Here we are beginning a new year! Always full of hope and promise.
As I closed last month’s letter, I mentioned that the potential of 2021 was a hope that is both “dangerous and beautiful.” That seems to be the correct segue into the subject of this edition of ‘Brighter Days Ahead.”
It is resonating more and more in the news that there will be wide shortages in the supply system. And this is not just in the news, it is becoming more a part of our experience, albeit not always recognized to the full extent just yet. Think of it as the global experience of our domestic ‘Great Toilet Paper Fiasco of 2020.’ Shortages, restrictions, and shopper’s short fuses! This issue is most noted concerning imported goods; not just finished goods, but also raw materials that are assembled into products here. The global shutdown set a domino run into motion; economy slows, factories shut down, cargo ships shut down, trucking systems shut down, supplies run thin, now other factories shut down, cargo ships…you see the cycle. And setting the flywheel up to restart takes a long time because ships have come off the ocean and dockyards are overwhelmed. Others can (and have) described this much better than I have.
“But Bill,” you ask, “What does this have to do with my industry?”
The first sign in our industry is a lack of available materials. We have been hearing from customers, “I need this material,” and we want to respond, but the upstream battle for shipping availability and priority is looming larger every day. Freight companies, dealing with pressure to ship, are now charging upwards of 3x last year’s prices for imported items to receive ‘priority’ status. It’s either more costs or longer delays, both of which affect us downstream.
When the material finally reaches our shores issues #2 and #3 set in.
#2: How long will it take to get it unloaded and through customs?
#3: Will there be a truck available to move the product to ‘my’ destination? Just how many trucks and destinations will it take to finally reach the customer?
And all of this describes what I would see as the ‘dangerous’ part of 2021. So, what then is the ‘beautiful’ part you described. I would say the beautiful part is how we choose to respond to the struggle. How do we maneuver, manage, and control our business both proactively and reactively?
This is where the genius of our industry will show itself through the value of distribution. Distribution has started—and must continue—to look forward in a way that creates an investment in inventory for the right items that will likely face the highest demand and the longest waits. Not only will proactive measures be needed on the purchasing side, but there will be value in choosing which customers to support and why. Those that are the best prepared and the most disciplined with their planning and approach will see the financial benefits of their planning. I would prophesy that at some point
This year the first demand from the field will not be “What’s your lowest price?” but will instead be “What’s your inventory?” and “Will you have enough to help us complete this project?”
Another potential hurdle we could face is the changes in our economy. This is not a biased reference toward a party, simply a recognition that when political alignment shifts in our nation’s capital, it is not unusual to have changes to our economic focus. Already we have seen a change in the oil and gas industry that (whether you like it or not) affects us all. Politics will be what they are, and we all have to be prepared to adjust our game plan to meet the needs of today and tomorrow without looking back and wishing for ‘the good ole’ days.” Looking back means you can’t be moving forward. Business is about the opportunities that lie ahead, and I am continually excited about what that means to all of us. We must never lose that fire and excitement to succeed!
The United States of America, in my opinion, continues to be the greatest nation in the world. People want to come here for freedom, opportunity, and prosperity. If we work hard and use discipline in our actions, we are free to ‘pursue happiness.’ Perhaps no industry is better prepared to experience the ‘promise of hope’ in America, considering we are in the electrical industry as the backbone of ‘clean-and-green’ electricity. It matters not if you are an employee or a business owner or what industry you are in, if we are to continue to be the United States, then we must work together this year as much as ever to rise above the challenges set before us.
Never have I been more confident of and ready for ‘Brighter Days Ahead’ for all of us.
– Bill Devereaux