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DarisMulkin

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On another board I'm on a couple people posted that they were paying $50-$60 per box for strip. I didn't believe it, so I called my supply house and asked them how much it was here. Here goes:
Tri tack wood-$43.69
Reg wood-$42.99
Reg concrete $43.09
What is it in your area? He said it was all due to shipping. I presume meaning importing from you know where.
 

Floorist

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I can remember it being around $10. We had a tack strip factory here back in the 80s. Silver, of Silverline Industries lived 10 miles from here for many years.
 

highup

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I haven't checked in a while. I'm guessing mid 40's for 1inch wood strip.
 
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So, here's the deal...

Over the past two years Traxx has been quietly buying multiple companies and consolidating both tackstrip and underlayment manufacturing. They own the majority of the market here in the U.S. and they sell under multiple brand names. The plywood that is used for the manufacture of stip is imported by them. About September of last year they instituted what they refer to as an "Oceanic freight surcharge" on several of their products including strip and underlayment. The way they are working it is they start with a base charge. Let's say for example that the base charge is .50 / carton of strip. Each week they evaluate their incoming oceanic freight costs and they publish a "multiplier" which is a factor to multiply the base charge by for any material that you purchase that week. In December this "multiplier was roughly stable at around 8 or 9. It's currently at 14 and rising. It's been as high as 24. Now if you do the match that's currently adding $7.00 - $7.50 per carton just in freight cost.

This is all a direct result of oceanic shipping companies playing all kinds of games. About 14 months ago they started increasing their "container retention charge" which is a fee on top of the actual freight and other fees that guarantees that a container will be available at the port where the purchaser is moving their material from. This charge prior to the pandemic was roughly $800.00 to $1000.00 per container. During the past 18 months it's been as high as $24,000 per container. Again, that does not include the actual freight, port fees, applicable import taxes or anything else that goes into importing a product. Those charges started to drop in the 3rd quarter last year and then began rising again and have continued to rise or stay flat over the past six months.

This also doesn't include the domestic ground freight charges which have gone through the roof due to inflation and the rising cost of fuel.

In addition, lumber began rising again and has continued to rise over the last several months. So the actual cost of the strip itself is up roughly 40% over the past 14 months or so.

It is starting to impact the box stores as the ones closest to me are well over $50.00 per carton and continue to increase and that's IF you can get product. There are still allocations on underlayment / plywood.

The real problem with this weekly "check with me" costing is at some point, we as suppliers are going to get stuck when the price starts dropping because if you're cost is that high when you buy and the price drops you're stuck with a bunch of overpriced strip that isn't competitive and won't sell. This is one reason it's getting harder to find because no one wants to buy a bunch of strip and then sit on it if the price falls out.

Beside strip and underlayment these same "Oceanic Freight Surcharges" are also impacting - Blades (Traxx now owns Personna), staples, and seam tape. You can also bet that the other vendors are watching this closely and will do something similar to increase profits. It's a copycat world right wrong or indifferent!

We're also having issues with cement board being on allocation, PVC resins are still creating production delays with sheet vinyl and laminate. We've recently started to see raw material allocations and shortages affecting wall base and flooring transitions. LVT hasn't been as impacted as some of the other flooring categories with regards to raw materials but decor film (no one makes film in the U.S.) and oceanic shipping costs and delays have been the big issues with the category. Wood flooring is fairly readily available but the costs have skyrocketed more than any other category. In many cases pricing has more than doubles the past 24 months. Carpet cushion and anything else made with foam such as foam board (Kerdi board, Wedi Board, Laticrete's Hydroban board are also being impacted by raw materials allocations and have been difficult to get.

It's certainly one of the most challenging and volatile times I've experienced in 27 years of distribution. It's beginning to impact businesses at ourlevel and drive people to close or be "consolidated" by one of the larger chains. It'll be interesting to see who is left standing when things begin to settle out. At any rate, now you know the other side of the story. ;) :)
 

highup

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Wish there was a way to stop monopolies. There should be no such thing as three companies owning everything in the world.
 
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It’s pretty hard for them not to increase the pricing though when the ocean freight companies are charging more than the cost of the product in the container just to retain the container. Most of them are owned outside the U.S. so there isn’t much regulatory control for price gouging.
 
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Trust me when I say that there a lot of people in our industry questioning producing overseas. The pandemic has exposed the vulnerability we're in. But back when the President imposed the tarrifs on China (which are, for the most part still in play) there were many in the flooring industry who banded together to plead hardship that the U.S. simply doesn't have the raw material infrastructure in place to support building some of the products here. They were asking for delays in implementing the tariffs so that they could adjust their business models to either begin producing here. As a result, there was one level of tariff that was rolled back. Many companies are making moves to produce product here. However, especially with PVC resins, they simply cannot get the raw materials to keep up with the demand. Keep in mind, that when Texas had their power grid fail this greatly impacted domestic availability of all of the oil derivative products - like PVC resins that are necessary for production here. To further complicate things of the 3 or 4 major domestic producers of PVC resins all of which are located in Texas, two were damaged by hurricanes following the power grid failure and a 3rd had a massive fire that wiped out nearly all of their production capability. These are not things that just get fixed overnight. As a result typical lead times on domestically produced products are still being extended 2 to 3 times normal.

Then you throw in some vendors in the supply chain who have figured out ways to bottleneck things and charge more and you have the present mess we're in right now. It's literally pushing people out of business. You can't get decent help unless you're willing to pay above market value for them and you've got many older workers who are just saying "enough is enough" and retiring or leaving the work force or taking the opportunity to explore something different. Higher wages, higher insurance costs, higher benefit costs, higher freight, higher product costs and here we all are trying to figure out how strip got to be $50.00 per box. :)

One of the biggest challenges that I've seen is child care. If you have employees that have children that need care outside of the home then it's a fortune right now and that's IF you can even find somewhere that will take them. It's nothing to spend $200 + / week for licensed reputable child care. Especially if it's an infant. As a result many women are deciding they will just stay home and take care of the kid and try to find a job working online from home. Between the "Great Resignation" and the child care issue - there are your major reasons for workers shortages right there.
 
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It's even worse when the paper money isn't backed by any resources other than faith.

It's interesting to me how so many "expert" people get the basics of economics so wrong. You listen to so many of the politicians, news media, and "talking heads" on both sides today and it's as though they never even read a book on the subject.

We were made to read this in high school:

Amazon.com: The Wealth of Nations eBook : Smith, Adam: Kindle Store

Best book on the subject and it was written over 200 years ago. It's a little antiquated in language but you can find versions in modern English as well. I recommend it to anyone who wants a good basic understanding of macro-economics without any political leanings one way or the other on the subject. If you use it as a framework when you're trying to make sense of the complexities of today's economics, it helps to simplify things down quite a bit.
 

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