After the clampdown on China, David Allen Company thought it had the global supply chain essentially figured out.

The tile, terrazzo and marble contractor sourced much of its product from China until 2019, when the U.S. Department of Commerce determined that the country had dumped ceramic tile on the U.S. market at less than fair value and imposed steep duties on the products in response. “China’s exports to the United States in that category literally went to zero almost overnight,” says Martin Howard, executive vice president at David Allen, which is headquartered in Raleigh, North Carolina, with additional locations across the southeastern United States. “We were prepared for that, so we had shifted most of our purchasing back to Europe and also to South America.”

Problem solved—until early 2020 and the global pandemic. A year later came a winter freeze in Texas, followed in February 2022 by a war in Eastern Europe. These two years of unexpected crises knotted the supply chain in ways that the construction industry is still working to untangle. Here’s how David Allen has kept materials in stock, projects moving forward and clients happy.

COVID-19 and More

David Allen works exclusively for commercial clients, servicing projects in health care, higher education, airports, government and other sectors. The company saw the impact from COVID-19 immediately in the form of higher freight costs for ceramic tile and stone.

“The cost of a container moving from Asia or Western Europe went from $3,000 a container to $20,000 a container,” Howard says. “That adds a significant amount of cost. If a container can move 10,000 square feet of ceramic tile, let’s say, you’re going from pennies per square foot to dollars per square foot.”

Materials shortages and other logistics breakdowns soon followed, and suddenly it wasn’t enough to have shifted sourcing to Europe and South America. David Allen needed to look even closer to home. In some cases, the company was able to move procurement to the United States, which has seen the number of tile factories increase from two to about a dozen over the last 15 years, concentrated mostly in Alabama, Oklahoma and Tennessee. “That’s helped,” Howard says, “but those factories can’t produce enough footage to satisfy the U.S. market.”

Plus, a domestic supply base isn’t a foolproof solution, as David Allen discovered in February 2021, when severe winter storms crippled the power grid in Texas and shut down many of the state’s oil refineries. That was bad news for oil-based products such as epoxy coating along with secondary product markets for resins and plastics. Materials became scarce and prices spiked—again. David Allen worked to modify project schedules and identify alternative product solutions for clients.

The Russia–Ukraine war further exposed not so much the fragility of the global supply chain as its unseen interconnectedness. “Unknown to us and probably the rest of the public,” Howard says, “Ukraine supplied some of the key components like feldspar and certain clays that make the body of porcelain tiles for all of Western European factories.” Compounding the problem, those factories use natural gas to fire their kilns that is—or was—supplied by Russia. Spain and Italy alone produce 60% of all imported tile for the United States, and, by mid-April, Howard says, “we saw more than 30 factories in those two countries either have to turn their kilns off for a period of time or close.”

Telling It Like It Is

With only so many materials and so much freight capacity in the world, the options available to companies like George Allen over the past two years have been limited. Clients are reluctant to agree to cost-escalation clauses, so David Allen has continued to focus on day-to-day realities—and communicating them honestly to stakeholders.

“We try and get as close as possible to our customers and help them understand what we’re dealing with and that this is way beyond our ability to control,” Howard says. “There are multiple factors at work in the world that we’re having to deal with and overcome, so lead times, cost and availability become an issue. We’re trying to educate our customers and get them to allow us to speak to owners, designers, architects—whomever—to help them understand and go with solutions in hand.

“We’ve had numerous projects where we’ve placed orders three or four months ago and when it’s time to start the job, we can’t get product either because of shipping delays or because the factory couldn’t produce it due to raw materials issues,” Howard continues. “We’re trying to come up with domestic options that will meet the design intent and are available, so we can start projects without delaying them.”

If there is a silver lining to the ongoing supply-chain dilemma, it’s that it’s forcing the industry to do things differently, which could provide resilience for whatever the next crisis turns out to be. In fact, David Allen is counting on that.

“We’ve had to make new relationship with new suppliers and deepen relationships with existing ones in order to cobble together the ability to provide something that the end user is happy with,” Howard says. “These products aren’t something that you take out every five years and replace. These are life products. They’ll be there when the building is decommissioned, if we’ve done our job correctly.”