How long will the building industry suffer from supply chain issues?

Global supply chains have been disrupted by geopolitical instability, the pandemic and a myriad of other reasons. The South African building industry is not immune to the supply chain disruptions and while there has been improvement this year it is still grappling with the problem.

Saint-Gobain are global leaders in lightweight and sustainable construction and has been present in South Africa since the late 1990s following several acquisitions. Here Pieter van Jaarsveld, S&OP, and logistics manager, and Damien Peyrelongue, MD (Gyproc & Isover) at Saint-Gobain Africa give their view on how the industry has been affected and when it could see an end to supply chain issues.

Compared to other countries, how much has SA’s building trade been affected? 

The supply chain constraints have been a worldwide challenge and have been affecting all countries especially if you’re unable to source locally. Consequently, South Africa’s building trade has been affected by supply disruptions of imported finished goods but also from imported raw materials which are then transformed locally. Additionally, with South Africa as a main exporter to its neighbouring countries, other countries within Southern Africa have been drastically affected as well.

How long are they likely to still suffer supply issues? 

We have seen an improvement in the supply chain from the tail-end of 2021 – while the impacts of the Covid-19 pandemic were decreasing.

However, while availability has been improving throughout 2022, the building trade sector still faces major supply challenges, for example:

– Logistic costs remained very high and have only recently started decreasing slightly;

– Some sourcing countries have taken protectionist decisions reducing importing options of raw materials:

– The war in Europe shuffled some worldwide supply sourcing forcing the industry to look for alternatives, which takes time to establish,

– Harbour or infrastructure failures extend lead times, and more recently the energy crisis in Europe is also disrupting supplies.

In this context, it is difficult to evaluate how long it will take to stabilize the building trade supply chain. If no major outbreak occurs, one that we could expect anyway, and with a world recession reducing demand, stabilisation and a better supply equilibrium could be reached in the course of 2023.

What is the building industry doing about it? 

The building industry is adapting to these constraints by for instance looking for alternatives and switching to other materials. For instance, Saint-Gobain in South Africa is continuously working on both localising as much as possible its raw material supply to its local manufacturing sites and localising manufacturing of any trading goods it’s importing.

The building industry is also actively working on reducing its environmental impacts by optimising and reducing its resource consumption. The recent innovation of RhinoBoard with EcoTech technology that is reducing environmental impacts and optimizing logistics is a perfect example of such a trend.

Should the South African government be doing something about it?

It is the responsibility of the building industry stakeholders to adapt and offset recent supply chain impacts as explained above. The South African Government could however support all industries by ensuring proper infrastructure, services, or utilities.

They are a very important component in facilitating the supply chain of any industry and not only the building one. It is also critical to support localisation of manufacturing which will then reduce imports and increase local employment.

While talking about building a trade supply chain, we must keep in mind that local industry could also export its products and solutions and so support [the] SA trade balance. This also requires SA Government’s consideration in facilitating such outbound activities.

What advice do you have for small businesses in the building industry going through this problem?

We often talk about challenges and difficulties but from a business point of view, we have to keep in mind that economic disruptions also create opportunities. For local businesses and more specifically small and medium enterprises (SMEs), the recent supply chain disruptions could offer some opportunities.

The recent pandemic and the current global impacts have demonstrated the importance of being regional and local and for any business to create its close and local eco-system. SA SMEs, being local, and being more agile could really offer alternatives in terms of supply or services. They must grab such an opportunity with both hands.

It’s important for us to note that the Saint Gobain Group in SA is always open to considering working with SA SMEs. With its recently obtained B-BEEE Level 3 certificate, we are deeply involved with our local environment and would critically consider developing local SMEs as well.