Mitch Hires, CEO of Construction Resources, speaks with Jack Hough on the Streetwise podcast about maneuvering today's delays and shortages for appliances, construction materials and other housing products.
JACK HOUGH: It seems like at first in the pandemic, everybody was saying, who in their right mind would want to build or work on their house or do anything during a pandemic? And then they very quickly learned that the answer is absolutely everyone. There's a lot of talk right now about supply chain delays, shortages. Walk me through what it looked like from the start of the pandemic up till now.
MITCH HIRES: All right, so at the start of the pandemic-- I'm one of the guys that survived '08 and 09. So the market was so unknown, some people got panicked. And so a lot of people pulled back. We pulled back. We put in some contingency planning. Just wanted to make sure that we were protected for the long run and that we were going to survive.
In our case, and in most people in home products, we were not the problem that was going on at that time. As a matter of fact, demand increased based on what happened with COVID.
So if you look at the suppliers for home products, they did the same thing. A lot of them pulled back because they weren't sure. So you had this pause in the supply chain. On top of that, you had a more complex supply chain because you had manufacturers all over the world who were now somewhat COVID handicapped.
In other words, they couldn't get labor. They couldn't get people. Their processes that they had developed over years of manufacturing, now they had to put in these COVID safeguards. So that slowed production down.
And it slowed the entire supply chain. So you had a pause in demand. You had a pause in production. Then once you said, OK, demand is returning, let's start making product again--
JACK HOUGH: I'm in the unfortunate position of having a fancy fridge that's about 19 years old, right at the end of its life. So I need to buy a fancy fridge. And a guy like you knows what kind of financial hit we're talking about with that.
So I put it in the order. I'm here in New York. I put it in the order maybe a month ago. They said, fine, we can have it for you in October.
MITCH HIRES: What we're seeing-- and it's amazing to me, especially on our luxury and custom builders. We're seeing people come in and order their appliances when they break ground on the house. That has never happened in our appliance company that we own that is 60 years old. It's never happened before.
And the builders are advising them to do that in some cases. So that's compounding the problem in some ways because people are so much more aggressive on their ordering, it's stressing the supply chain even more because these orders are constantly going in. So we're not seeing the backlog really drop at all. It's just continuously increasing.
We're going to see that compression in the market. And labor is going to be a big factor. Can we even get enough people to do all of that? That's going to be something we're really focused on as we move into Q4 and Q1.