Shortages of supplies and workers will delay Gulf rebuilding

Joe Sobol, owner of Big Easy Construction in New Orleans, has bad news for homeowners who have called about roofs damaged by Hurricane Ida or to get an update on renovations planned before the storm hit the area.

The job will cost a lot more than usual – and take a lot longer too.

Ida bumped into the Gulf Coast — then brought destruction to the northeast — at a time when contractors were already struggling with severe labor shortages and depleted supply chains. The damage inflicted by Ida has magnified those challenges.

The struggle to find enough skilled workers and materials is likely to drive up 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.”

Recall that Lake Charles, Louisiana, 200 miles west of New Orleans, still hasn’t recovered from the damage done when Hurricane Laura swept through the area a year ago.

The challenges construction companies face stem from what happened after the country went through a brutal but brief recession when the viral pandemic broke out in March 2020: the economy recovered much faster and stronger than anyone expected. Businesses of all kinds were caught off guard by a surge in customer demand resulting from an increasingly robust economic recovery.

Workers and supplies were suddenly scarce. Across the economy, companies have struggled for months to stock up, restock their shelves and recall workers they laid off during the recession.

Construction companies have been particularly affected. Among construction managers Zonda surveyed last month, 93% complained of supply shortages. Seventy-four percent said they didn’t have enough workers.

And that was before Ida struck.

“Natural disasters put pressure on building materials, reconstruction materials and labor,” Wolf said. “The difference today is that the whole supply chain was already affected before Ida came along. You really have all these things at the exact same time. Honestly, the last thing the supply chain needed was extra tension.”

As a result, the costs of materials and supplies have increased. According to data from the Labor Department, combined prices for windows, doors, roofing and other construction products rose 13% in the first six months of this year. By contrast, before 2020, such aggregate prices would increase on average just over 1% per year in the first six months of a year.

Prices for steel mills were more than twice as high in July as a year earlier. Gypsum products, which are needed for drywall, partitions, ceiling tiles and the like, increased by 22%.

Henry D’Esposito, who leads construction research at the real estate company JLL, said the biggest rebuilding challenge now is the delays in acquiring drywall, glass, steel, aluminum and other materials.

“A lot of the materials you need for any project and especially for something so urgent you can’t get on site for weeks or months,” D’Esposito said.

Sobol has ridden some of the biggest hurricanes to hit Louisiana over the course of his career, 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 client wanted to know whether the initial cost estimate still stood.

“I said, ‘You can probably add 10%,'” Sobol said.

And now the project will probably 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 in.”

The insurance companies that foot the bill for many of the hurricane repairs could be an added burden, Maddox said.

“I’ve spent more time fighting with insurance companies over prices than on house roofs,” he said.

Jacob Hodges, co-owner of a family-owned roofing company in Houma, Louisiana, complains that shingles are so scarce that it’s hard to consistently buy them in the same color. One day they will only be available in black; the next day, only gray.

Hodges takes what he can get. This also applies to his customers, who desperately want to have their roof repaired or replaced after the storm.

Then there is the labor shortage.

Among the scarce labor are framers, who build, install, and maintain foundations, floors, and door and window frames; carpenters; electricians; plumbers; and specialists in heating and air conditioning.

“Workers — they have the power,” says Wolf, the economist at Zonda. “They can go where they can make the most money. So if you need access to workers, you’ll have to brag.”

Maddox said the average pay for roofers has increased 20% in the past year. Some can make $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 roofers often split their time among different contractors.

“Now we need them all,” Hodges said.

To make matters worse, power is still out in many places, gasoline is scarce, and the Gulf Coast weather is sweltering hot.

Since there is no whereabouts, workers involved in the reconstruction have to drive in from far away. Maddox said he has roofers who commute from Lake Charles, a three-hour drive from the hurricane zone.

“We lose half our time driving,” he said.

He would like hotels with running water to reopen – even without electricity – so that workers would have a place to stay.

“Those guys don’t mind cold showers,” he said.

Balancing the magnitude of the hurricane damage against the shortage of supplies and workers, Hodges foresees a lengthy, arduous rebuilding period for Ida.

“To get everything back to the way it was,” he said, “you got it… well, we’ll probably be working around this time next year.”

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Wiseman reported from Washington, Veiga from Los Angeles.

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