TED Magazine - May 2017

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? ;