Workaround Success! (w/ 6-day delay)

The uncertainty of the Bio Bio bridge does have mills in the region confused, but we’re lucky to have already found a workaround.  However, the new shipments won’t depart for 5 or 6 days, which will yield an additional sparse week of WindsorONE production.

Weeks of 3/29, 4/5 and now 4/12 are going to be difficult; we’ll contact you directly on how this will be impact your WindsorONE shipments.

Supply Disruption?

Marcelo (ForAction General Manager) sent us the following message yesterday afternoon:

“…we have all containers on Sitrans ready to send to Puerto Coronel but the government stopped the truck traffic on the bridge Bio Bio for the risk of falling (this is the only way to reach port.) . We hope that this restriction be lifted as soon as possible. We are looking for alternatives to ship all our containers…”

Approximately half of our containers were going to ship through Coronel; pending shipment/vessel alternatives, we’ll report back as soon as possible on consequences to WindsorONE CA/VA shipments.

I did make note Wednesday that I would report back on possible impacts to our cost structure come this Monday; however, efforts now are focused on finding alternative routes to ship all containers. 

At this point though, it is clear that the cost to procure raw material and to manufacture WindsorONE will increase; we’ll need a few more days to better understand by how much, and by what date a price increase will take effect.  Please note: we will only change the price of our products by the actual and realized incremental increases to our cost structure.

As always, please do not hesitate to contact me directly should you have any questions; my contact information can be found at the bottom of this post.

In Solidarity,

Craig

Arauco Producing…

Good news for the industry, Arauco has resumed operations at many facilities.  The below message is from Mark Young of Arauco (Atlanta Offices), March 17th:

“Beginning this week, Arauco has resumed the operation of the following industrial facilities:

Sawmills: Of the seven sawmills that will operate in Chile, five are operating – Valdivia, El Cruce, Vinales, Nueva Aldea and Cholguán.

Remanufacturing Plants: Of the five remanufacturing plants, four are operating – Vinales, Valdivia and 2 in Cholguán.

Panels Plants: Of the four, two have initiated their operations:  Trupán has begun a line of MDF, and Nueva Aldea has started up two lines of plywood.

The Arauco energy plant in Nueva Aldea has initiated its operations, and is producing electrical power for the grid  – Sistema Interconectado Central (SIC).   The Arauco Valdivia energy plant is operating providing electrical power for the grid as well

Pulp: The five pulp plants continue the process of accessing damages and are working to standardize their operations for start up.

Ports:  Activity has begun in the ports. San Vicente is loading containers, Lirquen has loaded a Break Bulk Vessel for Mexico and the port of Coronel is preparing a container vessel to be loaded beginning on March 20th.

Arauco continues to support the numerous relief efforts to aid its employees and their families, as well as the affected communities.

In a joint effort with the communities, machinery was made available to clear the streets and highways and to provide basic services. Additionally,  land was donated for the temporary installation of one thousand emergency homes.

As the surrounding communities, our employees and their families work to resume their daily lives, the company will now focus on the remaining industrial sites which will mainly consist of debris removal and cleaning and repairing the affected production facilities to get them back on their feet.

Please visit  http://www.arauco.cl for additional updates.”

SitRep on Our Supply

In Short:

We’re going to be okay, but will need to work closely with our customers for the month of April to manage our ability to produce and ship WindsorONE against customers’ needs, given a short gap in raw material flow.

In Detail:

We have containers from ForAction starting to ship to our USA WindsorONE plants beginning March 22nd.  This will be just over three weeks with zero shipments from Chile to the states, and with the 2-3 week container travel time, our ability to manufacture and ship will tighten at the USA plants for a few weeks.

We expect about 50% of normal WindsorONE shipments come the week of 3/29, and zero WindsorONE shipments week of 4/5; however, likely arriving shortly thereafter will be raw material from ForAction, so we should be back at close to normal come the week of 4/12.  I type “close to normal” b/c without a heavy working inventory, or as we call it “running hand to mouth,” efficiencies will run lower as we’re not able to produce at maximum capacity.  In addition, b/c we’ll be short on shipments week of 3/29 and 4/5, we will be playing catch-up for the month of April.

We will be proactively managing each of your accounts and orders, and when we expect delay caused by the above, you’ll hear from us directly.

It is also possible that some customers will see an increase in freight costs; if, for example, we’re unable to meet your requirements from the Surry, VA plant, then at times it might be possible to ship from the Willits, CA plant.  Of course we would only do so at your discretion.

In advance, thank you for your patience and proactively working to manage your inventories with Jan! 

In Solidarity,

Craig

SitRep on Ports

Team in Chile just reported the following to us…

“The actual situation of the Ports is the following:

– San Vicente, working to 50 %

– Lirquen, working to 90 %

– Coronel, working to 90 %”

I’ll be able to report more tomorrow on our supply status and possible holes (waiting on a few more pieces of information so I can provide best possible insights to Customers).

–Craig

Boom! We’re up and running…

Marcelo and his team fired up ForAction today; we’re up and running, and again producing WindsorONE block for our USA plants.  We even had 100% of the employees at the plant for work.

Yes, we’re still concerned about vessel space and that last “brick wall” to break through, but certainly the amazing dedication and hard work of the ForAction team getting the plant back online deserves some serious recognition!

Please help us give a congrats and a thank you to Marcelo and the ForAction team for their tireless dedication to Windsor Mill and our Customers; and for those of you that comment in the section below, we’ll continue the tribute by sending you a slug of the new WindsorONE “King of Boards” t-shirts to hand out to your favorite WindsorONE Builders… [WindsorONE stocking dealers only]

Will report back again Monday with updates sent over the weekend…

In Solidarity,

Craig

3/10 Insights: Pricing, Supply, Carnegie

ForAction will be shipping to USA plants end of next week, and raw material will again be flowing to the states.

A previous concern had been the status of the roads from the plant to the ports.  It looks like we have found a workaround, and while we will be using this route effective immediately, it is 4 times as long, and will result in an incremental increase in freight, which we’re calculating now.  This increase will be effective on our shipments arriving from Chile on the week of April 5th, and removed when normal routes have been repaired.

A new concern: it appears that even though we’ll be able to ship at 100% capacity, we’ll be running into a lack of available vessel space, likely causing shortages in our supply beginning first few weeks in April, length of time unknown.  We are monitoring this very closely, and will continue to update all.  As you’re aware, we’re also working on domestic raw material procurement to supplement; the negative here is the raw material is coming in at a substantial additional cost, and we’re not sure yet if we can give it that WindsorONE “look and feel.”  More info on that next week.

Still working our hardest at grabbing vessel space; that’s the last, big brick wall we need to break through before the supply pipeline is again 100% intact.

The real story, however, is the incredible job that the Windsor Mill ForAction team has done… it reminds me of a quote from Andrew Carnegie:

“Take away my people, but leave my factories and soon grass will grow on the factory floors……Take away my factories, but leave my people and soon we will have a new and better factory.”

 It’s an honor to be able to work with Marcelo and his team; their dedication to the Company and to the Customer is tireless.

3/8 Insights: ForAction People, Coronel Port

Some great news from Marcelo (ForAction GM) today:

“People : Today is coming to work 90% of the people, we are cleaning and organize the mill and the lumbers. 4 people lost all the houses ( burning ).  Today in my truck I get food to lunch for 1 week for all the people.  Nobody hurt, nobody died.”

Marcelo also reports that the Coronel has begun operating, and that he’s working towards alternate routes for delivery from ForAction to the port.

Here’s a “bulletin” that we received yesterday from our insurance carrier:

CSL Bulletin

More to come tomorrow…

3/8 Insights: Plant, Roads, Ports

As you’re aware, supply from Chile for WindsorONE production is influenced by three main factors: plant condition, road conditions, port conditions.

ForAction (FA) Plant Update: In short, we should be manufacturing again beginning of next week.  Following is detail as reported by Kevin:

“Power to the mill: The power company believes that the power will be restored to FA by Wednesday.  We will bring the mill up in sections and deal with issues as they surface.  There is a good chance that the mill will be “powered up” by Monday (March 15).

Water to the mill: OK

Boiler: The replacement fire brick and cement (high temperature adhesive) are scheduled to be in Concepcion on Wednesday.  The contractor will complete the job on Thursday (1 day) leaving Friday and the weekend for it to dry completely.  They will pressure test the boiler tubes with air at the same time.  If there are no other unforeseen issues, the boiler should be ready to go by Monday (March 15) as well.

Miscellaneous jobs such as final alignment on the FJ that moved, re-alignment of one of the molders that shifted, fallen units re-stacked, kiln doors that had fallen off placed back on their track, re-piping of the Boiler water softener, etc, should be completed by early next week as well.”

Continuing the updates…

Road Conditions: We’re spending time finding workarounds for getting trucks to port; current possibility is approx 4 times further than then normal route, but we need to verify that several roads are passable by loaded truck.  Lengthy, yes; yet still good news if workable.

Region VIII Ports: No updates today from on-the-ground team in Chile regarding Coronel, nor San Vicente.  Many of you have e-mailed as to the stats of the Port of Talcahuano, and yes, it appears to have sustained substantial damage. 

Domestic Sourcing: Previously posted fiber purchases begin arriving this week, which we will process and evaluate as soon as possible.

Lastly, I’m hoping towards the end of this week we’ll be able to determine exactly if or when holes in supply might affect your purchases of WindsorONE.  While still a combination of our ability to ship from ForAction (roads and ports unknown, plant status known), and what we’ll be able to procure domestically, we’re hoping to provide a more concrete report.

In Solidarity,

Craig

3/6 Insights: Coronel Port to Open?

Yesterday, Kevin, Ruben, and Marcelo were able to make it to the Coronel port.  Here’s a picture they sent, condition appears good:

We were also able to speak to a former employee and friend that now works at the Coronel port (he was there yesterday).  He shared that it looks like they’ll be back online Monday, and able to ship!  Great news of course, let’s hope it happens.  Our friend is also going to check on the status of the containers we have at the port, and let us know their condition.

No new updates on road status.

In Solidarity,

Craig