Supply Chain Problems Hit Luxury Business | 2022-05-26

    In March 2020, when the onset of the coronavirus pandemic shut down much of the country, Greg Darvin wasn’t sure when his East Hampton, New York-based company, Pristine Pools, would find their next project: “I said, ‘Who am I going to build a swimming pool?'” Luxury in the Hamptons again? “

    After more than two years, the question is still relevant, but for different reasons. Demand for Hamptons property and local services is up — there were 671 homes for sale in the area at the end of March, the lowest number ever in the 17 years that appraiser Miller Samuel Inc. And brokerage Douglas Elliman Real Estate tracks data.

    As a result, Darvin and other builders and contractors in the Hamptons are having trouble filling existing contracts and are already nervous about the next year. “If you haven’t planned your 2023 pool yet, it’s too late,” says Darvin.

    Usually, clients will not commit until they are ready to start the project. “Now we book one year in advance, and we immediately entered a difficult contract.” Otherwise, Darvin says, he won’t get access to the raw materials—everything from stone and tile to pumps and heaters.

    Before the pandemic, he did not inventory anything. “We now buy anything we can find and store,” he says.

    Darvin and his 40 employees build 10 to 30 swimming pools annually, including those built from the ground up as well as renovations. His projects start at $100,000. (He keeps his client list private.)

    Since last October, pool pump dealers nationwide have booked well in the third quarter. But now Darvin is also stocking basics like grout and partially packed cement to ensure availability and to protect itself from constant price increases.

    Pervasive supply chain problems and labor shortages are hampering his work. “Bluestone used to be the easiest source in the Northeast. Now, it’s almost nonexistent. The quarries didn’t have the workforce,” says Darvin.

    He has seen that the prices of some products such as pool liners and covers have gone up 40%-50% in the last 12 months. For most of my clients, [that increase] Doesn’t mean they won’t go on vacation. But we all feel it.”

    The East End complex’s problems extend beyond the supply chain, says Mark McAteer, CEO of The Laurel Group, a landscape design firm that also does general contracting. “There has been a localized shortage of pool heaters, which is related to freezing in Texas [in 2021]. They needed a million heaters. Every heater in Texas had to be replaced.” Some estimate that more than 20,000 ponds were damaged in the blizzard.

    The increasing demand is also putting pressure on companies like his to get work done in all parts of the house including his swimming pool; As the house becomes more valuable, the owner thinks they should put more money into it. “I tell people, time is your enemy,” McAteer says. “You’d better make a quick decision because prices don’t go down.”

    But local construction departments are similarly overwhelmed. What used to take four weeks [to get approved] Now it takes 90 days,” says McAteer. “If we deliver something in January, and [those in the town building department] I still haven’t read it in April,” and then the work stops. “I can’t say for sure that you’ll be swimming next summer.”

    Greg D’Angelo, president of Greg D’Angelo Construction in Wainscott, New York, agrees that the challenges in creating swimming pools are myriad. “If you are a homeowner and you are not planning your pool now, you will not have it next summer due to supply chain and labor issues but also construction permit issues. Everything is backed up across the board.”

    Regarding the 12,000-square-foot home he’s building in the village of East Hampton, D’Angelo says, “They’ll have a pool next summer, because it’s been planned for a while.” But the scramble for everything to get the homes ready has become more intense. “There’s $150,000 worth of appliances in that East Hampton home,” he says. “We bought whatever brands we could get. The machine operator will try to replace it with what he needs.”

    D’Angelo notes that costs have increased by at least 30%. “I’ve never seen anything like this in my 30-year history.”