This is part of a series of reports on the impacts of rising prices on the local economy. Each is a summary of presentations by industry leaders during the July meeting of business advocacy group Sonoma County Alliance.

“Rising inflation exacerbates already high prices caused by supply chain issues,” said Scott Kincaid, owner and project manager of Facility Development Company, a general contractor and construction management firm in Santa Rosa. “Combining this with fuel surcharges or minimum charges for site visits are also putting upward pressure on wages, which at some point in time will result in layoffs.”

He observed that higher interest rates, coupled with long lead procurement of materials, equals more front-loaded financial commitments and higher interest costs for each project. At the same time, long lead items are causing delayed starts on construction projects.

An example would be a project with a nine-month physical construction timeframe, but the electrical, lighting and windows for the project require 12-month order lead times. This results in clients having to make sacrifices on product choices to avoid further delays by adopting a take-what-you-can-get approach.

Kincaid declined to reveal them, but said he surveyed several suppliers and subcontractors to get their take on the extent of industry supply chain delays. They replied under the condition of anonymity offering the following:

Looking to the second half of 2022, unfortunately Kincaid sees much of the same continuing, and does not believe project costs will come down.

“I look at it this way, we still have supply chain issues constricting construction supplies. So even if we head into a recession led by a lack of demand, what is the incentive for manufacturers to produce more inventory?” Kincaid said.

This is part of a series of reports on the impacts of rising prices on the local economy. Each is a summary of presentations by industry leaders during the July meeting of business advocacy group Sonoma County Alliance.