Date: 2nd Quarter, 2021
Greetings and welcome to Insulate SB's quarterly email newsletter. As were moving through the 2nd quarter of 2021 (quickly, right?) we thought this would be a good time to reach out to our customers, builders, architects, construction professional and homeowners.
Today's topic I will touch on material shortages and material price increases. Material increases have always been a part of the construction business but at the magnitude we have seen this year its over whelming. We all know how much lumber prices, plumbing materials, doors and windows to name a few prices have gone up. I recall as I was getting into the trades doing labor work for my best friend, we would take the excess 2x4's and burn them in our campfire. Now we squirrel them away like gold coins.
Getting back on track, lets first touch on material shortages. Most of you have already experienced this or have had conversions with one of our team members regarding shortages. The biggest impact the insulation industry has seen is Rockwool and Spray Foam Insulation. We have been anticipating material shortages from early October of 2020. Everything seemed to be fine, and we were not seeing any setbacks until around March of 2021. At that time, we were told Rockwool was 60 days out, then it was moved to 80 days to as of April 2021 it was moved to 150+ days. Fiberglass insulation truckloads were pushed out from 2 weeks to 6 weeks. On top of the above, Spray Foam insulation moved from about a week out to 6-8 weeks. These are all estimated times and as I'm writing this, we still have not been able to receive Rockwool. We have had to get creative with other products, vendors and applications. The biggest challenge for us and for you're is the spray foam shortage. I'm sure your asking yourself with all of the economist that work for the material manufactures, computer technology and forecasting how can we run out of material.
Here are a few bullet points related to Spray Foam.
- Raw material availability mostly related to "Polyols." The cold snap in Texas and a Fire at a chemical processing plant that creates propylene oxide (PO), which produces polyol shut down production for a few weeks.
- There is a major shortage for global shipping containers. Yes, you read that correctly, the big metal boxes that are stuffed with various items and ship across the county via boat are almost non-existent. Three Chinese state-run companies produce 96% of the worlds cargo containers and production has not been ramped up. Imported raw chemicals need a seat or various seats in these containers and without the containers the materials will not arrive on time.
- Container shipping cost have exploded from $1,600 - $3k a year ago to now $12k to $16k. You guessed it, that's a 500 to 1000% increase in shipping cost.We are hoping the material shortages will stabilize by September but are not planning for stabilization until early 2022. We expect rolling supply shortages for both open and closed cell spray foam. Both products use similar raw materials but the ones that they both use, open cell uses 3x as much. Closed cell foam is being produced more rapidly vs open cell. I see that changing in the near future and there will be a big push for Open cell production.
Before I wrap this up lets briefly touch on material increases. On any given year we can expect two to three fiberglass insulation price increases ranging from 10-12%. This year at the mid-way point we have received 3 increases ranging from 8-12% depending on the R-Value. Although we cannot receive Rockwool a price increase went out for July 1st, 2021. in the past 8 months, closed cell foam has increased about 20% and open cell has increased 60%. As you know prices are still sky rocketing, every product that we use from insulation to trash bags to the paper that we print our work orders out for our installers. With fuel prices going up, suppliers are getting creative and adding fuel cost surcharges now instead of a material increase. We are seeing charges of 10%+ on our orders with the idea that they can lower the fuel charges at any point to make use think the material price is going down. But everything is mixed together to leave us to sort it out with you. Please note if you need backup for your customers, I have all manufacture/supplier material price increases letters that I can share with you.
Well if your still with me, that was a lot to share but all very important. And to think this was the short version. I encourage you to email or reach out to me if you would like to go into further detail. Please understand we are doing our best to stay on top of the shortages and price increases. We have great relationships with our suppliers and are in contact with them weekly if not daily and we will come up with a solution if material becomes unavailable for your project.
Cheers and all the best,
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"R" means resistance to heat flow. The higher the R-Value, the greater the insulating power. The amount of insulation you needs depends on the climate you live in. Also, fuel savings from insulation will depend upon the climate, the type and size of your home, the amount of insulation already in your home, your fuel use patterns and family size. All insulation materials are designed at certain thicknesses based on R-Value and application locations. Please note, installing a higher R-Value material into a smaller cavity than what its designed for does not mean that you gain a higher R-Value. It actually lowers it, as the material becomes smashed in the cavity and is less productive.