POLITICS & INSTITUTIONS - ECONOMY

Supply cost spikes, shipping delays continue to hit building projects



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The cost of construction materials have continued to increase since the beginning of the year, say industry executives. Library picture: Maison Moderne 

The shortage of raw materials in the construction sector has continued, and even appears to be worsening.

At the start of the year, several companies in the construction sector saw invoices from their suppliers suddenly increase. And delivery times for construction materials became increasingly longer, until industry leaders finally sounded the alarm in April.

Several weeks later, the situation has not improved and they say it has degraded further.

“It is getting worse and worse,” according to Marc Giorgetti, head of Félix Giorgetti, one of the grand duchy’s largest contractors. The prices of some materials have doubled, and he said that he has “no certain date for delivery” of products.

So far, none of its construction sites have been put on hold, and none of the 450 employees have been placed on short-time work, which is still available to the sector. But Giorgetti fears a “catastrophe” if the situation continues.

“Since the end of April, suppliers of all types of building materials have continued to send us [price] increases almost daily,” said Christian Nilles, CEO of Prefalux, which specialises in wood construction, in addition to roofing and finishing.

Wood is one of the most difficult materials to find right now. “We are talking about 12 to 16 weeks” for these products, instead of three to four before the shortage. “Some of our suppliers have even declared a hold on accepting orders for one or even several weeks,” said Nilles. As a consequence, the company is already booking deliveries for the end of the year. None of its 270 employees are on partial unemployment for the moment.

Evolubois, a company with nine employees also specialised in wood construction, is experiencing a similar situation. “Through the end of the year, we will have to organise things differently,” said manager Bruno Mallick.

He now pays €1,000 per cubic metre of wood, compared to €450 before the shortage. Large orders have become impossible, so he only places partial ones, when he does not go directly to the supplier to buy what is available. “Materials that were easy to find have become scarce. The same trend is starting for others, such as slate or zinc.” Mallick has noted an average delay of two to three weeks on its sites, and his team are all remaining full-time for the time being.

The construction executives warned that rising material costs will drive up project budgets, which in turn will further fuel Luxembourg’s rapidly growing real estate prices.

Originally reported in French by Paperjam and translated for Delano