The Price Increases Won’t Apply to Me–And Other Glass Industry Myths
(1) I am special in our glass industry. You see, my suppliers know me and they would never raise my prices. (2) With my purchasing power, my supplier would close their doors if I stopped buying from them. (3) Even with 9% inflation, my employees will stick with me and my scheduled 3% raise.
It sure is nice to have such a self-image that places your glass company as the only one in the good-old-US of A that the rules don’t apply to. A few select float customers may have locked-in pricing contracts, but these would be the large appliance companies or the automotives. The rest of us are going to pay. There is no escape clause. And you better believe that your employees will leave you for a job with great benefits and wages that match inflation.
Loyalty is fast-fading in our glass industry and just about every other vocation in our country. I hear stories of companies losing 20% of their workforce in one day when their announced wages don’t come near what inflation is right now.
Our industry, like just about every other industry, is losing employees to companies that offer better pay and benefits. How do you manage this trend and the massive price increase? By placing one foot in front of the other and raising your pricing now, not in 60 days, and by working with your insurance/benefits suppliers to bring your benefits up to current standards that will retain your team.
Your prices should cover glass costs and the increase in labor benefits and wages. You have a golden opportunity to blame any such increases on the natural gas pricing, the main cost element in the production of float glass.
Let’s say you have 12 employees, making an average of $23/hour, $47,840 in base pay, and 20 percent more for O/T, for an annual of $57,408. Your benefits, including social security, are probably around 27%, or $15,560. Putting $3,000 per year into increased benefits for your 12 folks will cost $36,000 per year. If two people leave you for better employment, it will cost you about six months’ wages to get the newbies trained and up to par. That’s a total of $57,408 plus the benefits that you are going to pay out for less than solid working. Keep your people with a better benefits package and you will save big dollars in the long run.
You are the only glass shop in a 50-mile radius. Don’t worry about it. On the other hand, if you do have competition, be ready to hang on to your people and hire from the companies that don’t treat their folks well.
Hopefully, you placed a 30-day pricing limit on your quotes. Call your existing open quotes and get a cash down payment to hold the order. Otherwise, the prices won’t hold. Yes, you will get yelled at or cursed. That is part of our lives in this industry.
Most glass shops I have talked to are raising quotes by about 25%. That seems fair and allows you to gain some overhead coverage for your company.
But wait…there is more…what about the shortage of glass. Yes, that seems to be part of what is going on now. I have talked with different owners. Some who are feeling the shortage and, not surprisingly, some who are not. What is the difference? The ones who are getting product pay their glass bills on time. The ones who are paying slowly, are having a tough time getting products. Don’t you treat your customers the same way?
Paul’s Afterwords: A quote attributed to Marlo Thomas, an actress and humanitarian:
“My father told me there are two kinds of people in the world, givers and takers. The takers may eat better, but the givers sleep better.”
Well done Paul. As usual. Lyle
A story very pertinent to this topic about discussing price increases with customers was revealed at a colleagues recent retirement:
“I’d like to share a sales/relationship situation which Pete handled with aplomb. In the mid 90’s we were experiencing some significant and regular price increases from suppliers. This meant discussions with builders about reviewing their prices. One of the larger residential builders responded with comments that this was unreasonable and that he would be looking at an alternate glazing supplier. Pete’s reply was delivered with humility and with respect to the client and went something along these lines, “We are disappointed that you feel this way and we would be sorry to see you leave, however it would be remiss of me not to let you know that there are builders who are wanting to move over to ourselves as a glazing supplier however, we have held off accepting their orders out of respect to our current customers lead time expectations. If you did choose to leave, then we would take on one of those as a regular customer and then if you did decide to come back we would have to see how our production capacity was looking at that time”. When I was speaking with Pete a few days later he calmy said that the builder had accepted the price increase.