, but the supply chain crisis and price volatility has made it even more difficult to manage, has increased stress and pressure on project teams and is really testing each business’ resilience,” said John Wallace, Fairview’s State Sales Manager – Victoria.

Transport & Supply Chain Challenges –

It has been an exceedingly difficult period in supply chain and logistics, with terminal and port congestions causing excessive delays which are not expected to ease in the near future.

In terms of local freight and logistics, increased fuel and AdBlue prices along with driver shortages is putting on additional pressure on stock access. 

What trends are we noticing?

  • Customers are becoming more selective about which projects they are pursuing, choosingprojects that they can be more confident of a successful completion.
  • Project procurement is commencing almost 12 months earlier than we have ever seen have before, to allow time to gather supplies and place orders.
  • Contractors are scrambling to get hold of all supplies for future projects before their competitors. This has seen an increase in Warehouse construction and rentals where these contractors are stockpiling supplies, and placing further strain on relationships between suppliers and loyal customers.
  • Increased level of research into alternate materials
  • More collaboration between stakeholders to share the project vision and firm upa heathy supply of reliable resources. The view is to create resilient supply chains to achieve less fragmentation in the industry
  • Demand for skilled workers – the construction industry is in grave demand for skilled trades to guarantee that projects are completed on time, on budget, and in a compliant manner.
  • Sourcing of materials closer-to-home to reduce reliance on importing.
  • Internal focus on building trained and resilient organisational cultures where staff are engaged in resolving problems and are given time and training to develop innovative thinking.

Joe Bousquin, Senior Reporter of the Construction Dive reports,

“Supply shortages, worsened by surging demand, have led to the largest annual spike of input prices to construction since 1987, when data collection began”.

Drivers of Product Price Volatility

Many product suppliers within the construction industry are contending with aggressive cost pressures associated with the price of aluminium. This has been driven by several factors: 

  • High USA & global demand generally for aluminium. This is particularly as a result of government efforts to kick-start economies post covid. International aluminium stocks are now at critically low levels
  • Increasing input costs. Energy costs are about 35% of the cost of manufacturing aluminium. Europe and China have seen significant increases in the cost of energy. Additionally, a coup in Guinea late last year and recent export restrictions in Indonesia have increased supply risk and cost of Bauxite, the main commercial ore for aluminium. Bauxite is about 25% of the cost of aluminium.
  • Reduced global production. Despite high aluminium pricing, high energy costs have forced several smelters in Europe and China to shut down or significantly reduce capacity in recent months. Emission targets in China are further limiting production capacity, and China is now a net importer of aluminium after having been a net exporter for decades.
  • Ukraine crisis. Russia is the third largest aluminium producing country after China and India. While there are no sanctions on Russian aluminium specifically, the overall sanctions are significantly impacting their ability to do business with other nations, driving up aluminium and energy costs. Ukraine refineries supply about 20% of the Alumina for Russia. 

Aluminium pricing has increased considerably since 1 Jan 2022 and unfortunately there appears to be little to prevent ongoing price volatility caused by these drivers.

Product Alternatives

In light of price pressures, some contractors are opting for on-site painted fibre cement. Whilst it helps to achieve a cost saving, this is an enormous compromise on the aesthetic and performance of the façade and there are many cost-effective alternatives available.

With Vitracore G2, there is no compromise on design. Vitracore G2 uses the tried and tested specialist technology PPG coating system so it is available in the same extensive colour range as Fairview’s leading solid aluminium panel, Vitradual.

Vitracore G2 also contains 50% less aluminium than solid aluminium products, and it thus not as heavily impacted by the price fluctuations. Vitracore G2 is the most stringently tested product of its kind, is 100% safe and compliant, deemed non-combustible and the perfect product for both new builds and to replace combustible cladding.

The limitless range of finish options, including solid, metallic, and multi-layer finishes such as spectra, chromatic, woodgrain, brushed, and natural look, is unmatched and provides you with a solution for any design intent.

In addition, Fairview supply a range of non-aluminium products including:

CeramaPANEL – through-coloured fibre cement panel (QLD and VIC)

Vitraloc – roll-formed steel

Argeton – terracotta ventilated façade system

Equitone – through-coloured fibre cement (NSW and ACT)

Price and Supply Constraints, and What it Means for You.

20 tonnes of Vitracore G2 is being delivered from Lithgow NSW to Melbourne VIC

We are committed to helping you make confident cladding choices.

To learn more about Fairview’s range of solutions, order a sample or discuss what the industry’s supply and price challenges mean for you and your project, please contact our friendly team.    

Fairview
Australia
With almost 30 years’ experience in the façade industry, Fairview is committed to providing aesthetically pleasing and safe cladding products to the construction industry. Our aim is to consistently facilitate the successful delivery of innovative façades that meet the requirements and vision of every project.With one of the largest stock holds in Australia, we have the ability to ensure a consistent and timely supply to our dedicated installer network. In addition, our flexible and innovative approach allows us to work closely with our clients to deliver the best possible project outcomes.Our HistoryFairview Architectural was developed to primarily service the aluminium composite façade market with our product Vitrabond. After several years, we began manufacturing Ceramapanel pre-finished CFC and soon after, secured the coveted ArGeTon terracotta façade tiles distribution for Australia.Our expansion into the United Kingdom market with our flagship product Vitrabond allowed us to establish a global presence, and this, in addition to growing our suite of façade solutions, indicated the need for a strategic realignment of our brand. In 2015 Fairview Architectural moved to simply be known as Fairview. This new approach allows us to better house the extensive suite of products we now manufacture and distribute and more effectively represents the innovative and professional company we have become.Our flexibility and attention to innovation, allowed us the ability to develop a range of non-combustible aluminium composite panel solutions, as part of our focus on addressing the issue of combustible façades; launching Vitracore G2 in 2015 and Vitradual in 2017.Corporate FoundationOur MissionInnovative and proactive organisation, consistently delivering industry leading façade solutions; renowned for excellence of product and superior customer service.Our VisionTo lead the industry through consistently facilitating the successful delivery of innovative façade solutions.Our ValuesTrust and respect / We work together to create a culture of interdependence built on trust, respect and dignity for all. Each person’s contribution is critical to our success.Achievement and Excellence / We strive for excellence in everything we do; we challenge our thinking and look beyond the obvious.Customer Service / We serve people in a way that is above and beyond what is expected.Meaningful Innovation / We are the Façade Company that invents products and solutions that matter.Uncompromising Integrity / We are open, honest and direct in our dealings.Solutions Minded / We are passionate about developing and presenting solutions for every project.

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