Inflation Is Coming To Our Economy–Watch Your Long-Term Bids
A classic definition of inflation is when prices rise faster or higher than the relative value of the products that are valued. Ask 10 experts what the future inflation rate will be and you’ll get at least 12 answers (that is also inflation). A broad answer, currently, in the U.S., the inflation rate is 5.4%.
This high rate is primarily attributable to the cost of automobiles going up. Car manufacturers can’t get key computer chips needed in their cars and delivery of new cars is significantly down. Therefore, dealers have to sell at higher prices to break even, and heaven forbid, make a profit. So, they are selling the cars at a higher price, with lower discounts for trade-ins, and since the car is the same, price inflation follows.
Subtracting car dealers from the mix and the level of inflation is about 3.4%. What is the future for us in the glass industry? Have you heard that glass floaters are running at peak capacities and don’t have enough goods to satisfy every customer? Metal companies are busy, too. Our industry is playing catch up from last year when we couldn’t get work done due to closed jobsites. Also, consumers are spending more on home improvements. A vast majority of glass shops are busy and could be busier if they could get good labor.
So what will happen? Commercial flat glass shops will start to raise prices for similar jobs they have done, adding our little corner-of-the-world’s inflationary action to the whole economy.
What is the effect on you, my dear reader? I hear float prices are going up and that float shipping capabilities are going down. Deliveries are three to four weeks instead of three to four days. And, prices are going up. What is there to do now? First, buy from a vendor you trust. Second, whether you are buying directly from a floater or through a distributor, get a firm confirmation on your delivery dates when placing the orders, so you can continue being in your business. And third, look ahead at your needs. Order your glass early so that you do have it on time for your upcoming work. Whether this is tempered or insulating glass from a manufacturer, expect lead times to go up. Remember, a fabricator who is a nickel or dime more expensive and has the goods to sell is better than buying from the cheapest in town but who has no goods to finish your order.
So, dear reader, place an escalator clause in your quotations based on how far the actual construction date is compared to the date now. Up to three months, no raises, four-six months, add a percentage you are comfortable with, six months to one year, add that prices may go up beyond that. Some glass fabricators will give 30-day price protection. Ask if your vendor does this.
[…] Bieber at USGLASS Magazine offers some good advice: Inflation is coming to our economy – watch your long-term bids. But those who’ve been here before may remember there is more to inflation than just rising […]
Thanks for your comments on my “inflation” blog. Yes, supply chains are critical to the glass industry. It really doesn’t matter what the price might be if you can’t get the product at any price.
I liked the way you “spoke” to your team on this subject.
I wish you and your team safety and health as we again look at COVID.
Bieber Consulting Group, LLC