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Fletcher Building Faces Rising Costs Amidst Middle East Conflict
16 Apr
Summary
- Construction material prices increase, especially plastic piping by 36%.
- Middle East conflict disrupts supply chains for key materials like urea.
- Company warns of softening demand due to project delays and economic slowdown.
Fletcher Building, a major construction materials supplier in New Zealand, is raising prices significantly in response to escalating costs, compounded by geopolitical tensions in the Middle East. The company has introduced fuel-linked surcharges, with some product prices, such as plastic piping, increasing by as much as 36%.
These price hikes are driven by rising diesel expenses and considerable supply chain disruptions affecting crucial materials like resins and urea. Fletcher Building utilizes urea for insulation and Laminex panels, while resin shortages impact plastic pipe manufacturing in New Zealand and Australia.
Fletcher Building is experiencing extended order processing and delivery times for plastic piping due to high demand and ongoing global supply constraints. The company has secured short-term supplies of resins and urea and is implementing mitigation strategies, including diversifying sourcing.
Adding to these challenges, the company is also observing an early indication of softening demand, marked by project delays. This situation presents a risk to Fletcher Building's strategic positioning for economic recovery after facing economic headwinds over the past two years.
