An article that caught the team's eye last week was not about petrol hoarding, but the price rises in our arena of engraving. We keep a keen eye on Google alerts and friends and competitors alike and this particular news article broke from Banbury, Oxfordshire. It was all about the explosively accelerating prices of steel for Riteweld Engineering.
Now we know these are unprecedented times globally.
We understand the shortages of semi-conductor chips have led to shortages in new and used cars and vans, and technology. The Covid 19 pandemic saw whole swathes of industry, like tourism and restaurants close, creating a huge ripple effect on suppliers. But this story struck us for one main aspect.
Let's explain.
Riteweld Engineering in Banbury reported that prices are rising each day, creating an unwanted ripple effect of its own, a domino cascade on clients. Ben Young explains it well saying that a ton of steel may cost £20 more at 5pm than it did at 5am on any given day. This may not seem much to your average business but think of it this way - Riteweld quotes for a contract or supply of steel at a fixed price. Usual terms are 30 days. But. A month later, that quote means Riteweld are supplying at a loss.
We know, in business, that proposals and invoices often have 30 day payment. But if a ton of steel rises in cost by £20 per day for 30 days, that's a £600 disparity.
The price of steel, and other raw materials, is rising because the costs of production are much higher. Gas is now 6 times higher than a year ago and here's another issue, you may or may not know about. Unlike domestic customers who can lock in a price tariff for 6 or 12 months for gas and electricity, industrial users like us and Riteweld have uncapped tariffs.
It's why we're living in such weird economic times with some winners and many losers.
Take used cars. We know of people in our wide network who have made a profit on their vehicle. Cars depreciating could be a modern commandment - except, in 2021, they're not. Cars and vans are in short supply and high demand which means inflated values for used ones.
At Total Industrial Engraving, we've seen rises in energy costs and material costs, though our business is not as impacted as that of Riteweld Engineering who provide the steel skeletons, the backbone if you like of business communities - the frames, to be exact, for warehouses, shops and restaurants.
So when a £20 daily rise is experienced this impacts on both the supplier and the client. The client may feel that they can't stretch to a revised quote, and the supplier knows that the original price is loss-leading.
We don't expect this new blog post to create ripples, sympathy or Go Fund Me pages, but we do hope that it improves awareness of what challenging economic times many companies are facing in the UK and globally.
Perhaps too, we all need to be more like Ben Young and say quotes are only valid for 24 hours - to protect his company and the buyer.
What do you think?
