Steady business and thinning reserves across lumber supply lines halted the falling market and set it back on an upward trajectory, but thankfully only to a small degree. Concerns over which direction the economy may take made for cautious buyers (who wouldn’t venture beyond near-term needs) and reserved production from the mills, who withheld from producing any more than enough to meet immediate demand. The restraint on both sides helped to temper any extreme gains in pricing, but many mills have now closed up shop for a week or more to retool and business has been steady enough that dealers have had to turn to buying from distributors for anything they need quickly, paying higher prices, and taking what they get (and not necessary what they want) in the process. Although buying from distributors at higher prices is never a first option, dealers often have no choice until mills go back online, produce, and ship, none of which happens overnight. Nonetheless, August is typically a quiet month for sales on Cape Cod and, although it has been an active summer, it’s relaxed as compared to the pace of spring and fall business. As we head towards September, the demand for construction materials is usually slow to build but there is good optimism that it will be a busy season. In the meantime, prices have firmed and are slowly edging higher, but not at any rate that should be alarming. For August, we anticipate that pricing will continue to be firm and tick upwards until mills come back on line, work through their order files and build some surplus.
Volatility in the supply chain (coupled with inflation) has wreaked havoc on price levels for all building materials in recent years, at times making it very difficult to distinguish the differences of similar items when looking at price alone. This applies particularly to lumber items, which can be nearly impossible to compare against each other when you don’t have the luxury of seeing them in person. Interestingly, some dealers choose to lead with quality or service as their leading attribute for selling lumber, whereas others choose to lead on price. As consumers, we want all three to our best advantage and highest degree possible, but we rarely (if ever) are able to enjoy that trifecta. Why wouldn’t a dealer be able to provide all three attributes simultaneously: quality, service, and price? The answer is that it is unattainable, meaning that one attribute will always suffer at the hands of the other two. In this example of an “unattainable triangle”, the theory at hand is that any business that makes the claim to be able to offer all three will soon disappoint as it is inherently impossible to operate a profitable business that can simultaneously be good (quality), fast (service) and cheap (price). However, is that really true? Comparing prices from different suppliers prior to placing your order is the path of least resistance. Hard numbers are easy to work with, unlike the intangible service or ambiguous quality. But if you choose to buy from the lesser-priced option, you know that you will be forfeiting either quality or service and a deficit of either one will certainly cost you money in other ways. The trouble here is not knowing how much it will cost you if, for instance, you can’t use the lumber you’ve been shipped because of poor quality or your crew can’t start on time because your scheduled delivery didn’t arrive or was wrong. You can calculate the value of material that is unusable and you can also calculate time lost on the job (and, with today’s wages, it won’t take long for that to add up), but can you also put a price on your own wasted time dealing with the aggravation of having to do things twice? Either way or with any option, the cost often exceeds the perceived savings when choosing the supplier with the cheaper price. There is a wise saying that the Spanish use, “lo barato sale caro”, which means that “the cheap comes out expensive”. When you see a price that seems inordinately low, consider the sacrifices to quality and service that you may be making that will inevitably cost you more in the end.
We can assure you that we stand behind our products and work to the best of our ability to provide you with quality products, exceptional service, and competitive prices. The lumber business is an aggressive one, and we all need to be on point to be sharp with our prices in order to compete. We are proud to now have 44 years under our belt in proving our worth in this marketplace by successfully selling competitively priced, quality building materials with exceptional service. Thank you for your business!
Example of an Unattainable Triangle (courtesy of www.theifod.com):
