Force Majeure: Yet another Corrugated Plastic Increase (Coroplast)

[White Haus]

Just secured a skid at the original price (before first force majeure) after reading this so we'll be good for a bit.

Thanks for the head's up.

 

[signheremd]

"payer le joueur de cornemuse" .

Paying the Piper indeed

 

[signheremd]

I already lost a lot of business because I couldn't get black hoodies over the last few months. And a good number of people were upset and didn't believe me. And a good number of people came in and accused other shops of lying about it. Then they go on to tell me they can't get their own materials for their business. Frustrating.

I have some stock but not a ton, it's just me here so I don't put out 50 signs a month but I have enough here to hold me over for a few months. I hope!

Excellent example.

I would never stock up on materials we do not use. That said, our business depends on the materials we use - last year we ran into shortages on 54" Oracal vinyl, had to struggle to find it to continue doing business; paid higher prices and had a few times almost ran out. Now I keep more new rolls in stock. Always a good idea to invest some of your profit into most used materials.

As far as comparing to a run on toilet paper - yes and no. The difference is that there will be profit in Coroplast.

Gino is right on one level, suggesting buying as need. It is the principle of turns. Turns relate to the amount of money tied up in your business for product - the more often you "turn" a product (sell, get your money back, buy product) the higher your end of year profit. So if you normally invest $40 in coroplast and replenish once a month that would be one turn per month. If you buy twice that, you now have twice the amount of your free cash invested in that product and your turns dropped to once every two months. Your ROI, Return on Investment, drops even though maybe you do the same number of signs.

But there is another principle - buy low sell high. Not to gouge customers, but as price increases you can slowly drive your prices up and instead of taking a hit, quoting and finding price went up, you can even up your profit. As Stacey showed above, if there is supply interruption you might not be able to do some jobs and you might even loose customers over it.

Just somethings to think about...

 

[Ray Miller]

I keep many of my supplies on hand for all kinds of emergencies. I'd rather call it reserveds or backup. As for rigid stock items most of my orders will come in the next day so I can have whatever someone needs. If the price is higher I just explain that MY costs have not gone up, but materials have and I have no control over that. Most people understand that. My problem comes when someone gets a price quote on a job and it comes to life 3 or 4 months later. That's when explaining price increases will be put into effect. On all my quotes it says the quote is only good for 30 days. I've used that many times over the years, where I have to.

 

[Boudica]

I keep many of my supplies on hand for all kinds of emergencies. I'd rather call it reserveds or backup. As for rigid stock items most of my orders will come in the next day so I can have whatever someone needs. If the price is higher I just explain that MY costs have not gone up, but materials have and I have no control over that. Most people understand that. My problem comes when someone gets a price quote on a job and it comes to life 3 or 4 months later. That's when explaining price increases will be put into effect. On all my quotes it says the quote is only good for 30 days. I've used that many times over the years, where I have to.

I think our estimates state on the bottom they are only good for so long, like 30 days. So if they come back 3 months later, and the cost of material has gone up significantly, the estimate will have to be revisited.

 

[Jeff grossman]

I already lost a lot of business because I couldn't get black hoodies over the last few months. And a good number of people were upset and didn't believe me. And a good number of people came in and accused other shops of lying about it. Then they go on to tell me they can't get their own materials for their business. Frustrating.

I have some stock but not a ton, it's just me here so I don't put out 50 signs a month but I have enough here to hold me over for a few months. I hope!

Last year it was neon work shirts now it’s black hoodies and shirts - short supply and when they are available they come from 3 different warehouses and different dye lots - same problem here in PA - also shipping takes forever- use to be next day now it’s 3-7 days - just when I thought the gas surcharge would be lifted they once again justify it - vicious circle of supply and demand and Covid ( Covid is the cover all excuse now )

 

[FireSprint.com]

What's happening to corrugated plastic isn't really inflation, it's an act of god wreaking havoc on the supply chain. We buy corrugated plastic form 4 primary suppliers. One of them rejected our PO a week ago. They didn't reply with a higher price, they literally rejected the PO stating they wouldn't have enough resin to fill the order.

We're stocking up for one simple reason, this price hike is likely temporary. Once the refineries catch up, the prices will begin to fall again.

If we can bring in enough inventory to ride out the wave, we'll be able to keep our pricing to all of you guys stable through the whole thing. That builds credibility and just flat out makes working with FireSprint easier than someone that has to adjust their pricing with the short term bumps in the market.

 

[Texas_Signmaker]

What's happening to corrugated plastic isn't really inflation, it's an act of god wreaking havoc on the supply chain. We buy corrugated plastic form 4 primary suppliers. One of them rejected our PO a week ago. They didn't reply with a higher price, they literally rejected the PO stating they wouldn't have enough resin to fill the order.

We're stocking up for one simple reason, this price hike is likely temporary. Once the refineries catch up, the prices will begin to fall again.

If we can bring in enough inventory to ride out the wave, we'll be able to keep our pricing to all of you guys stable through the whole thing. That builds credibility and just flat out makes working with FireSprint easier than someone that has to adjust their pricing with the short term bumps in the market.

Seems like you are "Holding the Line"...

That was a Gemini reference.

 

[netsol]

of course everything goes up, especially after an election that goes the wrong way
i think we will have $4.50 gas before too long. (up almost $.70 in less than 6 weeks

we all know lots of other prices are sky high, and i guess it is inevitable.

we started playing games about 10 years ago, EXCLUDING energy purchases, gasoline and many food items from the formula to calculate inflation

the problem there is, with those exclusions, the Weimar republic was doing just fine when you needed a wheelbarrow to carry enough deutschmarks to buy
a loaf of bread

 

[Texas_Signmaker]

We have not had much inflation over the last 10 years... we're due for some. With the amount of money being thrown out in stimulus, and labor shortage and wage increases... there is only one outcome.

 

[Notarealsignguy]

What's happening to corrugated plastic isn't really inflation, it's an act of god wreaking havoc on the supply chain. We buy corrugated plastic form 4 primary suppliers. One of them rejected our PO a week ago. They didn't reply with a higher price, they literally rejected the PO stating they wouldn't have enough resin to fill the order.

We're stocking up for one simple reason, this price hike is likely temporary. Once the refineries catch up, the prices will begin to fall again.

If we can bring in enough inventory to ride out the wave, we'll be able to keep our pricing to all of you guys stable through the whole thing. That builds credibility and just flat out makes working with FireSprint easier than someone that has to adjust their pricing with the short term bumps in the market.

The prices of goods and services don't typically increase or fall lineally with the prices of raw materials. I don't know about the wholesale market for items like coro but typically the price may fall some from the distributor but it's not back to the same level as it was. Maybe I'm wrong?
In a less overheated economy, that didn't have trillions dumped into it, the demand for the coro would go down as the price increases which in turn would push that price down until it finds an equilibrium. Right now, the price can double or more but would bet that the demand does not decrease as you are seeing with material shortages. I don't see why the price would drop back down significantly with no demand change. There is lots of money floating around that people want to spend and not enough stuff to buy. IMO, the fed has given into pressure to keep interest rates too low for too long. I really think that the time will come when things change and people are sitting on overpriced assets that they can't unload or be competitive with.

 

[Gino]

Back in the 60s, gas would fluctuate maybe a tenth of a cent over a period of 6 months or a year. Come the early 70s and it had about doubled in price from .30 a gallon to about .70 a gallon. Still, ya had gas lines that went on for blocks. The gas prices still only varied by tenths of a cent. Go to the last decade or two and prices increase by 10 cents a week. Sometimes more. Still think inflation isn't here, yet ??

 

[vapor103]

What are the 4 suppliers names you get coro from ?

More increases coming down the pipe again. The street price of coro will likely double by May.

So far, our FireSprint printed price on yard signs will stay consistent, we bought a couple of months worth of material in hopes to hedge these increases. I assume they will be temporary.

Here's what I recently heard regarding the plants that produce plastic resin:

• BASF declared force majeure on nylon products and intermediates made at its Freeport, Texas, plant and on Ultraform® POM Q600 grades.
• Braskem declared force majeure on polypropylene products.
• Celanese declared force majeure on a broad list of products.
• Chevron Phillips declared force majeure on polyethylene products.
• Covestro announced that the winter storm has curtailed production at its Texas operations, forcing a reassessment of allocations and extension of lead times.
• DuPont declared a global force majeure on Zytel® (including Zytel® HTN and Zytel® Specialty Nylons), Crastin®, Rynite®, Selar®, Minlon® and Pipelon®.
• Flint Hills declared force majeure on polypropylene products due to the storm.
• ExxonMobil said it is allocating polypropylene products.
• Formosa Plastics Corporation USA declared force majeure on PP, PE and upstream products from its Point Comfort, Texas, plant.
• INEOS declared force majeure on polypropylene products due to the storm.
• Invista declared force majeure on U.S. supply of PA66 intermediate chemicals.

We've got your back! FireSprint is ready to help with all the political signs and graduation signs you'll be selling this spring!

What's happening to corrugated plastic isn't really inflation, it's an act of god wreaking havoc on the supply chain. We buy corrugated plastic form 4 primary suppliers. One of them rejected our PO a week ago. They didn't reply with a higher price, they literally rejected the PO stating they wouldn't have enough resin to fill the order.

We're stocking up for one simple reason, this price hike is likely temporary. Once the refineries catch up, the prices will begin to fall again.

If we can bring in enough inventory to ride out the wave, we'll be able to keep our pricing to all of you guys stable through the whole thing. That builds credibility and just flat out makes working with FireSprint easier than someone that has to adjust their pricing with the short term bumps in the market.

 

[netsol]

firesprint,
i believe it is a resin shortage. the whole petroleum industry will be turned on it's heads for a while
end of fracking means oil will be flowing through different refineries & i imagine contracts to buy the byproducts will no longer be valid

it will take a while for the supply chain to realign itself.

HOPEFULLY

the price increase will be temporary. call me a skeptic

my favorite example is the telephone service excise tax. passed in 1898 the president promised the tax would go away at the end of the spanish american war
strangely, the tax still appears on your phone bill

so, temporary would be terrific

 

[FireSprint.com]

There is alot going on, and sure, thinking the price will go back down is an assumption. But I have seen this before. After every major storm that hits the gulf coast. So far, every time it has come back down.

The cost of corrugated plastic has only gone up on average of 5-10% over the last decade from what I have seen (1% per year). Yet, we have gotten a dozen 8% to 22% one time, price change (increase) letters from our suppliers in that same period. When the price goes up, it's loud, but it comes back down quietly. Market forces in action.

Now inflation is a different matter. That will inevitably happen, and has been happening, but not this quickly.

 

[kcollinsdesign]

I can easily handle the price changes. After all, higher prices means higher profits. The more insidious problem, for me at least, is depleted inventories and supply issues. Explaining to a customer that materials have gone up so you have to charge more is easy. Explaing why they have to wait four more weeks for their installation is a mother!

 

[Stacey K]

I can easily handle the price changes. After all, higher prices means higher profits. The more insidious problem, for me at least, is depleted inventories and supply issues. Explaining to a customer that materials have gone up so you have to charge more is easy. Explaing why they have to wait four more weeks for their installation is a mother!

You're exactly right! A friend started complaining and pissing and moaning to me his shirt lady was "lying" to him that she couldn't get black shirts a few months ago. He said she just didn't want to look, she's lazy. I said...she's not lying, I can't get them either, nobody can. His reply: OH...OK

Makes me wonder how many of MY customers are doing the same thing behind my back!

 

[WYLDGFI]

We've been holding the line so to speak here as well. I raised the price of aluminum signs a little bit this year...thats it. The Coroplast and everything else, we were able to get before any major increases hit so we're steady.

 

[FireSprint.com]

Just got word that there are some pretty serious increases coming again! Uhg.

 

[Elwood "Woody" Smith]

We too have been buying all we can, but prices are on the rise and I think they will be for some time. I too have lost business because customer's think the higher prices are a ruse? it has stunk.