How is COVID-19 Affecting the MEP Supply Chain?

An Industry Update on the MEP supply chain during the COVID-19 pandemic by JSE’s President, Tim Milam.

As we continue to see COVID-19 impact the world around us, we here at Jordan & Skala Engineers have taken a deep dive into the effects that the pandemic is having on the A/E/C industry — specifically, those within the mechanical, electrical, and plumbing supply chain. In our research, we contacted industry leaders to get a sense of what challenges they have faced due to the virus, as well as what they anticipate for the market, as it relates to the MEP supply chain, in the nearer future.

Through our discussions, we were interested to learn about the trends in industry, and pleased to hear some encouraging feedback. Since most jurisdictions have deemed construction-related businesses as essential, a large majority of U.S. factories continue to produce necessary project site materials. Additionally, A/E/C companies across the nation (including Jordan & Skala) are continuing to produce with safety in mind. During our research, we discovered the following:

Overview MEP Supply Chain

• Although all construction-related businesses were previously deemed as essential, the U.S. Department of Homeland Security Cybersecurity and Infrastructure Security Agency (CISA) recently updated its “Essential Critical Infrastructure Workforce” advisory list to more-accurately define the plumbing and mechanical industry. The Federal Government states that “workers who support the supply chain of building materials from production through application/installation, including cabinetry, fixtures, doors, cement, hardware, plumbing, electrical, heating/cooling, refrigeration, appliances, paint/coatings, and employees whom provide services that enable repair materials and equipment for essential functions” are included. By explicitly citing the entire supply chain for MEP products as essential, the Federal Government has stated just how important each facet of the industry is, from manufacturer to the contractors.
• MEP contractors, in both the electrical and mechanical disciplines, report that very little of their work has stopped, but that they have had to manage sporadic “no-shows” from workers on a case-by-case basis. Although current workload remains consistent, mechanical and electrical contractors state that new project work has slowed due to some hesitation/uncertainty about the nearer future.
• Product distributors are reporting that sales and sales support staff are working remotely, still maintaining daily contact with customers. Counters and warehousing operations are open, and delivery trucks are running.

Mechanical Supply Chain

• For the most part, HVAC equipment manufacturers in the United States are operating in full production mode. We have heard of a few USA manufacturers temporarily closing facilities where shelter-in-place mandates are in place.
• Some manufacturers that have facilities in China have experienced minor delays due to closures, but have contingency plans in place to mitigate any long-term disruptions.
• Others manufactures with ample warehousing capacity have stepped up production to 24/7 x 3 shifts in order to increase their stock to get ahead the curve.
• Freight carriers delivering from manufacturing plants to distributors are operating on schedule.
• Manufacturers’ sales staff are not traveling, but maintain contact with their customers via phone/teleconference.

Electrical Supply Chain

• Electrical contractor-, distributor-, and manufacturer-related organizations, including National Electrical Contractors Association (NECA), National Electrical Manufacturers Association (NEMA), Independent Electrical Contractors (IEC), and National Association of Electrical Distributors (NAED), issued a joint letter to political leaders in Washington D.C. on March 20th, stating that electrical industries are capable and necessary to be operational for our country, and to request clear guidance and support from the Federal Government.
• While the majority of wire and conduit is made in the United States, conduit fittings are typically imported due to lower costs; with China resuming work, there has been no supply disruption.
• A substantial number of lighting fixture products are manufactured in China — in particular, components (such as drivers) of LED lighting fixtures. While lead times for lighting products have increased due to factory shutdowns, China is now back to work and, therefore, production levels are being restored to much higher levels than was experienced two weeks ago.
• Currently, there are issues with a few lighting manufacturers located in Quebec, Canada, which has instituted a shelter-in-place that includes manufacturing.
• Manufacturers of switchboards, panelboards, circuit breakers, and related equipment are reporting that lead times are normal and that their plants are running at a regular pace. Sales staff are not traveling, but are in touch with their customers through videoconferencing, phone, and email.

Plumbing Supply Chain

• The majority of plastic piping is made domestically, and all major manufactures are in full production mode with no disruption at this point.
• A substantial amount of plumbing products are manufactured in China, including fixtures, faucets, and valves. While lead times for some products have increased due to factory shutdowns, China is now back to work, and therefore, production levels are beginning to see significant improvements.
• Obviously, there are some manufacturers that the COVID-19 pandemic has hit harder than others, but a majority of manufacturers had previously diversified their production facilities geographically in order to include other areas of the world prior to the pandemic. Through this, they were able to absorb the crisis without any major setbacks in the manufacturing or supply chain.

Overall, our findings gave us an optimistic outlook on the future. Despite the chaos, mechanical, electrical, and plumbing suppliers are taking proactive measures to ensure safety remains a priority for their employees, while continuing to produce. For further inquiries regarding the COVID-19 effects on MEP production, please reach out to one of the following Jordan & Skala contacts:

Mechanical – James R. Haefeli at jhaefeli@jordanskala.com

Electrical – Tim Milam at tmilam@jordanskala.com

Plumbing – Jim Allen at jallen@jordanskala.com