An apartment building in Houma, Louisiana, that was damaged by Hurricane Ida. The storm caused so much damage to the complex’s buildings that residents have to leave. Ida faced the Gulf Coast at a time when building contractors were already facing severe labor shortages and an exhausted supply chain. (Rebecca Santana, Associated Press)
LAFITTE, Louisiana – Joe Sobol, owner of Big Easy Construction in New Orleans, has bad news for homeowners who have been calling on rooftops damaged by Hurricane Ida or to receive an update on planned renovations before the storm do not scatter the area.
The work will cost much more than usual and will also take much longer.
Ida faced the Gulf Coast, and then destroyed it in the northeast, at a time when construction contractors were already facing a severe shortage of workers and depleted supply chains. The damage done by Ida has magnified these challenges.
The struggle to find enough skilled workers and materials will likely increase costs, complicate planning, and delay reconstruction for months.
“My expectation,” said Ali Wolf, chief economist at real estate research firm Zonda, “is that it will only get worse from here.”
Consider that Lake Charles, Louisiana, about 200 miles west of New Orleans, has yet to recover from the damage it caused when Hurricane Laura broke up the area a year ago.
The challenges facing construction companies stem from what happened after the nation suffered a brutal but brief recession when the viral pandemic erupted in March 2020: the economy bounced back much faster and stronger than no one expected. Companies of all kinds were surprised by an increase in customer demand that resulted in an increasingly solid economic recovery.
Suddenly, workers and supplies were scarce. For months throughout the economy, companies have struggled to procure enough supplies, replenish their shelves, and remember the workers they had abandoned during the recession.
Construction companies have been particularly affected. Among Zonda building executives surveyed last month, 93% complained of supply shortages. Seventy-four percent said they lacked enough workers.
And that was before Ida hit.
“Natural disasters cause pressure on building materials, building materials and labor,” Wolf said. “The difference today is that the whole supply chain has been mistreated even before the appearance of Ida. You really have all these things at once. Frankly, the last thing the supply chain needed it was an additional tension. “
The result is that the cost of materials and supplies has been rising. According to data from the Department of Labor, the combined prices of windows, doors, ceilings and other construction products increased by 13% in the first six months of this year. By 2020, by contrast, these aggregate prices would typically increase slightly more than 1% annually, on average, during the first six months of the year.
Prices of steel products more than doubled in July over the previous year. Gypsum products, needed for gypsum boards, partitions, tiles and the like, increased by 22%.
Henry D’Esposito, who directs construction research at real estate services company JLL, said the toughest challenge in rebuilding now are delays in the acquisition of gypsum, glass, steel panels. aluminum and other materials.
“A lot of the materials you need for any project, and especially for those that are so urgent: you can’t get to the site for weeks or months,” D’Esposito said.
Sobol, over the course of his career, has scattered some of the largest hurricanes to attack Louisiana, including Betsy in 1965, Camille in 1979, Katrina in 2005, and Ida last week. On Friday, he received a text from a client who had hired Big Easy for home renovations. The customer wanted to know if the initial cost estimate was still maintained.
“I said,‘ You can probably add 10%, ’” Sobol said.
And now the project is likely to take nine months instead of six.
“We have to jump through hoops,” said Robert Maddox, owner of Hahn Roofing in Boyce, Louisiana, 200 miles northwest of New Orleans. “We have to pay more for labor. We have to pay more for supplies. We have to bring supplies.”
The difference today is that the entire supply chain has been mistreated even before the emergence of Ida. You really have all these things hitting right at the same time. Frankly, the last thing the supply chain needed was an extra effort.
–Ali Wolf, chief economist at the real estate research firm Zonda
Insurance companies that pay the bill for many of the hurricane repairs, Maddox said, could incur an additional burden.
“I’ve spent more time fighting with insurance companies for prices than roofing houses,” he said.
Jacob Hodges, co-owner of a family-owned roofing business in Houma, Louisiana, complains that tiles are so scarce that it’s hard to buy them the same color consistently. One day, they are only available in black; the next day, only gray.
Hodges takes what he can get. So do their customers, who are desperate for their roofs to be repaired or replaced after the storm.
Then there is the labor shortage.
Among the scarce workers are the framers, who build, install, and maintain foundations, floors, and door and window frames; carpenters; electricians; plumbers; and heating and air conditioning specialists.
“Workers have the power,” said Wolf, Zonda’s economist. “They can go where they can make more money. So if you need access to workers, you’ll have to make ponies.”
Maddox said the typical roof pay has skyrocketed by 20% over the last year or so. Some can earn $ 400 a day.
“If you don’t pay them,” he said, “someone else will.”
In normal times, the demand for their services was so uneven that the roofs were often divided by time working for different contractors.
“Now, we all need them,” Hodges said.
To make matters worse, the electricity supply continues in many places, gasoline is scarce and the climate of the Gulf Coast is stifling.
With no place to stay, the workers involved in the reconstruction have to drive from afar. Maddox said it has rooftops traveling from Lake Charles, a three-hour drive from the hurricane zone.
“We’re wasting half the time driving,” he said.
He wants hotels with running water to reopen, even without electricity, so that workers have a place to stay.
“These guys don’t care about cold showers,” he said.
With a weight of the magnitude of the damage caused by the hurricane against the shortage of supplies and workers, Hodges anticipates a prolonged and hard period of reconstruction from Ida.
“To get everything back as it was,” he said, “talk … well, we’ll probably work at that time next year.”