March 2018

Material Prices
THE PRICE IS RIGHT? MATERIAL
COSTS AND CONTRACTORS
The issue of rising material costs is becoming an even thornier one than usual for roofing
contractors according to Simon Smith, Divisional Director at Bracknell Roofing. In the first of
a new, regular column, Simon says he sees a growing gulf between price rises that are
justified and ones that feel like they are a step too far.
Brexit, currency fluctuations and global
demand for raw materials are just some of
the reasons why we have seen price rises
across all of the staple materials we need to
construct a roof.
In the last couple of years, we know that some of
our suppliers have worked really hard to manage
costs at their end and in turn to minimise price
increases to their customers. For that they should
be applauded because it demonstrates the
importance placed by some on trust and positive
working relations between contractors and
suppliers. So, when prices have gone up, we know
that these suppliers have made all reasonable
endeavour to prevent this. Whilst nobody likes
price rises, sometimes fair and reasonable
increases are unavoidable.
A double-whammy
However, what does stick in the throat is the fact
that there are some sections of the supply chain
that are hitting us with a double-whammy. In
some cases, prices are rising well above historical
trends experienced over the past ten years and
beyond, yet without reasonable validation of the
input cost impacts driving this approach. The
effect of this is compounded for contractors,
particularly in slating and tiling, where the
availability and service level in some product
sectors has been acutely strained over an
extended period, resulting in significant impact to
resource and material costs.
I know everyone is in business to make money but
there’s a fine line between putting prices up
because you have to, and putting them up to
capitalise on market conditions. Of
course that’s a matter of opinion,
but it doesn’t sit well with me to
know that we have suppliers that
work with our customer base to
get their products specified (fair
enough) to the point of agreeing prices
with them for extended periods, only to leave it to
the last minute to advise us of significant price
increases agreed with our customers without
reference to us, which we are usually expected to
start paying immediately and left to absorb the
increased costs for weeks or months, until our
contract next permits price renegotiation. To say
this practice is unfair on contractors would be a
massive understatement. This leaves me with the
question: “do some manufacturers view roofing
contractors as a valued customer, or merely a
transactional link within the supply-chain?”
Notwithstanding my previous point, our business
understands that the prices of some commodities
like timber and metals are much more volatile
and, as much as we are able to, we factor this
volatility into our forecasting and projections. We
also have a good bellwether on insulation and
waterproofing – but roof tiles is one product
segment that confounds me.
The supply of some roof tiles over recent-times
has been worse than the market has seen at any
other point in my 30-something years in this
industry. The availability of materials such as
concrete roof tiles has been severely stretched,
with supply lead times reaching up to six-months
in some cases. Although there appears to have
been some improvement over the past few weeks,
it’s too early to say whether this
will be sustained and whilst I
hope it will, the fact remains that
contractors will continue to suffer
the cost effects of this period of
dysfunctional supply-chain
performance for some time to come.
Rock and a hard place
I think the most galling part is that roofing
contractors are stuck between a rock and a hard
place. Yes, we can express our dissatisfaction but
ultimately we have to work with these suppliers
because of specifications, third party supply-chain
agreements or due to the simple reality that we have
projects that need completing to time and budget.
What about passing on these rising costs? As
most contractors will appreciate, this is a
completely different ball game because in most
cases our hands are tied under contractual pricing
periods. We don’t have the luxury of continually
renegotiating terms with builders and
housebuilders. They just won’t stand for it.
For us, reviewing our costs is like a military
operation because we may only get one chance a
year to negotiate with our customers – so every
aspect of our costs are scrutinised and justified. And
no matter how prepared and well organised we are,
we have to work very hard to ensure we are not left
to absorb the burden of the pricing strategies and
performance of the roofing material supply chain.
Contact Bracknell Roofing
08705 626800
www.bracknellroofing.com
@BracknellUK
82 TC MARCH 2018