Happy New Year to all WindsorONE Customers and Strategic Partners!
Your continued commitment to purchase and support American manufactured products is appreciated by Windsor Mill; a second generation family owned and operated business, founded in 1972, with manufacturing plants in California and Virginia.
The purpose of this post is to announce a price increase on WindsorONE and WindsorONE+ Protected Trim Boards, Specialty Boards (including CA Sidings), and Moldings.
The 4% increase on FOB Mill pricing is the direct result of increasing log prices and business operating costs, including ocean freight, inland freight, paint, glue, and another year of 15% health care cost increases. (Price increase on moldings expected to be slightly higher)
The price adjustment is smaller than expected because of long-term log supply agreements. Our vertically integrated strategy continues to give us advantages in the marketplace, specifically as they relate to procuring a consistent supply of a consistent quality raw material.
The last price increase on WindsorONE and WindsorONE+ Protected was April of 2010. We’re hoping that the 4% increase holds through 2013, however, we could see additional log price increases and other economic changes.
The price changes will take effect on all shipments leaving our California and Virginia manufacturing plants the week of February 4th, 2013.
We are working to create the new price lists that reflect the approximate 4% change; we will distribute them to you as soon as possible.
Your continued support is more than appreciated… Build America!
Price Sheets with the 7%-8% increase have been completed; you’ll hear from Jan Hull and/or your Sales Director possibly this evening or tomorrow some time.
(I say “possibly” b/c those of you in the Northeast might have a delay given that Sean Pasell’s house is almost under water, he’s in Westerly, RI; for those of you looking for extra credit, stop by his place and help the guy sand-bag!)
The day-long delay in getting the price lists out is completely my fault, for that I apologize. And we still have not had time to re-do the Molding Price Sheets, which should be completed in the next day or so.
Please don’t hesitate to hit me via e-mail (craig@WindsorONE.com) this evening should you need a copy of W1 Board pricing right away.
The Windsor Mill ForAction team has done an excellent job with our raw material procurement in Chile; as a result, the WindsorONE price increase will stay in the single digits. Excellent work down there ForAction Team.
WindsorONE price increase: 7%-8% (fob mill), pending thickness/width of sku.
Approximately two-thirds of our total raw material is supplied to us by strategic partners, and one-third we source on the open market. To date, our partners have been able to hold log prices to us, which is the reason for the single digit increase in price. The other one-third of material that we procure in the open market has seen significant increases in cost, both in the Radiata we’ve purchased, and the domestic pine (this will be used at the Willits, CA Plant for West Coast shipments).
Please give us the day Monday to prep new price lists for each of you, and you should have them from us Tuesday morning.
The price increase will take effect on all shipments leaving the week of April 19th.
The next question of course is will WindsorONE pricing be reduced should market conditions settle, to which the answer is an absolute “yes.” However, it’s going to be an interesting year, and we just can’t predict right now exactly how things are going to play out. Here are some additional market insights in that regard:
- Significant manufacturing capacity temporarily and permanently reduced at Arauco, CMPC and other large producers due to earthquake;
- Chilean port restrictions and availability of ships will exacerbate the supply causing market price spikes, and there may be further pressure due to strikes at ports in Finland, which could put added pressure on ability to reserve space vessel in Chile due to competition w/ pulp;
- 30% of NZ sawmill capacity is gone in the last 12 months due to the prices low last year;
- Australia has a strong economy with limited export availability;
- China receives 50% of Radiata supply from Chile and 50% from New Zealand, as a result of the inability to purchase what they need from Chile, they’re aggressively purchasing from NZ and elsewhere;
- US domestic alternatives in weaker supply, and significantly higher prices;
- Alternative species, such as EWP and Poplar 20% higher than Radiata;
- Brazil, Argentina have little availability in blanks and block;
- Start-up costs in Chile will force price increases to cover inefficiency caused by uninsured events;
- Reinvestment in Chile plants and equipment will require higher prices to substantiate investment and returns;
- Chilean Peso 10% stronger over the past year;
- Brazilian Real 25% stronger over the past year;
- Worldwide freight rates on the rise.
As always, please do not hesitate to contact me directly should you have any questions.
1) WindsorONE Shipment Status: Jan Hull (Executive Account Manager) will be contacting your organization w/ your current WindsorONE shipment status given the previously reported 6-day delay in container shipments.
2) Cost Structure Impact: Looking to have this completed by Monday. Please note, the additional time we’re taking to calculate the financial impact to procure raw material and to manufacture WindsorONE will help us achieve, as best possible, consistency in pricing over time, given unstable markets.
3) Conceptual Selling: Speaking of pricing… drop me an e-mail (craig@WindsorONE.com), and I’ll send you a couple copies of this excellent book that will help your sales organization get away from competing on price, and better help your sales organization compete on Unique Strengths and Value. (W1 Dealers only)
Six salespeople from three W1 Dealers recently went through a 2-day Miller Heiman Conceptual Selling Workshop; it was so powerful that all are now working towards implementing the methodology throughout their respective sales organization.
If you’d like to hear a Dealers first-hand Conceptual Selling experience, don’t hesitate to drop me a line, I’m more than happy to make an introduction.
We reported on 3/10 that infrastructure and roads to ports from our Foraction plant had been damaged; and that luckily we had found a work-around, albeit 4-times as long, which would increase inland freight rates and cost of fiber. The good news today is that our normal routes have been repaired (or are being repaired), and WindsorONE products will no longer incur the additional freight cost.
There are still many factors, however, that could increase the cost of our products; we’re gathering as much information as possible now, to see exactly if, how or when our cost structure might be impacted. We should be able to provide more Insights into pricing come Monday of next week.
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.