have concerns with the security of nu- clear fuel supply for now and fully em- braces an international marketplace.” She noted that supply disruptions are much more quickly apparent in the oil industry vs. the uranium mar- ket, in which orders are made three to five years in advance; enriched fuel is typically purchased in 10-year con- tracts. “One of the greatest strengths of nuclear generation is that any given plant only needs to be refueled every 18 to 24 months, and the fuel that is delivered for that refueling has been contracted for and in processing for years,” she added. The lion’s share of that is coming from overseas, and as much as every-
IT’S EASY TO BLAME/ credit President Trump
when reviewing the current
climate of the commodity
markets. The man does know
how to move the needle, and
which way it heads is anyone’s guess. But I’d like to
spend this space discussing
a topic that is of interest to all
of us: how to make money in
an advancing market.
As of this writing, the mar-
kets that most affect our in-
dustry are currently steady,
which is not necessarily a
bad thing. It holds true that
both copper and steel are up
considerably from their 2016
lows. I’d much rather they not
move at all than move down,
but futures on both are still
showing positive, and that is
great news for us.
So when does paying
more for something become a
good thing? When you are the
one selling. John F. Kennedy
famously said, “A rising tide
lifts all boats.” The same
holds true for an electrical
distributorship. I’d much
rather make 10 points on $3
than the same on a $2 item.
It’s easy math to calculate
that is 50% more profit.
A good distributor should
always keep its customers
informed with any uptick in
the market. By helping them
to understand why there is an
increase in goods, they can
relay that information to their
clients as well. Everyone
pays more, and the only one
that loses out is the one holding the final bill.
When tuna values are up,
does his wholesaler, the dis-
tributor, and the grocer. The
only one that feels the pinch
is the hungry consumer. The
system works, but it is very
delicate.
My company sells in
Chicago, which is about as
cutthroat as it gets and is
very much a cable and con-
duit market. With more than
100 different electrical dis-
tributorships in and around
the city, it takes finesse to
make a buck.
When the rare opportunity
arises to make some margin,
almost everyone can cash in
—if it’s done right. Don’t think
the contractor that buys your
pipe is not marking that up
for its client as well. Some
distributors base pricing on
their last buy. If that was in
January, when the market
was 10% lower, they are leaving money on the table.
Whenever possible, sell
stock based on what it’s
worth, not what was paid for
it. Sometimes this is to your
advantage (like right now),
but other times, not so much.
But that’s best practice and
hopefully it results in more
upside than down. Many
moons ago a friend said to
me, “You don’t make any
money selling; you make it on
buying.” It’s solid advice and
I only wish it was shared by
everyone.
Every market has that
one fly in the ointment, how-
ever, whether it’s a big-box
home center or a distributor-
ship that still cuts POs using
paper and pencil. You simply
can’t stop their folly.
A fellow distributor here
in Chicago is often my “fly.” If
he was paying $100 for a purple peanut, he would mark
that up 10%. Often, he leverages his buying power by
stocking up on purple peanuts to pay just $90—while
still marking it up 10%. He
made a smart buy and yet
he is making $11 less with
every sale.
The purple peanut exam-
ple is just one more reason to
keep your clients informed on
why they might be paying
more. You never know when
a purple peanut salesman
will strike. Are you really
making more if your dollars
are worth less? ;
Kevin Reed is director of
purchasing and warehouse
operations at Paramont EO in
Chicago. He can be reached at
info@paramont-eo.com or
844-727-2666.
Profiting in an
Advancing Market
Money is made on buying, not selling.
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