For the past two years, we have endeavored to provide frequent and transparent communication with you as together we have navigated through extreme global challenges. In the three weeks that have passed since my last communique that expressed cautious optimism, the world has been shaken by yet another crisis that, in addition to stirring our hearts with humanitarian concern, is causing disruption in the supply chain and greater market uncertainty.
Below is a link to a notification letter from one of our largest aluminum suppliers which provides a more detailed explanation of the immediate and potential long-term impacts of this new crisis for your review. It cites March aluminum pricing, according to the Platts Previous Month Midwest Average has increased 23% from January.
It is important to note that, in most cases, Arch-Fab does not lock in its raw materials pricing until the date of shipment which can be 6-12 months from award. Below, I outline what we are doing, what you can do, and how we move forward together.
What Are We Doing?
- We are being proactive and transparent in our communication with you.
- We have narrowed our focus by eliminating outside powder coating and discontinuing service work to direct the entirety of our energy to serving our core business and you, our core customers.
- We continue to increase our raw materials inventory to all-time levels in order to protect your project budgets and timelines. Our current inventory levels are 3x as much as this time last year.
What Can You Do?
- Submit subcontracts, color selections, and confirm the scope of work within 2 weeks of formal notification of award and be executed by both parties within 30 days of award. Delays may require re-pricing.
- Ensure timely processing and payment of pay applications for stored materials.
- Commit to increased communication and cooperation between project management and onsite teams and comply with reasonable requests for accommodations as the need arises or as opportunities present themselves. Examples include onsite storage or reduced mobilizations to maximize onsite efficiency.
How Do We Move Forward?
- There will be impacts resulting from this newest situation and we are committed to being transparent and responsive with you going forward.
- We will do everything we can to hold our pricing, as stated on our quotes, for 30 days. However, please contact us to confirm your pricing before you award us or lock-in with ownership.
We pray for a successful resolution to the crisis in Ukraine and that we become more unified as a world community and as business partners. Please don’t hesitate to contact us with any questions or concerns. We are in this together!
Regards,
Philip Klement
Vice President of Preconstruction
