Construction companies deal with low material supply
SHERIDAN — Excalibur Construction used to order its building materials on a per-house basis. This year, they’re ordering per semi-truck.
Even then, they’re not guaranteed to get all the supplies they need at an affordable price, said Mykaila Jensen, project manager for Excalibur.
“There are definitely longer wait times for getting stuff here,” Jensen said. “You have to wait a couple weeks, and you might not even get all your materials.”
The supply shortage and cost increase — seen particularly in lumber and sheathing materials like oriented strand board — has been caused by a perfect storm of reduced supply and increased demand resulting from the COVID-19 pandemic, according to Nate Laible, director of marketing for Bloedorn Lumber. Local contractors like Excalibur are doing their best to weather the storm by adapting where they can.
“We’ve switched things up in regards to using materials we can get cheaper and quicker,” Jensen said. “We are doing our best to keep things moving. We have stayed right on track so far.”
Bloedorn Lumber buys materials from wholesalers, who themselves purchase the materials from lumber mills. But when the lumber mills had to temporarily shut down and reduce production last year due to the pandemic, that change had ripple effects throughout the supply chain.
“When the mills had to socially distance and shut down production for a while, nobody thought that would be a problem,” Laible said. “But then demand went up, especially here in the Mountain West.”
In the midst of the pandemic, many people from the east and west coasts decided they needed a change of scenery, Laible said. They sold their high-value homes and had enough equity to build new homes in Wyoming.
“A lot of people moved to Wyoming just to have their kids in school this year,” Laible said. “When you’re living in a big city during the pandemic, a place like Sheridan looks a lot more appealing, especially when you can work remotely.”
With new residents moving to the state, and an increase in remodeling projects during lockdown, the demand for construction materials far outpaced the limited supply of lumber, Laible said.
“The mill production was way down, and demand went through the roof,” Laible said.
With the increasing demand for building materials, prices skyrocketed, Jensen said. Nowhere is this clearer than in the cost of oriented strand board, which currently sits at $61.84 per sheet. This is a 786-percent increase from last year’s cost of $6.98 per sheet.
But all wooden materials are seeing a price increase related to the increased demand, Jensen said. Wooden studs, which used to cost between $4 and $5 depending on length, are now between $15 and $17. Steel studs, typically the more expensive option, are now half the price of wooden studs, Jensen said.
Due to high material prices and low supply, Excalibur is adapting where it can, Jensen said. Some changes are easy, like switching to steel studs. Others, like addressing the OSB issue, are more challenging.
“To use vinyl siding, you have to use OSB,” Jensen said. “So, for some houses, we have to use it. But for others, we’re trying to switch it up a little and use a new siding called SmartSide, which does not require OSB. We’re just making changes where we can to make sure projects move forward.”
These adjustments should be temporary changes while contractors wait for the market to recover, Laible said. Mills are expanding their operations to keep up with demand, and by the time construction season resumes next year, there should be enough supply to meet demand.
“The building cycle naturally falls off around December when it gets cold, which means the supply of materials can build up for a few months before the beginning of the next building season,” Laible said. “The hope and expectation in the industry is that this is just a short-term problem. While we’ll likely be dealing with it for the rest of this season, we hope to return to some sort of normalcy next year.”