Business

The Suez Canal and Industrial Distribution

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As you all probably know, there is a ship stuck in the Suez Canal, which is blocking transit. You may not think this directly affects you, but it will. It’s just a matter of time.

I own an HVAC distributor, and HVAC is a subset of industrial distribution. Most manufacturers are still reeling from last year’s Covid issues. Commodities like copper, steel, aluminum and sliver were already spiking in price before this latest logistics issue.

I spoke with one of my major component suppliers this week. The cost of a container from Asia to the US was $5k last year. This year it is $15k. And there simply aren’t enough to go around.

While the Suez blockage doesn’t directly affect this trade route, it does affect the overall global logistical issues – and wreaks havoc on just in time producers.

I have one manufacturer of HVAC equipment that suspended all new orders a few months ago as they grapple with staffing issues.

When you combine all of this, I don’t think that there is any question that there will be finished good shortages again this Summer. First affected will be stuff made “over there”. We are already seeing shortages on things like ductless mini split systems because of the continuing port slowdowns on the west coast of the USA. It isn’t even Summer yet.

Here is where it affects you. The guys who have the stuff will win. Hands down. I made an enormous inventory investment this Winter and Spring, placing orders far in advance of what I normally would. I’m not going to let that investment go to waste – and I’m not spending basically every waking hour getting stuff in my barns to help my contractors get their jobs done for nothing. If I’m the only guy who has it (and trust me, on some things, I will be) – the price just went up. It’s nothing personal, just business.

Believe me when I say that I wish my life were easier and yours cheaper, but I won’t be alone in this. If you end up with an issue with anything from car parts to electrical to something as simple as a washer breaking down, you will be paying more in the very near future.

Sorry.

Deleting Disney

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With considerable regret, I must confess to deleting Disney, their products, works and ways from my personal media consumption. I’ll not be trashing the various DVDs of classic Disney or Disney/Pixar movies that I own but I definitely will not be purchasing any more of them, or streaming and watching any future Disney productions, buying any Disney-licensed merchandise for my grandson, or visiting any Disney theme parks. It would appear that the corporate masters of Disney are more interested in being woker-than-thou and selling their products to a Chinese audience anyway

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Helter Skelter Redux?

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The stated aim of that murderous freak Charlie Manson and his deranged family of dropouts and druggies in committing the brutal slaughter of seven people in 1969 was to incite a race war. The murderers deliberately left bloody graffiti at the murder scenes, attempting to frame the Black Panthers yet another set of murderous and equally racist freaks active in that period. In Manson’s twisted vision, the Tate-LaBianca murders would set off a brutal race war; black against white, in which whites would be enthusiastically genocided. During this mayhem Manson and his followers would hide out in a vast underground city. They would then emerge to take command over what remained of society. Manson was a particularly noxious racist, unsavory qualities which were veiled by the last putrid remnants of the hippie commune culture, which let his cult family fly under the social radar as it existed in the afterglow of the so-called “Summer of Love” in the formerly golden state of California. (Jim Jones was another one of those super-organized racist-cult freaks of the era, whose’ commune was slightly longer-lasting and successful, until suddenly it wasn’t. Yeah, a supposedly race-prejudice-free socialist commune, with a white leadership cadre and mostly dead black bodies when it all came crashing down some years later.)

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Those Whom The Gods Would Destroy

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… they first make mad, or so goes the popular version of a concept which goes back to the ancient Greeks. They who are on that irrevocable final spiral towards destruction do seem addicted to self-destructive or at least counter-productive behavior either of the personal or institutional sort. I can’t help wondering if the powers-that-be at Lucasfilm/Disney are entering that death spiral, what with firing Gina Carano from the cast of The Mandalorian for … well, nothing much more than pointing out that the Nazi genocide of Jews started with a program of determined “otherization.” Ms Carano merely drew a parallel which has occurred to many another so-called “Deplorable”, and it certainly has not escaped attention of sharper observers than myself that a chorus of so-called tolerant progressives have been clamoring for the punishment and erasure of Republicans, conservatives, Trump supporters and flyover rural residents, ever louder and with increasing urgency of late. Why she should be singled out for cancellation for pointing out the obvious parallel, other than being in a notoriously prog-sympathetic profession?

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Industrial Distribution One Year Into Covid

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It was around a year ago now when we started to hear about this thing called Covid. My kneejerk at that time was “it’s just the f1cking flu”. Quite the year.

For those not acquainted, I own an HVAC distributor, and we are a subset of industrial distribution. I have written some updates along the way of this new Covidian world. Here are a few more thoughts of where we were, where we are, and where I think we are going.

1) I thought our AR was going to be ravaged. Boy was I wrong. AR is as healthy as it ever was. We probably have some PPP money being used improperly by some customers, but the fact of the matter really is that HVAC in general has been very, very strong. People had to stay at home and with extra money from not going on vacations decided to upgrade their HVAC systems. Indoor Air Quality (IAQ) was obviously a very good driver for us in both residential and commercial segments.

2) I originally thought that replacement parts would be an issue. Nope. It was all about finished goods, and still is. Our main domestic provider of HVAC equipment is digging out of the hole that seemed infinite in nature, caused by all of the distributors cancelling everything during the original shutdowns, and then re-ordering everything x 2 or more when the weather got hot in Summer. It was brutal, but we worked through it. All of the favors were called in, and I scoured the USA for new trading partners to come up with some solutions. That work paid off and will pay off in the future as now I have more partners to rely on. I have never worked so hard to get product – one week I worked 100 hours. I have had one day off since last February that wasn’t a holiday. Not looking for sympathy – these are things that you do when you are the boss but I’m glad we have a bit more normalcy now.

3) Right now, the ports on the West Coast are a mess, and there is a major container shipping issue to/from Asia. This is already causing hella problems with items such as ductless mini split systems, PTAC units, window airs, dehumidifiers, and the like. We are going to see major issues in these segments when it warms up.

4) Inventory controls are out the window. Product comes in surges rather than the patterns we were used to that had been developed over decades. We are still getting orders in on some items from last July. It is very tough to manage. We don’t dare send anything back to the manufacturers for fear of not getting the items again, but our turns are a farce right now. There really isn’t a solution, and we hope that our normal buying/supply patterns return later this year. I have rarely used my line of credit in the past, but until this thing normalizes, I have no choice.

5) Competition isn’t working as hard as I am. I really am happy about this as I am seeing new customers and coming up with innovative solutions or new products/vendors, and a lot of my competitors have either given up or just aren’t that interested in trying new things. It has really opened some doors. Hard work does create luck.

6) I protected, and continue to protect, our long time, loyal customers when the availability sh1t hit the fan and shielded them fiercely when other contractors came calling as their distributors ran out of product. We immediately halted new dealer acquisition and allocated product to “our guys”. My customers were very thankful for very few product outages. This created some angst as these potential new customers were offended when I politely told them to “pound it”, but that’s too bad. We did the right thing.

7) The future is bright. If we can get a handle on the inventory, we feel that there will be a burst of commercial work coming as companies get fully back up and running. I think that residential won’t slow down any time soon either. This polar vortex we are currently experiencing pushed a lot of units over the edge.

8) Some items are still hopeless. MERV 13 filters are a complete joke, along with UV product. MERV 13 filter lead times still sit at 16-20 weeks. Want a backup generator for your house? 20 weeks minimum. Our Bipolar Ionizer manufacturer that we represent has done a fantastic job re-supplying so that fight is over for now.

There is a lot of work left to do, but in general, we are finally, mercifully seeing some light at the end of the tunnel.