Think you have supply chain issues? Try building in rural Alaska, where prices are high and the season is short.
Seven years ago, a fire displaced Kuskokwim Learning Academy, a boarding school in Bethel. Without classrooms or housing, students moved into dormitories at Yuut Elitnaurviat, an adult learning center, where they quickly resumed classes on the second floor of the campus administration building.
“We had over 100 high school students there and realized we were crammed for space,” said Mike Hoffman, the current executive director of Yuut. He said that with the limited space, the school could only accommodate about 45 students.
Working with the Lower Kuskokwim School District, Yuut decided to move forward with plans to expand the administration building and add another dormitory to the campus. The drawings have been finalized. Funding was tricky, but they were also able to fix the problem with a bank loan, Hoffman said.
“But then COVID happened a few years ago,” he said. “And we heard and knew the prices were going to go up. We didn’t expect them to go up 20%, they did.
Prices never really came down. Hoffman finally said that a few months ago, Yuut and the school district decided — with the pressing need for more classrooms and living space — that they would have to bite the bullet and absorb the additional costs.
But then suppliers facing huge backlogs told Hoffman they wouldn’t be able to get materials to Bethel in time for the short summer construction season.
These delays and price spikes indicate that COVID-19 is still playing a huge role in the global economy. Every step of the supply chain — from manufacturing to shipping to distribution — has lost all sense of a normal rhythm, said Darren Prokop, a logistics professor at the University of Alaska in Anchorage.
“If any of these things get blocked because of COVID, because of a blockage at a port of entry, something like that, then you end up with bottlenecks,” Prokop said. . “So you end up with too much in one place and not enough in another.”
Prokop said supply chain blockages, not now inflation, inevitably lead to higher prices.
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Supply chain difficulties add an additional layer to the already complex challenge of building in rural Alaska. Godwit season in western Alaska only runs from May through October. It is a narrow window for conveying large shipments of lumber and other building materials needed for construction projects.
This tight deadline compounds the problem for builders trying to overcome supply bottlenecks and resulting price hikes.
Alaska Village Electrical Cooperative CEO Bill Stamm has only one word to describe it: grueling.
The utility maintains power generators for 58 rural communities stretching from Old Harbor to Kivalina. Maintaining dozens of diesel power plants, wind turbines and solar panels, as well as 800 km of distribution lines, is a complicated year-round effort – in a good year.
During the pandemic, prices and delivery times for large items like utility poles and cables have effectively doubled. Stamm said the delivery estimate he was quoted for a new transformer is 40 weeks.
“It’s most of the year,” he says. “We like to have a backup plan for just about everything, but the margins are getting thinner and thinner.”
Stamm said the delays have forced communities to rely more on smaller backup generators while they wait for materials.
“It’s sometimes a bit of a hassle to make sure the lights stay on all the time,” he said. “And it doesn’t look like it’s going to get much better this summer.”
It’s not just major projects that are affected by rising prices and supply chain shutdowns.
Shelby Clem is a field supervisor for RurAL CAP, a non-profit organization that, among other things, helps maintain safe and affordable housing across the state. He is surveying homes in Bethel to improve weatherization. The idea is to make improvements that will ultimately help residents save on heating and maintenance costs.
Surveying is happening now so they can place all of their equipment orders on April 1 when RurAL CAP receives its annual funding from Alaska Housing Finance Corp. .
“Three years ago, a piece of plywood cost $17. And now, last time I checked, it was almost $58. It really comes into play a lot because everything we do has to have a savings and investment ratio. And it’s really hard to get a return on your investment when you’re paying triple the price for plywood,” Clem said.
In Bethel, after already waiting more than five years to expand the Yuut Elitnaurviat campus, Hoffman recently had to accept that reconstruction won’t begin until the 2023 season. He said materials weren’t going to arrive in time to start this summer.
“So we have to wait. We are ready to go. We’re ordering all our gear, but talking to our suppliers we won’t have them until next year,” he said. “Not this spring, but the spring after and we will have a lot on this first barge in 2023.”
Pre-construction work will be done in the coming months, Hoffman said. Then the site will remain vacant and ready until 2023.
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