State of the Industry: 2021 - Cryer Pools & Spas, Inc.
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State of the Industry: 2021
Swimming Pools & Spas
The swimming pool industry as a whole is in the midst of a “perfect storm” triggered by the
Covid-19 pandemic but intensified by numerous other occurrences that have taken place during the past
12 months. Demand for our products is higher than it has ever been due to what industry experts are
calling the “cocooning effect”. This refers to the overwhelming shift in consumer sentiment prioritizing
investments in personal property over travel and family vacations. Simply put, when the world was told
to stay home last year people began looking around their homes and deciding to move forward with
projects they had been putting off for years.
Swimming pools quickly became one of the most desired home improvements worldwide at the same
time as governments started telling manufactures to put their operations on pause. As a result there
was a massive shift in the industry’s supply and demand balance which the entire industry is still trying
to catch up with. While we all continue to work tirelessly to “get back to normal”, people remain
concerned that what we all just went though could happen again. Despite economies and boarders
being reopened in recent months, demand for our goods has only continued to grow while production
of these goods is still nowhere near 100% of what it was pre-pandemic. There are no specific items or
product groups that are an exception to this massive disparity in the supply and demand spectrum
however there are certain sectors of the industry that are dealing with additional severe complications
beyond the surge in demand.
Chlorine:
In August of 2020 Hurricane Laura slammed the gulf coast and cause a fire at the BioLab
Chlorine plant in Lake Charles Louisiana. This plant was responsible for 40% of the United States Tri-
Chlor and Dichlor chlorine production. Being the industry leader in the production of these essential
sanitization products, BioLab is said to have lost a significant amount of it’s on hand inventory while also
being unable to produce new product. This event occurred in the midst of unprecedented growth in
demand for these products creating a world-wide shortage of chlorine related items. As a result, prices
have skyrocketed and all vendors have instated allocation limits, only allowing distributors to purchase a
percentage of previous year’s usage. Distributors have been forced to do the same with their retail
dealers which may ultimately result chlorine becoming unavailable mid-season.
Plastic (white) Goods:
In early February of 2021 a winter storm swept across the southern United States resulting in a
state of emergency declaration by Governor Greg Abbott. State wide power outages occurred while sub-
freezing temperatures took hold over the region for over a week creating a worst case scenario for the
pool industry. Majority of the pools in this region do not get winterized as temperatures rarely dip
below freezing. When this weather phenomenon finally came to an end, millions of homeowners found
their pool equipment and plumbing completely destroyed and retails stores were flooded with phone
calls from people looking to purchase equipment and schedule repairs. In the midst of an already
strained supply chain due to the “cocooning effect”, this sudden increase in demand for products
immediately pushed industry lead times even further out than they already were. Whatever available
product that was in the market place was quickly bought out as pool service companies began
performing work months earlier than they are used to in this part of the country.
5/5/2021Making matters worse was the fact that 80-85% of United States Polyethylene (PE) and
Polypropylene (PP) production occurs in the Houston area and these plants were suddenly shut down
without notice by the power outage. These are the key ingredients in refined resin which is used to
manufacture plastic goods used in all industries including for swimming pool and spa components.
When the power came back on these plants found that their infrastructure had been severely damaged
and many of them were not able to resume production until their pipelines had been disassembled and
manually cleaned out. This process took anywhere from a week to a month plus all while demand for
plastic goods continued to increase nationwide. Manufactures who rely on PP and PE based resin to
manufacture their products began looking over national boarders to try and source their needs. For a
limited period of time many started paying higher prices for material refined in Mexico. This was a short
lived solution as on February 26th a fire broke out at one of Mexico’s largest PE production facilities
halting their production and further restricting PE resin supplies worldwide. At the time of this writing,
several of the Texas based plants are back up and running but many are still not and the effects of the
shut downs in early February are just now starting to be felt at the retail level of the swimming pool
industry. This shortage is impacting every item that requires plastic to produce. Above ground ladders,
solar products, spa stairs, etc. have all been sold out since early March and the industry is now dealing
with the harsh reality that core items like skimmers, return fittings and PVC plumbing/fittings will be in
short supply for the months and maybe even years to come.
Above Ground Pools:
Most above ground pools are manufactured in Long Island, New Jersey or Canada. These areas
were hit hard by the initial wave of COVID and were placed under some of the strictest work stoppage
orders by local governments in the early days of the pandemic. Demand spiked at the same time as
production came to a complete halt for nearly 2 full months. Demand has only increased since then and
manufacturers are years away from being caught up as they have yet to resume 100% production
ability. Above ground pools were one of the first groups of products to be declared as sold out for the
2021 season followed quickly by above ground liners. While manufactures are continuing to produce,
they are struggling to achieve 100% production output due to a diminished workforce and massive
disruptions in the supply chain. All of this has resulted in shipments being delayed months and
distributors being told that the pools they expected to receive in the first quarter of 2021 will not be
shipping until late in the 3rd quarter or early in the 4th. The severity of the supply chain issues being dealt
with now was not clear at the end of 2020 and so there was a sense of optimism that above ground pool
manufacturers would be able to ramp up production to all-time highs and accommodate a larger portion
of the surging demand. Sadly that was not the case and dealers across the country are being forced to
postpone or even cancel jobs they sold in the fall of 2020 due to the fact pools are just not coming in on
time for the 2021 summer season.
5/5/2021Liners:
Raw material shipping from overseas is not arriving in quantities large enough to accommodate
the increased demand or even the demand of a normal season. Imported vinyl makes up the majority of
raw material used to produce above ground liners in North America so this shortage of imported
material drastically reduced the number of finished above ground liners entering the market for the
2021 season. Domestic raw material for above ground liners was depleted in late 2020 and
manufacturers are now focusing all of their efforts on producing in ground material in an attempt to
keep up with the demand in new construction (In ground pool liners are custom made to order). Many
companies have considered using more expensive in ground material to produce above ground liners
and while some have gone in this direction, they’ve done so knowing they will need to charge close to
double if not more for these finished products.
Lead times on in ground liners are currently at all-time highs. The surge in demand coupled with
the worldwide PVC resin shortage has resulted in pattern outages with all of the raw vinyl suppliers,
many of whom have declared Force Majore (defined as “unforeseeable circumstances that prevent
someone from fulfilling a contract). Manufactures who rely on that raw vinyl to produce in ground
liners are currently taking in over twice as many orders daily as they have the ability to build. It is
expected that lead times will continue to grow as the season progresses due to Texas’ petrochemical
complex continuing to struggle with getting back online.
Equipment:
The availability of common pool and spa equipment may become one of the biggest problems
our industry faces in the months to come. The increase in demand for new swimming pools worldwide
would be enough in and of itself to create an impactful shortage of these supplies but that far from the
only complication we as an industry are dealing with on this front. The winter storm that hit Texas in
February destroyed millions of swimming pool equipment packs and plumbing manifolds. This created a
sudden and unexpected spike in demand for equipment repairs in a part of the country that traditionally
sees significantly lower annual demand than that seen every spring in the Frost Belt due to the harsher
winters in the northern states. Every year equipment manufactures spend the winter months building
up inventories to try and accommodate the sudden spring time demand for their goods as pool season
approaches. When the devastation of this storm was realized, retailers and service companies in Texas
began ordering plumbing supplies and equipment at a faster rate than ever before. The manufacturers
were already dealing with decreased production abilities due to raw material and labor shortages and so
their inventory reserves were quickly depleted. Many have taken drastic measures to try and increase
production but a diminished work force, COVID outbreaks in plants and a lack of raw resources needed
to manufacture have hindered those efforts significantly. As a result, it has gotten harder and harder for
these manufactures to ship orders into markets that are just now starting to see demand for their goods
grow as the weather gets nicer.
5/5/2021Complicating things further is the worldwide shortage of microchips and semi-conductors. The
news has been reporting on vehicle manufacturers closing down plants all across the world due to the
fact they cannot get microchips needed to build the complex electrical systems that are now standard in
every make and model on the road today. Majority of these components are made overseas and when
COVID hit in early 2020, these factories were forced to scale back production to meet social distancing
standards or close all together to combat the pandemic. As more people began working remotely and
schools moved to their remote learning models, demand surged for lap top computers and high end
smart phones/tablets resulting in a massive backlog of orders for the semi-conductors needed to build
these products. This shortage is now affecting all industries including ours. In recent years variable
speed pumps, automation systems, solar systems and high efficiency heaters/heat pumps have become
common on swimming pools and spas worldwide. The lack of available chips and conductors has halted
production of these items at a time when demand has never been higher. This complication is just now
reaching the pool industry and has created a massive shortage in the supply chain for these goods.
Hot Tubs:
At the onset of the pandemic and government lockdown orders hot tubs and spas quickly
became one of the highest in demand appliances for homeowners everywhere. The demand for these
items outpaced that of swimming pools because the spatial requirements and initial investment are far
less than that of a pool. Combine this demand with all of the factors outlined previously and you get a
recipe for unprecedentedly long lead times. Spas are some of the most complex appliances in the leisure
market place today and are directly impacted by the microchip shortage (used in control systems for
spas) the resin shortage (used to produce the shells of spas and plumbing) the lumber shortage (used to
construct the frame of spas) and the skilled labor shortage. Many spa manufacturers are currently
scheduling production time well into 2022 for open orders and it is likely those lead times will be pushed
even further out as these shortages hinder production ability in the months to come.
Transportation:
Possibly the most significant complication our industry faces at this time is logistics and
transportation of goods. During the COVID shutdowns the shipping industry was faced with closing ports
or operating them with a limited workforce to combat the spread of the virus. This resulted in tens of
thousands of container vessels being forced to wait off the coast of their destination ports for weeks or
even months on end while the ports worked to off load vessels at a pace slower than ever before. Some
nations required these vessels to quarantine off shore before being allowed in to port to be offloaded.
As the backlog of ships continued to grow, a worldwide shortage of available shipping containers
became one of the most significant complications every industry was forced to deal with. Prior to the
pandemic the United States was already dealing with a shortage of over the road commercial truck
drivers. This shortage was made even worse as travel restrictions were implemented and many owner
operators decided to protect themselves and come off the road until the pandemic was brought under
control. This further backed up the shipping ports who struggled to find trucks to take the inbound
containers to their final destinations. As a result, the entire shipping industry was backlogged and is still
struggling to catch up. The blockage of the Suez Canal in March of 2021 further extended this backlog
creating even more demand for containers that were becoming harder and harder to find. Shipping
carriers were forced to increase their rates drastically as demand swelled for containers resulting in a
“full blown container crisis”. These transportation cost increases get passed down the supply chain at
every level and have contributed in large part to the increases in costs we have seen throughout our
industry.
5/5/2021Any one of these complications in and of itself is enough to disrupt the supply chain and result in
a shortage of product and an increase in pricing. All of them combined truly do equate to a “perfect
storm” that is not unique to the swimming pool and spa industry but is devastating none the less. Below
are several links delving deeper into each specific category outlined above. While this information is not
comforting by any means, the intent of this article is to help you and your customers understand the
challenges we as an industry are up against this season. I sincerely hope it helps in that regard.
Wall Street Journal - Texas Deep Freeze Results in Plastics Shortage
Reuters - Pool Sales Skyrocket as Consumers Cocoon
New York Times - Above Ground Pool Shortage
East Gate Pools - Letter to Customers - Liner Shortage
CMI - Shortages Caused By COVID Are Affecting the Pool Industry
Swimming Pool Steve - Chlorine Shortage in 2021
St Cyr Pool & Spa - Letter to Customers
Plastics Today - Weekly Resin Report 3.23.21
New York Times - Global Chip Shortage
USA Today - Microchip Shortage Explained
Hillebrand - Global Shipping Container Shortage Explained
Bloomberg - Shortage of New Shipping Containers Adds to Global Trade Turmoil
Aqua Magazine - Pool & Spa 2021 "Perfect Storm"
5/5/2021You can also read
