Surcharges and Material Costs

Transparency on pricing and market volatility

Storflex Holdings Inc


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How and when surcharges are calculated

  • Prices have steadily increased over the last year and show no sign of plateauing in the immediate future.
    • Steel mills and intermediaries site increased demand, difficult labor market, commodity shortages and COVID
  • Increased demand in a number of sectors continue to push steel prices up and have most mills working at, or near capacity.
  • Steel prices started to climb in September of 2020. The chart to the left shows the climb.
    • Cold rolled steel is the predominate commodity used in shelving and has increased in price 225% through August of 2021 according to the CRU

Cost of Raw Material Affects the Customers Price

  • Our steel suppliers final price is based on the CRU at time of delivery in Corning NY, not the purchase date. This is a major pricing and strategy shift by suppliers of steel.
  • Mills will no longer just take an order for any volume, long term purchase orders are a must for end product supply.
  • Steel suppliers lead-time is being quoted at 10-12 weeks however, on average delivery is 4 weeks longer than quoted.
  • There is almost no spot metal market for unplanned demand.
  • Storflex is buying 16-20 weeks ahead of customer demand. Prices continue to increase during the 4 months creating the need to adjust our surcharge to cover our increased cost.
  • Lead times for processing products on the production floor hasn't actually changed. We routinely find ourselves receiving metal and shipping it out to customers within days.
  • Lead-times are extended based on a few items:
        • The order flow has outstripped the capacity of raw materials, limited labor resources, equipment for processing, and transportation (both inbound and outbound)
    • Metal suppliers quote 16 weeks and our lead-time to our customers are generally 19-20.
    • The industry at large is struggling with material availability. The material issues seem to be with all suppliers for the foreseeable future:
      • We are limiting the number of specialty products on the production floor
      • Limiting colors to help us do longer runs
      • Limiting sizes to help maximize raw material and limit scrap
    • Hiring more people:
      • We have increased our staff by 50% since the beginning of 2021. Started additional shifts and increased pay to attract more staff.
    • Storflex is adding more equipment and automation to the production process.
      • These actions don't have an immediate impact as equipment lead-times are 12-14 months
    • Transportation has been an issue to secure inbound material and shipped finished products to customers.
      • We have engaged a series of additional carriers as well as replacements for poorly performing

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Balancing Availability and Price

We are often asked can I get product sooner and what is the easiest to get?

The three biggest things customers can do to help delivery:

  • Limit the amount of process steps:
    • Shelves without perforations eliminates both people and machine steps.
    • Limit the number of colors to the 4 highest volume of white, black, almond and gray.
    • Custom products that require hand welding require skilled labor which is challenging to find and keep. Limit as much as possible.
  • Limit run sizes and nonstandard items as much as possible:
    • 3' and 4' runs are the most common
  • Allow ease of shipment and packing:
    • Customers that allow us to consolidate their shipments to a central location help us build ahead and give us the ability to build and ship multiple orders at one time.
    • Don't complicate the requests for special delivery, packaging or shipping instructions.

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Customers Frequency Asked Questions