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Roofing Industry Leaders Discuss Supply Chain Issues

Illustration of construction machine lifting blocks
NRCA held a telephone Town Hall to provide updates regarding the current supply chain crisis.

When will it end? 

Suppliers and roofing contractors want to know when the industry can get past the supply chain issues causing, as Chairman Rod Petrick perfectly put it during the Sept. 22 NRCA telephone Town Hall on the subject, “unprecedented shortages, delays and price increases in the roofing industry.”

“I wish I knew the answer,” said Joe Smith, president of Johns Manville Roofing Systems and one of six panelists on the call. “There may be some things that improve over time, but there’s also unexpected stuff. In our mind, we feel that this will last through 2022—but truly that’s a guess.

“It will continue to be a challenging year,” he continued, “but hopefully a little bit more manageable and predictable as we all get a little bit better learning to manage a more uncertain situation than we’re used to.”

Added Nick Shears, president of Carlisle Construction Materials: “The general outlook is for supply to stabilize and slowly improve throughout 2022, but it will remain tight.”

MDI supply and demand

The industry left 2019 in a “pretty stable” situation, according to John Altmeyer, executive chairman of GAF, before demand slowed and supplies declined as the COVID-19 pandemic struck.

“Inventories throughout the supply chain were diminished,” he said. “Fast forward to 2021, the economy rebounds. Demand picks back up again. The supply chains are stressed. They struggle to get those inventories built back up. 

“This is exacerbated by the freeze in Texas where we started seeing force majeures by three or four of the major players,” Altmeyer added. “The ports are backed up; imports can’t get in. The infrastructure is overstressed. So it really is a perfect storm—and speaking of storms, in comes Hurricanes Ida and Nicholas which further cause problems with shutdowns for MDI (Methylene diphenyl diisocyanate) suppliers in the Gulf [Coast] area.

“As a result, all MDI suppliers are on force majeures currently or on allocation.”

Ice storms and hurricanes

It’s a double-edged sword—ice storms and hurricanes can be both great and terrible for demand in the roofing industry, said Jamie Gentoso, president of Firestone Building Products.

“In the end, the chemical industry is a major supplier for all construction material but especially for roofing products,” she said. “So when you look across all of our products. . . The main raw materials are all chemicals. Unfortunately, most of those are coming through the Gulf of Mexico.

The February ice storms had a “large effect” on inventories being built for the new construction season, Gentoso noted, “so now we’ve really hit an unprecedented supply crisis because of this and this is happening through the summertime.”

When a hurricane or other storms are arriving, Gentoso said, transportation issues arise.

“Railcars are then held back and then they do not get into those facilities for a period of time and then we end up with a number of a backup overall,” she said.

Afterward, “We are really affected as we try to get railcars out of the area where hurricanes have hit,” Gentoso noted. 

“The supply issues that we have are really a function and have really started or been catapulted by the hurricanes and the ice storms,” she added. “In the future, we are always biting our [finger nails] as we see hurricanes coming through making sure or hoping that they do not have a large impact on our supply chain overall.”

Linking that together, “there are clearly some common denominators between the challenges and MDI and the effects on the ice storm and the hurricanes,” Shears said.

Materials such as TPO EPDM and PVC are largely sourced from the Gulf Coast area—from Texas to Louisiana, Shears said, “so when they have a problem, we all have a problem.”

What it boils down to, according to Shears, is a basic supply and demand scenario. However, as he said, there are “very, very finite suppliers of TPO.”

Not only that, but Shears believes those suppliers are also looking at opportunities to serve other markets than roofing.

Tariffs

Supply chain issues for OMG Roofing Products began when tariffs took effect in 2018, according to SVP Josh Kelly. 

"[It] really shut down the supply of steel coming into the United States—especially from China, which is producing over 50% of the world's supply of steel," he said. "What happened, as a result, is people who were getting steel from China started to source their steel in North America. There wasn't enough capacity. 

"Those supply chains got pushed out, and availability became difficult, everything kind of went wrong that happens when supply goes down and demand goes up," Kelly added.

Steel

Kelly said that things got a little better when the tariffs on steel from Canada and Mexico were eliminated in 2019—but then the pandemic hit.

"Because of uncertainty with the pandemic, you had the domestic and North American steel manufacturers pushing capacity back and all of a sudden, people were working from home, they started doing things around the house, they started to want to product—demand came back," the SVP said. "But that steel production capability had been reduced and it's hard to switch that back on."

OMG looked for other places to acquire steel—but transportation issues emerged.

"Now all of a sudden, we couldn't move the steel from wherever we might be able to find it to our factories in Chicago and Massachusetts," Kelly said.

That's not all.

"Then on top of that, we had different labor issues," Kelly said, citing COVID safety concerns and filling various positions. "All of those things conspired to make it difficult for us to produce the number of fasteners that the market was asking for and really to get the steel that we needed to do it."

Kelly said OMG works with close to 20 different steel suppliers and the company is doing everything to bring in as much steel as is available from every corner of the world. 

According to the SVP, OMG produced about 95% of the number of fasteners, year-to-date, it created last year and 9% more plates in the same period. 

"If we could get the steel that we need right now to make all the demand that we'd have, we'd be up 50% over the last year which is extraordinary," Kelly said.

Suppliers

Supply chain issues aren’t exclusive to the roofing and construction industries as noted by Brian Whelan, EVP of SIKA North America.

SIKA supplies construction materials and operates in more than 100 countries around the world.

“It’s truly a global issue,” Whelan said, though he was quick to point out that roofing has been “more greatly impacted by the supply challenges than some of the other vertical markets or construction areas or industry that we participate in.”

What's next?

As for getting out of this rut, the simple answer is a matter of playing catch up, according to Spears.

"We started this recovery from COVID with virtually no inventories from the main chemical suppliers," he said. "So it's just a question of [can the industry] catch up?"

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