Analysis: Dan Payne @USARugby CEO Q&A. $1MM Revenue Shortfall?? 9

Payne discussed a $1MM revenue shortfall we will see in 2017 vs 2016 due to Brexit;  I assume it’s the cratering of the Pound Sterling vs. the US Dollar (i.e. from $1.50 t0 approx. $1.228 where it sits today), as well as a loss of a grant from World Rugby.
My comment to this is, “It’s business, and we better figure out a way to find that $1MM and more if we want to grow this game”.  What I heard is we have a budgetary shortfall from 2016 to 2017 of over $1MM and it will not be replaced. More…

Chemical Shortages (Getting Shorter and Shorter!) 7

I started in the chemical industry in 1988.  Anyone long enough in the tooth to remember that time (pre-email, about 50% of companies had fax machines) will recall the product shortage that ruled the day was Titanium DiOxide (Tio2).  List price at that time for the standard Dupont R-900 grade was about $1.00/lb, and the first deal I ever put together was with a great guy, still in the business – Warren P.  We bought a truckload (40,000 lbs) at $1.50/lb FOB and sold it at $1.60/lb FOB to a company called GoldBond Products in Sumter, SC.  There were two very nice ladies in the purchasing department that must have felt sorry for me or something –  I really didn’t know what I was doing at the time, but they placed a purchase order nonetheless.  At that stage of my professional life (fresh out of the Army, 27 years old and about 4 months in the business), I didn’t have $60,000 to fund the deal; Warren funded it, and we split the $0.10/lb profit.  About 30 days later when GoldBond paid Warren, he sent me a check for $2,000.  This was the greatest day of my life to that point.  I was hooked.

https://tonyridnell.files.wordpress.com/2014/04/63f74-supply_and_demand.jpg

It seemed like that shortage lasted many months.  If you are under 35 years old, it must be impossible to imagine not having email to transfer offers and specs/analysis by attachment. In the late ‘80’s the fax machine was just reaching the ‘tipping point’ of adoption. The physical act of communicating information to suppliers and potential buyers was comparatively done at a snail’s pace and the entire process of conducting commerce exponentially less efficient than it is today.  To a chemical trader, ‘those were the days’.  No really, they were. I talk to some old timers in the business about the Oil Shortages of 1973 (arguably the year that the chemical trading business started), and they talk of those shortages as the true ‘gold rush’ of our industry.

Ascorbic Acid:

Since that time I’ve seen numerous shortages with various lifespans and degrees.  The Chinese ‘cartel’ of Ascorbic Acid (aka Vitamin C) manufacturers appear to create a shortage every 3-5 years, moving prices from $3/kg to over $20/kg in one case.  That’s fun on the way up, and can be very dangerous on the way back down to $3.  The phrase ‘don’t try and catch a falling knife’ is in play on shortages such as these.  It took weeks (months?) for the price to rise 6-fold, and literally one week for the price to drop a similar amount.  Multiplying the dollar amount times 20,000 kgs per container – a lot of money can be made or lost.  I know of one company that actually made over $100,000 on each of two containers (as the price rose), and having not followed the age old principal of ‘take your first loss, it’s the best loss’ held on too long the final container and literally gave back all the profit made on the first two.  A loss of $200,000+ on one container!  It’s only money, right?

MEK:

Other shortages have included products like Methyl Ethyl Ketone (MEK);this product used as a cleaning solvent in high end electronics became very short after the horrible aftermath of the Japanese Tsunami several years ago. An MEK plant in Japan (designed specifically to service the high tech industry in Japan) was knocked out and the likes of Sony, Sharp, etc… were forced to buy MEK on the open global spot market.  That shortage lasted about 3-4 weeks.

Purified IsoPhthalic Acid:

Fast forward to just a few weeks ago when the major USA manufacturer of Purified IsoPhthalic Acid (PIA) announced o/a March 1 that their plant would be out of commission until mid-late April at the earliest. Common sense thinking would assume this shortage would last several weeks.   ‘Back in the day’ we would be chomping at the bit, salivating over the import opportunities that could come from Taiwan, Korea, etc… for PIA.  Reality is that this ‘shortage’ literally lasted 2-3 days for the spot market to be open and shut.  Emails flew around the world, international text messaging ramped up, and new communication Apps like ‘WhatsApp’ allowed instantaneous communication from mobile device to mobile device transcending former barriers such as time zones.  Users of PIA placed orders in 2-3 days to cover the next 6-8 weeks of shipments (including one container I know of that was air freighted from Korea!), and the ‘shortage’ was over.

As anyone who participates in these shortages knows, it can be alot of ‘fun’, and very rewarding to assist company’s & customers who need to find product to keep their plants up and running. Those same people will recognize the many sleepless nights of owning product at well over market prices, and the fear of selling in a market that is ‘the falling knife’.

Technology continues to change and evolve our industry.  It’s exciting; fast and furious,  and creates the need for the occasional ‘all-nighter’.  And until the next ‘shortage’, its back to the daily grind…chemical distribution the old fashioned way.  Bags, drums, pallets and truckloads at a time.

Share your ‘shortage’ stories!

Chemicals: Why must we defend our chosen profession? 11

Have you ever been in a social setting and someone asks what you do for a living? You pop up your chest, stand a little straighter and reply ‘I’m in the Chemical Business’. Or, do you actually stand up straighter?  Rather you might temper your answer depending on the audience.

I imagine the chemical industry is celebrated in places like Houston, Delhi, Antwerp, Singapore, and Shanghai – but in Seattle, there is an audience always ready to malign our chosen profession at any opportunity. Sometimes I am in position at the family dinner table to have to argue (i.e. defend) my positions on things like why the XL Pipeline should cut across Nebraska, and have documented my thoughts on fracking as a necessary technology risk while alternate energies become more viable.

At a convention of the National Association of Chemical Distributors (NACD) a few years ago, I got into a choice discussion with a female guest who spent much of the day roller blading while our group was in sessions.  When she took the time to ask about our business, she came over the top with the usual ‘chemicals are bad’ generalizations and I proceeded to explain to her how chemicals were rooted into her life (products in her hair, makeup, pigments in clothes, textile chemistry, etc..).  The best moment for me was when I focused on the wheels of her roller blades and was able to talk about the reaction of such substances as Isocyanate and Polymer being reacted to create PolyUrethane Resin, basically the entire wheel.  And every time she slid on those wheels, a little slice of this nastiness is released to the environment.  So much for her ‘green’ workout.

A label from a "Bio Organic Detox" Foundation Cosmetic.  Chemicals are everywhere.  It's reality.

A label from a “Bio Organic Detox” Foundation Cosmetic. Chemicals are everywhere. It’s reality.

More…

Email Overwhelm? The Digital Vortex of Time 5

I bought my first personal computer in 1986 in Lawton, OK while at the Field Artillery Officer’s Advanced Course.  The IBM PC Jr. was little more than a word processor, calculator and organizer of digital 3 X 5 cards.  And, it was the coolest thing ever.

The Wonderful IBM PC Jr.

The Wonderful IBM PC Jr.

Fast forward 1994….my first email address…  SomethingSomethingSomething@Compuserve.Com.   For those of you too young to experience going from a world with no email to a world with email, that was something special.  Nothing short of amazing.  Fast forward to 2014… email is amazing alright.  An amazing pain in the … More…

GSP Reinstatement Revisited. It’s painful, and is costing jobs. Get it together Congress!! 2

On December 15, 2013 I posted an article, GSP Reinstatement. Help or Hurt the Chemical Industry?? which reiterated the need for businesses to press Congress to reinstate the General System of Preferences (GSP) and offered ways that companies could make their voices heard. In short, by allowing the GSP to expire, Congress is forcing all importers, small and large to have customs duty preferences revoked without notice or recourse – thus creating unanticipated increase in duties paid, a direct (and completely uncalled for) negative impact to their bottom line.  In a recent post by The Coalition for GSP titled GSP in 2013: Companies Should’ve Saved…Could’ve Hired?, Jeff Wright (Exec VP and CFO of TRInternational, Inc) points out the actual unanticipated loss for his company…the result of which causes our company not to be able to hire 1 or 2 people to spur its growth. Here is the excerpt:

TRInternational, Inc. (TRI), a global wholesaler of industrial chemicals, headquartered in Seattle, is just one of the companies forced to pay higher tariffs because of Congressional inaction. In the 20 years TRI has been in business, it has made the Puget Sound Business Journal’s “Top 100 Fastest Growing Private Businesses in Washington State” list on three separate occasions. Yet the absence of GSP has cost the company more than $50,000 in higher customs duties (as of this writing the amount now approaches $70,000)

As noted by Jeff Wright: “On an annual basis, that’s 1 and 2 new hires that TRI could be employing to help our growing company and the Puget Sound region.”

Surely this is Congressional inaction that must be rectified immediately.   Job Creation.  Stunted.  Seems like a no brainer to me.  Do you agree?   What is the counter argument?

If you feel as strong as I do, and we do at TRInternational, Inc (TRI) please act to support the immediate retroactive renewal of the U.S. General System of Preferences.