Common Issues

November 24, 2021 Published by London and Area Chapter - By Jennifer Dickenson

The Shortage Economy and its Effects on Condos

From the CCI Review 2021/2022—November 2021 issue of the CCI London Chapter

Our office is forced to answer the question “What is taking so long!?” multiple times per day. Condo managers are not the only ones encountering these concerns from homeowners, but it is definitely near and dear to our hearts. We are not only living through a pandemic but also a “Shortage Economy”. Some of you may remember one major shortage economy in the past: the gas shortages of the 70s.

Supply Chain Effects

We’ve all read the news mentioning the microchip and semiconductor shortages but these shortages are not just in the electronics industry. Other factories were also shut down during the pandemic, while online orders increased. Most South-East Asian factories, which specialize in industrial materials, shut down and that hit many construction and manufacturing industries harder than many realized.

It’s not always that the material isn’t being made, however. Logistical bottlenecks continue to prevent materials from getting to the companies that make end-user goods.

As rich countries continue to purchase, global supply chains are straining under the demand, showing how neglected they’ve been over the decades, as industries relied on the ‘old ways’ to do business. Increases in shipping costs, due to de-carbonization cause our prices to increase or force companies to absorb the increases by either decreasing their already strained workforce or changing their offerings/risking closure by trimming their profit margins.

Globally, the top industries affected are gasoline, coffee, semiconductor chips, diapers, chicken, lumber and toilet paper. There may not be physical shortages of the material (now that we’ve made it through the great toilet paper shortage of 2020), but shipping and costs are drastically affected. The IMF recently commented that the world is witnessing “pandemic-related supply-demand mismatches and higher commodity prices” and the recent USMCA trade agreements are written more with protectionism in mind, not efficient access to goods.

This is to say, there’s a surge in demand and supply can’t keep up.

The Pandemic has presented a unique set of challenges to the Supply Chain. Imports are often held longer and then inspected more thoroughly, due to risk of the virus transmission. If just one component is delayed, the whole production of the end-product is on hold.

We’re also becoming more socially conscious as a society, which is great, but it can have unforeseen effects on the consumer. Canada is currently looking at banning imports from Xinjiang, China (where there are ‘re-education camps’) unless companies can show the items imported weren’t made with forced labour. This affects raw materials like cotton and solar panel ingredients. Canada was also ‘surprised’ by some goods being held by Chinese shippers while Meng Wanzhou, the CFO of Huawei, was held at the request of the USA from 2018-2021, straining trade relations even further between the two countries.

Natural disasters like forest fires, extreme winds, floods and hurricanes seem to hit every month in 2020. But it wasn’t just confined to 2020!

Remember when the Ever Given turned sideways in the Suez Canal for 6 days in March 2021? It resulted in an estimated $54 billion in trade losses. June 2021 saw a whole container ship sink, including its almost 1,500 containers, off the coast of Sri Lanka. In October 2021, the container ship, Zim Kingston, lost more than 100 of its 2,000 containers overboard while the ones remaining onboard risked being damaged by a fire. No one knows what materials or goods have been lost as a result.

“Buy Canadian” is great! You’ll find, though, many ingredients are sourced out of country, even if something is assembled in Canada.

Contractors

This is all horrible, but why is it affecting your window installation, right? The Pandemic has put strain in other areas of the economy, as well.

Contractors have been closing their doors due to increases in insurance costs, decreases in workforce availability and some didn’t survive the lack of income during the first (or second) pandemic shutdowns. Our office is seeing labour shortages affecting masonry/brickwork, roofing, window/door installations, landscaping, fencing installation and the list goes on.

This combination of labour shortages in delivery/supply and installation means goods can’t get to you quickly. London (and most of our area) is experiencing an ongoing house-building boom, which means Builders are buying up the available supply of key renovation materials. As we were stuck in our homes, we also found the time and repurposed vacation funds to complete our own renovations! Most are familiar with the struggle in late 2020 to get lumber and almost any other construction material.

It’s not just lumber (still). Items affected include windows, doors, fire safety equipment, hand sanitizer, kitchen appliances and any number of other materials.

Boards of Directors cannot accommodate the needs of their Corporations, let alone the wants of individual owners beyond the basic necessities. Many are being forced to implement stop-gap measures when the materials required for basic safety are unavailable.

We’re nearing the end of the maintenance season and some contracts issued in or before March 2021 are still not completed. Asphalt plants are getting ready to close and the ground is too soggy to support most major landscaping projects. Many owners are left wondering “But when will I get what I’ve been asking for?”

Efforts to fix it

We’ve been hit hard and from multiple angles, but there are many efforts to ease the pain of the shortage economy. Some are temporary and some are going to cause far-reaching changes.

During the height of the pandemic, there were government subsidies for businesses and private citizens. This helped many get through the worst times. Now that the Canada Emergency Response Benefit (CERB) has ended (early October 2021), many of us have hope that the labour shortages will ease, as many are forced back into the labour market.

Globally, $10.4 trillion is being spent by governments on stimulating economies. Borders are opening to private travel, allowing citizens to source materials, as well as businesses. Ports like that in Los Angeles and big suppliers like Walmart are opening for up to 24 hours/day to try to facilitate the movement of goods. Companies are hiring truck drivers with signing bonuses because there aren’t enough drivers to get goods where they need to go. Other companies are realizing that wages need to be higher to attract the workers they need.

Things are Looking… Forward

Most of this article was explaining why you’ve been waiting 5 months for a patio door replacement or four months for a mason to repair your wall. But we’re feeling hopeful that the efforts being made to improve the situation will catch up a bit over the winter. The semiconductor shortage is predicted to last until 2023 but we’re hoping other materials catch up sooner.

When you ask, “why is it taking so long?”
please remember, people around the world are feeling the same way.

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Jennifer Dickenson, BSC (Hons), RCM is a condominium manager with Dickenson Condo Management.

She was first elected to the CCI Board of Directors in 2016 and has been energetically involved in all aspects of the board planning and execution. She also served as the National Representative to the chapter from June 2020 to June 2021.

Following the 2021 AGM, Jennifer was elected by the CCI Board of Directors to serve as President for the upcoming year.