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I am a great fan of cycling and was struck last week by news reports highlighting the difficulties that the ultra-trendy Brompton Bicycle company was having sourcing critical materials. Not only were some high-end components stuck in containers as a result of the blockage in the Suez Canal, but rising steel and aluminium prices have been causing problems too.

Despite benefitting from a pandemic-induced sales boom, Brompton put its prices up by 6% at the start of the year and the firm is now publicly discussing further increases. That is not great news in a price-sensitive market.

What has this got to do with construction, you ask? Recently, there has been a lot of noise about short-term product availability problems. During lockdown there was a shortage of plasterboard and tiles; then there was the issue with goods  stuck in containers; more recently both timber and steel availability has been flagged as a problem.

Brompton anticipates further disruption for at least the next 12 months

What makes the Brompton news interesting is that the firm highlights that materials sourcing has become its number one challenge. Brexit is now described as 鈥渢he least of our problems鈥�. Furthermore, Brompton does not think  the problems are going away anytime soon 鈥� it anticipates further disruption for at least the next 12 months.

In the same newspaper, I read about the problems piling up at Liberty Steel, growing concerns about the UK鈥檚 access to rare earth minerals and the priorities of President Biden鈥檚 infrastructure plan 鈥� with massive investment focused on grid reinforcement, EVs and new sources of clean energy.

Ironically, just as the heavy materials industry is facing ever-louder calls for the adoption of clean technologies, demand is set to sky-rocket.

In one respect, that is a positive, as it will prompt new, cleaner investment. However, in the meantime, our ability to rely upon a highly flexible and resilient global materials supply chain will be tested as limits to capacity and growth are exposed.

It is fair to say that, even in an inflationary industry such as construction, the materials sector has had a low profile over the past few years. The commodities markets last boomed in around 2011 and it has been a long time since I have had to flag up materials availability as a pricing risk in a forecast.

A combination of continuing globalisation, a huge expansion in Chinese manufacturing capacity and the openness of the EU single market has contributed to a diverse and well-supplied market.

The past decade has been marked by regular complaints in connection with materials dumping rather than shortages

Ironically, the past decade has been marked by regular complaints in connection with materials dumping rather than shortages. Times change of course and repeated shortages that have followed shutdowns due to covid-19 have highlighted how complex and fragile these supply chains are. Who would have thought a year ago that a shortage of roof battens in the UK would have been triggered by a warm winter in Scandinavia and a US housing boom?

So, the big question is whether current market signals are a short-term blip, or the sign of more intractable problems. And whether this is a global issue or whether there is a unique set of issues for UK businesses to resolve.

There is a strong case for the short-term blip theory. Production was disrupted last year and there is little doubt that, like the UK, many economies are accelerating out of lockdown faster than expected.

The opposing view focuses on how many recovery plans, including our own Plan for Growth, are disproportionately focused on investment sectors 鈥� triggering at least in the short term a rush to pour money into buildings, plant and machinery. The UK鈥檚 鈥渟uper-deduction鈥� tax incentive will cost 拢25bn over two years, encouraging a lot of investment in sectors that are already hot from a wave of public investment in social and economic infrastructure.

As the scale of global recovery plans gets firmed up, and as the UK approaches what we hope will be an irreversible re-opening up, I am starting to feel that this is a long-term challenge which requires more engagement with the market simply to avoid preventable slip-ups.

In the short term supplies might be made more secure through the acceleration of materials ordering through the procurement process. However, such a move is unlikely to optimise market timing and may bake in cyclically high costs.

New capacity will only be brought if there is certainty in connection with demand and the wider business environment 

In the long term, new capacity will only be brought if there is certainty in connection with demand and the wider business environment 鈥� including for example the cost of carbon and extent of the coverage of the UK鈥檚 new emissions trading scheme (ETS).

There is one further issue that leads me to believe that the construction materials market in the UK will continue to be a source of risk, and this is a direct result of Brexit and the Trade and Cooperation Agreement (TCA) signed with the EU on 30 December. The issue concerns the replacement of the EU construction products directive and the rules that govern how products are tested, certified and placed into markets in the UK and Northern Ireland.

Post-Brexit, the UK will have its own parallel system, raising all sorts of issues associated with testing capacity, mutual recognition of certification and so on. Implementation is a very real challenge for material producers.

Up until now, however, I have tended to look at the problem through the lens of choice 鈥� in other words, clients and their project teams might not be able to use the materials they want because they have not been placed for use in the UK.

Increasingly, I also recognise that, if there is a narrower range of materials and products available in the UK, demand for those products will rise. And if supply remains finite, prices and delivery times might rise too. Far from being 鈥渢he least of our problems鈥�, the TCA could still trigger further disruption.

There is no doubt that there is short-term inflation in the system and everyone, from manufacturer to end-user, will have to absorb their share. The long-term picture is far less certain. Being alert to current developments and treating the products sector as a material consideration will be a critical step to increase project resilience.

Simon Rawlinson is a partner at Arcadis and a member of the Construction Leadership Council