Deja Vu?

Here we are again updating you all with all the problems we are battling across the industry. I want to thank the ones who have stayed with us this long. We know this can get old hearing more doom and gloom over and over… and over. But we feel like we owe this to our customer base to alert them of things that are on the horizon to hopefully prepare them for what is coming and to keep their business moving in the right direction.

For those who have reached out and thanked us or stopped in to thank us. It means a lot. We do not want to be the doom and gloom guys but what we are facing is unprecedented. We have aligned ourselves for over 33 years with strategic partners and allies to help us in these times. We do that not only for ourselves but for you too. Bear with us. We are not here to crush your dreams, just educate and inform the best we can.

If at anytime you ask yourself why we are in this situation or do not remember why we are struggling with inventory, please go back and read our previous posts. Workforce, COVID, material shortage, shipping, etc.

Flex continues to be a HUGE problem. I do not know where other distributors stand but when we are getting a truck in, we are fulfilling about 45-60 orders in backorders that day. Immediately knocking our flex inventory down about 30%. This is not good. We are getting a truck every 35 business days on average. We can not maintain our normal flex business at those times. Now we have every contractor with a KY License in our parking lot every day waiting on flex. We just can not keep up. If you have been a loyal Best Choice customer of ours you have my word, WE ARE PROTECTING YOUR INVENTORY TO THE BEST OF OUR ABILITIES. But at the end of the day, we are out of flex. We can not keep up.

Refrigerant is still on the rise. R22 is a problem purchasing. Alternatives will be mandatory before this is all over. Get familiar with R22 Alternatives. You will be forced to use them. Cost seems to be rising into Q4 on all as of now.

Line sets lead time is getting a little better. Copper price is increasing of course but the lead times seem to be reducing some. And when we say lead times are better, we are talking about 10 weeks instead of 16 weeks.

Metal FOR NOW is ok. We are experiencing another price increase on metal, between 15-20%. If you are keeping score this is the 3rd price increase on metal this year.

Equipment will be an issue also. There is no specific item, but we are going to have issues moving forward. Coils seem to be the biggest issue, but all items are struggling.

So more of the same really. Unless we go back to 2020, which would be just like 2021 to do.

COVID cases are on the rise again. The CDC is coming out with more guidelines seemingly every day. Politicians are arguing daily over COVID like its January 2020 all over again. We do not have a crystal ball and we are not going to DARE guess what these elected officials are going to do next. But do not be surprised if the remainder of 2021 looks a lot like the beginning of 2020.

We are preparing our PPE and COVID protocols for the day they put us back in Q1-Q2 2020 lockdowns. We hope this doesn’t happen because this caused a lot of pain on all of us with the restrictions, rules, material etc. But every day we seem to be getting closer to that and we are preparing for that in case we do.

Although the lockdown worries us, extending the unemployment benefits and all that comes with them is what really worries us. The only silver lining we can think of is sales should be slowly trending down the remainder of the year. But we need people back in the workforce. Locking down the economy will have negative effects if done again.

One benefit that was not extended was the eviction moratorium. Starting Sunday August 1st rent, and back rent is officially due in many states. New York, New Jersey, Maryland, Illinois, California, and Washington D.C. have their own Eviction Moratorium that will expire later this year.

This could be the catalyst for more benefits. We will have to pay close attention to how all of this plays out.

As of today, most manufacturers are seeing these issues continue until at least Q3 of 2022. For you that means any projects you have planned during that time really need a good look. START HAVING CONVERSATIONS NOW. You will not be able to complete projects like you have been in the past. You will not have the material, people, prices have increased. Please think about what you are doing.

Speaking of price increases, we STILL have customers that have not raised prices this year. No, raising your price 5% is not enough. It is not our business to tell you how to run it. But a lot of you probably have been busy this year. Probably working a lot of hours. Some may have higher sales numbers than ever. And you will make less than you ever have because you have not raised pricing. Distributors have had quarterly price increases. We normally get ONE annual increase in the 5-8%. Now we get them every quarter, with double digit increases. Your business can not absorb that.

Every builder in the world is having issues with shortages. Every material on the job site is up this year. They know about price increases. Homeowners know about price increases. They buy gas and groceries. What message are you sending to people if you have not raised your prices and weekly the Federal Reserve has a meeting with the American people trying to convince them we are not in a runaway inflation problem. Please protect your business and your family.

To summarize, material is still a MAJOR issue. It will be hard to complete jobs for at least another rolling 12 months. Unless something major happens or the economy breaks. Which we will take the demand being there. We do not want a 2008 again.

COVID is making a run and getting politicians all worked again. This could lead to more of the same we had in early 2020. This could extend benefits and create issues for all of us. It could not. Just pay attention and be prepared.

Prices are rising again. And will continue to raise into Q1 2022. Please monitor your costs and labor in your business.

As always please reach out to us with any questions, comments, or concerns. We are here to help any way we can. Thank you!