Bring on the next challenge!

s recovery from the pandemic continues, businesses are now facing a new set of challenges, especially around material price increases and

shortages, and while the economic prospects appear to be positive and most Members are busy, the issues of rising material costs and availability are beginning to impact on many. Unlike the ‘heavy side’ of the

construction sector, where more than 75% of materials are ‘home grown’, the electrotechnical sector imports the vast majority of its raw materials or fi nished goods from Europe or the Far East and a combination of global and local (UK) factors means that the issue of cost and availability isn’t going to go away any time soon.

There are several factors behind the issue of shortages and increases: ● Signifi cant and unexpected upturn in worldwide workload – there has been a huge increase in demand, especially from the US and China, which has led to shortages in key products.

● COVID-19 recovery and logistical constraints – during the COVID-19 pandemic a signifi cant portion of manufacturing facilities were closed for varying durations and the world’s distribution network was signifi cantly impacted and is still

recovering. This is resulting in delays to manufacturing and increased cost and time for delivery of

materials around the world’s distribution network. ● Supply from the EU – although there is now a trade agreement, the borders and customs processes and practices add administration, time, and cost to obtaining products. ● Hedging and bulk ordering

– materials suppliers, main contractors, and many major UK projects have sought to off set disruption and delays by stockpiling or bulk securing manufacturing and supply slots. This hedging activity is resulting in increased pressure for the rest of the industry. ● Raw materials costs - the

COVID-19 pandemic, post-Brexit trading rules and rising oil prices have led to soaring material prices. For example, copper has increased by 49% and steel by 25% in the past six months. Unfortunately, there is no easy answer to fi x the issues around materials, and just around the corner is another problem, related to product testing. At the moment, materials are subject to an EU mark, but from 1 January 2022, a new UK mark will be required to allow products to be sold and installed. If mutual

recognition is not agreed before 1 January 2022 then EU manufacturers will be

forced to use UK Approved Bodies to enable them to comply with mandatory UKCA marking as from 1 January 2022.

The problem this

causes is that the UK does not have suffi cient test capacity to meet this demand, so disruption to EU exports to the UK will

ensue, and EU recognition of existing European Technical Assessments issued by UK bodies and new UK Technical Assessment Certifi cates is required now. A UK/EU agreement on mutual recognition would overcome most of the immediate issues for the UK, and from 1 January 2022, for the EU. Failure to address those areas of concern will lead to a further shortage of materials in the UK construction sector as we will no longer be able to import many of the products currently obtained from Europe. With these challenges to be faced,

it’s important that Members consider forward planning. SELECT has produced a series of guides for our SELECT TV channel, which feature our legal consultant, Professor Rudi Klein, explaining the steps Members can take when faced with cost rises and shortages from a contractual perspective. Through the CICV Forum we are also represented on a Scottish Government and industry group which is collaborating on preparing a detailed investigation into the current and future impact of the materials shortages. Via our membership of Actuate UK,

we have asked the UK Government to reach agreement on mutual recognition of technical standards or seek an extension to the date of 1 January 2022. Lots of challenges lie ahead, but we can assure you that SELECT will be working hard to ensure that Members’ views are eff ectively represented on these important issues.

Alan Wilson Managing Director, SELECT


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