Is the deck-building business back to normal?
“Every year, we look at our deck building costs and make a decision on pricing. We want our customers to understand why we make these adjustments and give them full transparency in our decisions. The following should make things perfectly clear. “
What we saw in 2020 – Deck Business in Canada
To understand what to expect in Canada, we have to take a close look at what we have seen in 2020.
Lockdowns lead to shortages of lumber, delivery delays, and unavailability of many composite and rail products. In the past couple of months, here in Canada, we have seen much more draconian lockdowns than last year. These lockdowns have seen many lumber mills and pressure-treating facilities’ production slow to a crawl once again.
CERB paired with work-from-home schemes, and slightly lower expenses for some, means many have time and a few extra bucks to work on their own homes. The army of handymen we saw burning through pressure-treated materials last spring will likely be back again this year.
If the lockdowns stretch into spring, many large construction sites will be affected. When workers are laid off and on CERB, hundreds of ads begin appearing on Craigslist and Kijiji for decks and fences by temporarily unemployed carpenters.
Government business assistance will mean interest-free/low-interest loans for many businesses to keep them afloat. Many deck companies took the money last year and hoarded materials on the advice of their suppliers. Many of those are carrying higher expenses for that reason.
Whenever demand outstrips supply, prices go up. We expect to see material prices sky-high as well as shortages of many materials and products once again.
Upward Price Pressure
Fuel Costs are up… and the deck business uses plenty of fuel
The canceling of the Keystone XL Pipeline and Fracking bans south of the border are helping push fuel costs up across the globe.
Newly increased carbon taxes here in Canada featuring taxes upon taxes will magnify increases here. We expect to see prices for fuel nearing $2.00 per liter. When fuel costs double, that affects our overhead as well as the delivered cost of materials on site. Remember, this is on top of other market forces like supply and demand.
Real Cost of Living is Up
In 2020, groceries went up about 50% due to flooding and cold weather in Asia and a cold wet growing season in the US in 2019. Couple that with increased Hydro and Home Heating here in Canada, and, increased transportation costs for many due to Carbon Taxes, the real cost of living increases are likely close to 15% here in Ontario. Wages will have to grow for deck builders and laborers to maintain their standard of living.
Lumber Prices Due to Pandemic
On the Rise Again – deck building inputs have nearly doubled
Pressure Treated Lumber was pretty much at par with Western Red Cedar last year. Almost all were doubled in price, and, mostly unavailable. As the cities ran out of lumber, the small town yards actually refused to sell to the city builders. They were just trying to keep their people in the business.
This year is shaping up to be very similar. The cost to frame a deck has nearly doubled since early 2020. This does not look like it will change in 2021.
Inflation has arrived for Deck Builders in Ontario
Every deck builder will have different circumstances.
Some have storefronts and massive overhead– Those with the highest overhead may have to restructure or disappear. We try to keep up with the economic factors affecting deck builders. In my mind, it is better to see what is coming at you.
Lean, professional deck builders that are focused on quality, and charging reasonable rates, as well as budget builders, may do well in this tumultuous time.
Builders that are slow to react to required price changes will find themselves short of operating funds. Some may leave homeowners hanging after putting down a big deposit.
Kijiji/Craigslist builders come and go. Some will coast through. Most of them are semi-skilled and work cheaply to augment unemployment or Government support payments. Unfortunately, their lack of experience often leads to maintenance issues later.
Most people understand the difference between hiring a semi-skilled budget builder, and, a professional.
“Semi-Skilled Builder’s decks need repair in 4 or 5 years– Professional Deck Builders decks will look great after 30 years”