As of March 2022, Vinyl Fence Prices have risen nearly 50% in the last 18 months and in this article, we are gonna break down where those price increases are coming from, and what we predict for the future of vinyl fence pricing.
But before we can speculate on the future we must first go back a couple of years and review the past.
As we know COVID-19 pandemic affected the entire world’s supply chain but how? Well if we could summarize what happened we would explain it as simply as a labour shortage.
Increased Distancing In The Workplace
Increased distancing amongst co-workers resulted in fewer employees on any given day. Fewer employees working on a single task or project resulted in a decrease in productivity.
COVID-19 Amongst Employees
Some employers chose to not increase distancing amongst co-workers and although this kept productivity numbers at a normal level initially, this quickly backfired with many employees contracting COVID-19 and not being able to work. COVID-19 amongst employees eventually caused production to slow to if not slower than an increased distancing model.
At OK Vinyl Products we chose to incorporate an increased distancing model for our employees. That combined with a “Sick, Stay Home” Policy we were able to navigate the COVID-19 Pandemic without suffering from any production delays.
Many businesses and manufacturers closed completely during the first wave of COVID-19. The businesses that closed relied on existing supplies and sold their reserves with a prediction that demand for goods would slow dramatically.
All of the above resulted in more people being without and or reduced employment. In April of 2020, 5.5 million Canadians experienced a job loss or reduced hours.
When we think of shipping we primarily think of truckers. The aging population of truck drivers in Canada is the primary reason for our truck driver shortage currently in Canada. Did you know that 31% of truck drivers are age 55 and older, while other sectors average 21%? The massive amount of Canadian Truck Drivers who have retired in the last 5 years has led to a shortage that has been difficult to catch up with. Combine that shortage with the increase in goods being delivered to our doorsteps during the COVID-19 Pandemic and you have a logistics nightmare.
PVC (Polyvinyl chloride) also known as Vinyl is primarily composed of 2 raw materials, oil and salt. Did you know that 57% of PVC’s weight comes from common salt and that 43% of its weight comes from oil? In this section, we will be reviewing the 2 raw materials, their byproducts and how they have an impact on the pricing of vinyl fences.
During the initial wave of the COVID-19 Pandamic oil prices actually dropped to as low as $0 USD a barrel in April of 2020. This price crash was very short-lived tho, with Oil prices now reaching upwards of $120 USD a barrel we can expect more pricing increases on PVC if we see no relief on the oil commodity.
You might be asking what salt is doing in vinyl fencing? Let me explain, PVC also known as Polyvinyl Chloride contains Chlorine hence the name Chloride. Chlorine is created from rock salt through a process called chloralkali electrolysis. Although many rock salt mines remained in operation across North America, some mines suffered from a worker shortage due to illness. This lack of productivity resulted in an eventual rock salt shortage and when combined with the need for more chlorine-based cleaning products across the world this results in higher prices.
The COVID-19 Pandemic brought on a wave of uncertainty. Many workers found themselves at home and many workers began to notice a shortage of labour among other employers. This shortage of labour across North America allowed the employed to begin searching not for what they can get but what they wanted in a job.
The Great Resignation
As we know already, many workers during the COVID-19 Pandemic were laid off, given reduced hours, or told to work from home. This accompanied by Government Assistance in both Canada and the United States allowed workers time to think about what makes them happy. Many workers thought forward to the end of the pandemic and decided that if they wanted to make a change, now was the time.
For Decades North America has relied heavily upon foreign workers to fill entry-level positions in the workforce. During the COVID-19 Pandemic, many worker visas were suspended to limit travel and the spread of COVID-19. When you combine an aging population such as Canada and combine it with a lack of foreign workers to fill the void of entry-level positions, you begin to see unprecedented actions such as fast food companies paying retention bonuses and wages above the minimum wage just to recruit workers.
Will Vinyl Fencing Prices Go Up Or Down?
There are many factors that affect the price of your vinyl fence in fact many more than discussed in this article. So to summarize what we think will happen to the price of vinyl fencing over the years.
We will likely see no price reductions and could potentially see even more price increases in 2022 due to the following.
Labour Shortage & Higher Wages
Immigration has still not caught up to the level it was prior to the COVID-19 Pandemic. This has given more power to workers to choose where they work and negotiate the wages they receive for the work they perform.
43% of PVC is manufactured out of hydrocarbons (oil), with the alarmingly sharp rise in the price of oil we will likely see our prices increase if the oil industry does not find a way to lower the price of crude oil by 30% in the near future.
We will likely see no price reductions but we are doubtful we will see pricing increases either.
Improved Labour Market
By 2023 we are predicting that the labour market will have become more stable and in turn, companies will be less likely to be offering increased wages and accommodations. With fewer wage increases and accommodations being provided to workers we will also likely see a slight correction in the economy. This has the potential to reduce spending amongst homeowners and therefore cause manufacturers to keep pricing the same in order to balance the higher wages of their employees.
As oil prices are hard to predict due to 1000’s external factors we prefer to not predict how the price of oil might affect pricing in 2023.
Although we might not see a dramatic drop in pricing in 2024 we will likely see a stabilization in the economy as a whole. This will result in a market without shortage and allow manufacturers to explore ways to reduce costs through improved negotiation.