Order Ahead…Way Ahead!

We have been in the industrial building business a long time. We have seen some ups and downs in commodity prices as supply and demand get out of whack for a period until supply increases or demand decreases to balance things out and prices get back to normal. These are not normal times.

The pandemic resulted in an intentional shut down of “non-essential” businesses. It was a recession on purpose. It turned out to be a lot more difficult to turn the switch back on than to turn it off! As the economy tries to resurrect itself, the pent-up demand is real and the lack of labor to meet that demand is also real. With the additional infusion of trillions of Federal “relief” dollars, inflation has re-emerged after four decades of hibernation.

Things will eventually return to a balance; but, in the meantime, what is one to do? The supply chain disruptions are erratic and hard to predict. Here is just one story of what we have done to combat this unpredictability.

We build speculative industrial buildings, and virtually every one of them need loading dock levelers for the tenants to conduct their business. In the past, we would wait for the customer to tell us what they preferred. We would order the product, and it would show up in 8-10 weeks. This fit in with the time to build out their offices and was just a part of the work to get the tenants in the building. When we started getting quotes at 26 weeks to deliver levelers, we said this is going to be a problem. A big problem!

We could negotiate a lease with a client and have the building ready in three months, but it would be another 3½ months before they could have working levelers. They would understandably not want to pay rent without the ability to load and unload trucks.

So, we decided to change our policy and go ahead and install levelers so the buildings would be usable from day one. We bought levelers for all the buildings we had under construction…and the next four buildings we had in the planning stages.

We are glad we did. Delivery times are now up to 35 weeks, and prices have more than doubled. There are other critical items that need to be ordered in advance these days. Electrical gear and transformers can be 50-60 weeks delivery time for high load equipment. You can get overhead doors, but the springs to raise them are likely to come 12 weeks later. In today’s environment, “order” everything you can identify that you are likely to need in the next year right now. You will be glad you did!

“Joe Hollingsworth participated as one of our first equity investors. In addition, Joe Hollingsworth has served as a board member and leading advisor for strategic planning and direction.” — Scott Kelley, President and CEO, Service Center Metals