How producers, manufacturers are managing inflation

WILL PIERCE (SCHURCO SLURRY): I have one specific example that shocked me, and then as I kind of adjusted to it, I realized what I believe may be happening. We had one particular input to our product that, year over year, had a price increase of 37 percent, on average. That was amazing to me. And it was not like a $4 O-ring. It was a very expensive component that we were putting with our pumps. I thought for sure we would have an incredible pushback initially. When we went out and continued to sell these products packaged with our pumps, there was no issue at all. It was a necessary thing.

Everyone is still operating. Everyone is still producing. They’re buying. They are accommodating price changes.

What I realized, at least personally, is there’s a rising tide. We’re all on this same price structure together all over the whole world, and the tide is rising – and it’s rising very fast. If the ship has holes in it where maybe there’s a lot more water getting in, you’re going to find out quicker than most. But if you have a solid ship in the first place, your ship is rising with that tide.

MARK KRAUSE (MCLANAHAN CORP.): I have a little different perspective when I talk about the price changes. As an industry, I think we’ll manage through this. We’ve managed through other things. Right now, we have the demand. As long as we have the demand, we’ll be fine.

To me it’s more [about] John Q. Public. We came out of COVID, and everybody had money in their savings account because they didn’t travel; they didn’t do things. So they had money to go do things. Now, going forward, they don’t have that cash in the savings account anymore. The price to fill up your tank or book an airplane ticket is expensive. So my worry is we’re going to – from the consumer’s standpoint – fall into that recession-type thing where, as an industry, I’m not as worried about it. I’m just more worried on the personal side [with] my kids and all that. That’s more where I think we’re going to see the effects of inflation.

CORY DANNER (ARCOSA AGGREGATES): Kind of back to what Scott was talking about with the ability to pass the cost increase onto customers and raise prices: We’ve certainly experienced that. And it sounds like a lot of people in this room have, as well.

Our team has been focused on ways to mitigate that. Think about all the innovation that’s going to come out of the increase in profits. Like, where do you trim some fat in your organization?

For us, as a producer, diesel is probably one of our most expensive inputs. It’s gone from sub-$2 during the pandemic to a level of $4 right now. That aligns with our ESG (environmental, social and governance) goals – not because it’s a politically charged thing to do, but if for every gallon you can cut out of your business you’re saving $4? That unlocks the door to invest in more electrical ideas or maybe go after a different way of producing materials that cuts some of that diesel demand out of your business to control your costs. Innovation is going to be a way to get out of this. To limit inflation, we all have to do our part.

PAUL ROSS (DOUGLAS MANUFACTURING CO.): I think the key to that is reinvesting in your own company – and we’re doing that. Probably everybody in this room is doing that to gain those efficiencies because you can justify it now. Now, we have to get more bang for our buck. That’s critical in managing.

You can’t avoid the impact of inflation on your business. You have to pass on price increases. But mitigation is a great word. You want to control that to a level you can control it, and that’s about becoming better at what you do. We should all be focused on that every day.

CURTIS LEDERLE (TREAD TECHNOLOGIES): As someone who provides a cloud-based task technology, I maybe have a little bit of a unique perspective as kind of a technologist guru. But we’re seeing over the last two years a dramatic change in the attitude of people in their chain of management within the organizations. In terms of what is the biggest challenge of the industry? From where we sit, it’s resistance to change.

I think we’re in an environment that requires folks to change. Billion-dollar companies that are used to doing business on paper are now saying: ‘OK, I’ve got to get more out of the trucks that I have.’ I’m talking to folks who are literally going to Europe to buy trucks for a year or two now.

One of the phrases I often use that lands well with folks is saying: ‘Hey, you know more about a pizza being delivered to your house than you do about the material that you’re managing.’ That kind of lights people up.

KRISTEN RANDALL (HAVER & BOECKER NIAGARA): We traditionally have kept our supply primarily in North America. That’s always been important to us. But even more so, we’ve tried to be really local with it. Most of our suppliers are within a three- or four-hour’s drive of our manufacturing plant. That not only helps you build a really good relationship, but you can actually go visit them. Plus, with transportation costs being astronomical, that has really helped.

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