Raw Materials Pricing – the impact on coatings
Raw Materials are increasing in price, this is a painful fact that cannot be avoided. Since most come from Mainland Europe or further afield, the devaluation of Sterling has seen most prices escalate in the last 9 months. There have also been a few plant shutdowns that the cynical person might suggest is designed to inflate prices above their natural level.
At Pronto we spent many months preparing for a large extension to our tank farm in 2016, and in July decided to push ahead regardless of Brexit and the other issues of the day. This has helped offset a lot of increases to date, as we can buy more in bulk and produce more efficiently, handling less barrels for example. As ever, we only change our pricing when we need to, in some cases offering stability for 4-5 years at a time.
This year is going to be a little different though, so let us consider the impact that raw materials have on a can of paint.
It is a common expectation that a paint manufacturer will have the product available for sale 24/7; and I see no problem with that. It is equally common to expect that we will stock all the colours you could ever wish to order and again I see no problem in that. After all we can’t have a company called Pronto Paints and not offer that kind of service! As our regular customers know and hopefully appreciate, we go to great lengths to ensure that this happens time after time. It should not be taken for granted, but it is a comfort for them to be able to rely on us.
As I see things, one issue caused by uncertain times is the natural tendency to de-stock. Gone are the days of keeping hundreds of litres in paint stores or ordering extra in case you need it. Equally well, the customers ordering the products paint every day have reduced their stock levels. This has caused lead times to reduce considerably for all parties in the supply chain. However, it should come as no surprise to learn that the suppliers of key raw materials have reduced their stock levels too.
As well as significant price rises for basic commodities such as Xylene and Titanium Dioxide, the ‘put up on’ paint manufacturer is faced with ‘force majeure’, increased lead times for delivery and hopefully you get what you need in time.
This creates a couple of choices: Do you wait patiently for the correct raw materials and continue to manufacture your products to the standards expected? Or do you become tempted to substitute inferior grades, off spec products and risk ruining a reputation built up over many years.
As an active member of the British Coatings Federation, it will come as no surprise to hear that we refuse to do any of the above. Good relationships with your suppliers, along with an honest and respectful approach to business, will stand you in good stead. Until someone flicks a big switch and decides to end raw material shortages, sorts out Brexit, steadies the oil markets and all at the same time, we will remain in this brave new world.
I do not claim to have a magic answer, but good communications can only help. We have lots of ideas to aid companies struggling for supply. If you currently buy from another company I hope you still enjoy the same quality of product and level of supply you deserve, regardless of it costing a little more now.
If it takes an extra day or two to get the correct product supplied, it seems a worthwhile wait – after all, surely it is more important that the paint works for its intended purpose.
If you have taken the time to read my rambling thoughts, feel free to post comments and I will try to read your opinions too. Please note that I would never encourage needless criticism of other people and companies. I would like to think that my fellow BCF members share a respectful courtesy to one another and these discussions are meant to inform and provoke discussion, not knock the efforts of any decent British Manufacturers.
All the best