October '17

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78 • RV PRO • October 2017 rv-pro.com A F T E R M A R K E T from international sources, although it's a more-limited range of countries, including Canada, Venezuela and Russia. The U.S. also mines some aluminum, and Postle has another source of mate- rials open to it that isn't available to some other product sellers. "We buy on the secondary market, and that's all recycled materials," Robinson says. "They're melted down and then brought up to spec with added mineral concentrations and alloys so we can put them back in log form and extrude them again." He takes great pride that any leftover materials are also sent back to a smelter and included in those recycled materials. Availability, Instability & Regulation Because they're adding value to the products they buy, and not buying truly raw materials, Robinson and Courtney say political upheaval from supplying countries doesn't have as large an impact on pricing as the average person might think. "However, it does have an impact on availability," Courtney says. "If there's instability in the politics and the government of a supplier country, it can have a ripple effect. It can get difficult for transportation companies to move things, it's hard to get people to come to work." Still, he's quick to add that in the 20 years he's been working with supply chains, there haven't been any major disruptions because of political turmoil. And, Robinson notes because Postle buys from domestic smelters in places like Chicago and Detroit, they would be the ones who would first see those impacts. Because of that layer of insulation – and the fact that it's traded on the LME – Robinson says his company also isn't seeing much impact from the fact that the dollar has fallen in value in recent months. "It's not hitting the aluminum world," he says. On the other hand, Robert Weed Plywood's Courtney says exchange rates always have an impact on pricing for his products. "If the dollar is strong, then the price of imported goods becomes more attractive," he explains. "If the dollar is strong against the Canadian dollar, which it has been, then my pur- chasing power is a little stronger when I'm looking for Canadian softwood or plywood lumber." A special concern is when buyers work with letters of credit, Courtney adds. "We're trying to gauge when the currency is on the way up or the way down, because that influences timing when we make a purchase," Courtney says. "If I can wait a week and the currency is going to be better, I'll wait. If the currency is going to get worse, I'll make my purchase now." The value of the dollar is only one area where the federal government may play a hand in the way these companies do business. Regulations on the amounts of imports allowed into the country and the tariffs paid on them also can impact mar- kets up or down. One case that's being watched closely by those utilizing ply- wood is the current International Trade Commission's (ITC) review of whether the Chinese are dumping – exporting prod- ucts to other countries and selling them at less than fair market value – hardwood plywood. Similarly, metal importers are keeping an eye on the federal Department of Commerce's review of Section 232 of the Trade Expansion Act that allows the president to set tariffs and import limits if he believes imports are hurting U.S. national security. Currently under scrutiny: Steel. "If the government would invoke the 232 provision on alu- minum, that could have an impact on us," says Robinson. "They could put a surcharge on what we buy off-shore." There are also the current renegotiations going on over the pro- visions of the North American Free Trade Agreement (NAFTA). "We're very interested to see what potential changes could happen there," says Courtney. "Since NAFTA was first adopted, the amount of cross-border traffic has increased exponentially. If there are significant changes, that could really put a damper on it." Because these companies are bringing in materials from overseas, still another factor that might – might – play a role in pricing is freight, and any disruption of the shipping chain, be it a hurricane that hits a major port, such as Houston, or a 2015 strike by truck drivers at the ports of Los Angeles and Long Beach, Calif. An Eye on the View Ahead So, how do these companies keep on top of what's happening with their materials around the globe and how does that impact what shows up on OEM's or supplier's shipping dock? Robert Weed Plywood's Courtney says one of his goals is to maintain a steady inventory. "You have to sell what you buy," he observes. "If we buy it, we must sell it, so it's important to maintain the correct inven- tory to support our manufacturing activities." To do that, he spends a lot of time forecasting expected demand, which in turn drives targeted inventory levels while considering other factors, such as transit times. And, to do that, he works closely with the firm's major customers. "The more we can get integrated with our customers, the better the information flow is," Courtney observes. "The better the information flow, the more we know what the consumer demand is and the OEM demand, the better we can plan for our supply chain, and the more reactive and flexible we can be." Postle's Robinson says some of his OEM customers will set their pricing for an entire calendar year, and then ask the company to do the same. "That way, no matter what the commodity market does, their bills will not be impacted," he says. "A lot of different manufacturers do that." Robinson says it helps that his company tries to carry an inven-

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