Finding the materials they need to conduct business has become a big problem for suburban companies

Tom Murphy remembers the good old days when he needed to give flooring manufacturers just three to four weeks lead time to deliver materials for the Hiffman National projects he oversees.

Those good old days were just a few months ago.

For Joseph Ahrens, project manager for Premier Design + Build Group in Buffalo Grove, his biggest headache is with securing roofing materials.

And Mike Maheras, general manager of Phillips Chevrolet in Southwest suburban Frankfort, remembers when his dealership had a 100-day supply of new cars on its lot. It also wasn't too long ago. These days Phillips Chevrolet maintains just a three-day supply of new cars.

"It's been challenging throughout the year," said Murphy, the Hiffman National director of project services, a division of NAI Hiffman in Oakbrook Terrace. "We did experience some challenges last year, but really there was this bubble that burst around March of this year."

Murphy said he is seeing delays in simple things such as fasteners used to install roof systems. He is being told that some material delivery times for similar items are three or four months.

They all have stories about supply shortages, and they aren't alone. All around the suburbs, businesses are feeling the pinch from a lack of normally common materials that likely will last into 2022.

Many reasons

That "bubble" that Murphy describes, Ahrens sees as the result of a "perfect storm" of events that have made a strange year even more strange.

"I think it's everything," Ahrens said. "You hear the term perfect storm thrown around quite a bit. Factory shutdowns due to COVID, tariffs, labor shortages, people not wanting to go back to work, increase in demand," Ahrens said. "All these different factors that are playing into it without one at any given time seeming to be the easy culprit to point at."

Speaking of storms, you can throw weather issues into the equation, particularly that deep freeze that hit Texas last winter.

"The weather that occurred in the Southwest earlier this year affected a lot of manufacturing, especially on the roofing side, because some of the byproducts used in the poly-ISO insulation that goes in the roofing systems that's insulating roofs, is some form of petroleum byproduct," Murphy said, speaking before Hurricane Ida hit Louisiana.

Once a factory shuts down, there's more to getting restarted than flipping a switch. There are safety procedures that take time. To add to the problem, one facility had a fire break out.

Also playing a role is a major backup in unloading ships bringing materials from Asia to West Coast docks.

A unique situation

Local businesses are working overtime trying to figure out how to deal with these shortages, mostly because they've never had to deal with anything to this extent before.

"Regarding shortages related to labor or raw materials, I don't think that's something that I've ever experienced and had to maneuver around," Murphy said.

"Construction is hard this year," Ahrens added. "It's hard in general with the stuff that everyone has to deal with. But this is adding another exceptional layer of time that is required to manage all of the extracurriculars here."

Ahrens is a veteran of 20 years in the commercial real estate construction industry.

"It's more interesting talking to individuals who've been doing it their whole careers, 40 and 50 years, and hearing them say they've never seen anything like this. That definitely lends some weight behind it," he said.

Steel is an issue for Murphy, particularly in HVAC units. In June he placed an order for a package of rooftop units. They were supposed to ship in August. Instead he was told they probably won't arrive until December.

The shortage has meant parts for simple repair jobs can be almost impossible to find.

"They won't sell us a coil. You have to buy an air conditioner and/or furnace with it," said Bill Epps, owner of Epps Heating and Air Conditioning in Fox River Grove. "They're that short to where they're forcing us to tell our customers, no, you just can't replace that coil. You have to buy an entire new system."

The problem has been going on since the pandemic started, Epps said, but has been especially bad this summer.

It's a common theme in a wide variety of businesses.

"So what are we doing about it?" Murphy said. "We're calling and we're identifying alternative manufacturers and even in some cases where we have subcontractors that perform the work, we're contacting other subcontractors and networking to identify and source the equipment that we need.

"But that's just one example."

Here's another, taken from the restaurant industry.

"There has been for sure shortages of certain product, especially chicken," said Diego Cervantes, owner of Chicago Pizza Authority in Hoffman Estates and Northbrook. " ... But we try to make it work one way or another so we can get the product to the customer. Obviously, prices have changed and everything else has been slightly different than what I'm used to but we're trying to work through it all and so far I think we're making it happen."

For Maheras the issue is the shortage of computer chips. Cars, like so much other modern equipment, are computerized. The auto industry uses about 10% of the chips produced, he said. The problem is on the production end. Most computer chips are produced in Asia, where manufacturers have fallen behind because of the COVID-19 pandemic.

Computer makers are feeling the pinch, too.

"We could have grown more if it wasn't for the shortages of components," HP Chief Executive Officer Enrique Lores said in late August, according to Bloomberg.

Lores told Bloomberg that the supply problem is because the chips are made in factories that produce multiple types, putting the PC industry in competition with many other industries that rely on semiconductors for capacity, such as home appliances and cars.

"The demand has been incredible for car sales," Maheras said.

Demand is up in a number of areas, a sign of a thriving economy. More people working or taking classes from home has increased demand for personal computers and related equipment. Because people don't want to travel, they have more money to spend on home improvement, causing demand for new appliances to surge. Aid from the federal government also has helped boost demand.

This is the kind of problem businesses are happy to deal with.

A longer wait

Businesses and consumers alike must have some patience during this materials shortage, of course.

If a customer wants to order a specific car, it might take six to eight weeks for delivery, Maheras said. Others are matching up with a car they like and picking it up as soon as it comes in. Those cars are gone as soon as they arrive.

Persistence also helps in some areas.

"If we're building out 40,000 square feet, we have 560 light fixtures that we're waiting on, we're going to make sure that we're tracking that weekly. If there's an eight-week lead time, we're checking with the manufacturer weekly. That's not the norm," Murphy said.

The norm 18 months ago was, "OK, we ordered it, we have our ship date, we're done."

When will it end?

A return to normal in material availability can be as hard to predict as an end to the pandemic. Early 2022 looks like a good bet in most cases, though.

Meanwhile, demand shows no signs of letting up. Murphy said he's seen a "really large uptick" in new clients and existing clients looking to move forward on projects such as elevator modernizations and roof replacements. That's why he's telling clients not to wait for prices to drop but to get in line now.

As for the price increases that have come with these shortages, some likely will be permanent. Others will fade. For instance, surcharges on certain types of projects for shipping will likely end.

The HVAC industry has been especially hard hit by price increases. Refrigerant prices have soared, Epps said.

"Our materials as far as the copper and everything has quadrupled," Epps added. "All our sheet metal has gone through the roof."

These are expected to return to normal when supplies do.

Maheras said the car companies still have good deals, but there's not much negotiating over the final price anymore.

Used car values are up 40% this year, "so it's the best time ever to buy a car if you have a trade-in. Ever, ever, ever," Maheras said.

For instance, he said, a used truck purchased over the winter would be worth more now.

"When has that ever happened?" he asked rhetorically.