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Preparing for Shortages

by John Caulfield

This article appears in Builder Magazine online...

What’s your biggest challenge if business really starts picking up?
During the downturn most builders, developers, suppliers, and trade partners downsized and were forced to do more with less. When our market picks up, my initial concern is that vendors along the supply chain will be reluctant to increase production and will avoid increased operating costs because they may feel that the recovery is not sustainable.

The resulting limited supply will challenge builders to keep up with newfound demand and likely push labor and material pricing upward.

The elimination of acquisition and development loans, and the mass employee exodus from the industry, are also concerns. We rely heavily on improved lots and execution at the community level; a spike in demand would significantly impact our ability to find the “next community.” The lack of qualified and seasoned employees would test builders’ ability to sell, construct, and service new homes at the level customers now expect.

 

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John Caulfield is senior editor for Builder magazine.