Business Monthly

Transformer Shortage Delays Flathead Construction

Nationwide supply chain challenges have left Flathead Electric Cooperative with few transformers to supply to developers in the Flathead Valley since last fall, delaying some residential projects by six months and adding more pressure to the housing market

By Maggie Dresser
A transformer box in Whitefish on April 11, 2023. Hunter D'Antuono | Flathead Beacon.

Last fall, Terry Homes Vice President Merna Terry closed on 40 lots in Eagle Valley Ranch in north Kalispell, behind the Ford dealership, with plans to build single-family homes as part of the second phase of the subdivision development.

Crews got to work excavating and pouring the concrete for the future homes. Installing transformers – the electrical boxes that transfer energy and provide power – was the next step in the process, but to Terry’s surprise, there weren’t any available.

“We had no idea,” Terry said. “We had a loan, we closed on them, we dug a hole to start building and we realized there was no transformer.”

Terry had already purchased the transformers from Flathead Electric Cooperative (FEC), so as she waited for them to arrive, she was also paying interest as construction suddenly halted to a standstill. Moreover, since crews were hired to work through the winter, power was needed to complete things like drywall and paint, which needs a heat source to dry.

The transformers were finally scheduled to arrive in April, delaying the projects six months and preventing Terry from selling the homes, which are in high demand. She said many of the houses would have been completed by now, but instead they won’t be move-in ready until June or July.

“I’ve never experienced this in 28 years,” Terry said.

Other developers in the Flathead Valley are feeling the impacts of the transformer shortage as supply chain issues continue to delay projects. Andy Masa at FEC said the shortage is a nationwide issue.

Roofers at work on the Silverbrook Apartments under construction in Kalispell on March 10, 2022. Hunter D’Antuono | Flathead Beacon

While supply chain disruptions impacted the lumber industry and a broad range of building material companies during the height of the pandemic, as developers ramped up operations to meet the renewed demand, Masa said the transformer shortage only began affecting customers last fall.

FEC officials typically order transformers a year in advance, which meant there was a large backstock supply of the electrical boxes on hand for a few years.

But when pandemic-related delays slowed operations at manufacturing plants across the nation, there were suddenly fewer transformers being built as demand skyrocketed.

“They weren’t able to fill our orders,” Masa said.

After the transformer inventory dwindled, Masa said FEC could no longer meet the demand for construction projects.

In December 2021, Flathead Electric officials ordered 735 transformers to keep stocked for the next year, but so far they’ve only received 420.

The shortage has forced many developers in the Flathead Valley to pause their projects, further delaying construction and move-ins in an industry that’s facing high demand in a tight housing market.

Last fall, Wade Rademacher of Edge Development was warned about the shortage, so when he ordered transformers in December he was bracing for a six-month delay on his 31-lot subdivision. The order was delivered in about four months instead of the predicted six, but he said the uncertainty has created anxiety among builders.

“We can still build without electricity, but you can only go so far,” Rademacher said. “You need heat in the houses – you can go further in June or July, but you can’t texture or paint walls when it gets cold.”

Rademacher’s crews were using generators to get by without transformers, but he said the alternative became too costly and they were noisy for the neighbors.

New homes under construction in the Silverbrook Estates neighborhood in northern Kalispell on April 23, 2020. Hunter D’Antuono | Flathead Beacon

Masa says the shortage is starting to ease at FEC and they have started buying refurbished transformers and sourcing the electrical boxes from additional companies. Officials with the company said more transformers are coming in, but it remains an issue.

At Terry Homes, crews were finally set to receive the transformers that were ordered last fall so they could complete some of the homes in the Eagle Valley Ranch subdivision. Terry said if everything remains on track, the first home will be completed in early summer, about six months later than was originally planned.

“It’s been a problem,” Terry said. “For the past two or three years, so many people want homes. We would love to build them as fast as we can before a recession hits. It’s increasing the price of housing in the valley.”

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