Metals on the Rise, Boom or Bust for Your Company?
Once again metal prices, particularly copper and aluminum, are making a surge on the world market. To say the least this is a mixed blessing. For the end consumer it means that, once again their buying power will be reduced. For us working in the electrical industry it means opportunity as well as a pitfall.
The hazard that this trend presents is increased cost of our most basic supplies (wire, cable, wire nuts, etc.) but that isn’t necessarily a bad thing. Yes, it normally will cause a drop in demand but it also presents an opportunity to actually increase profit. Think I’m crazy, keep reading. I’ll prove it.
Markup Your Materials
One of the things that has always baffled me is how many contractors are shy about adding a markup to the materials they supply to a customer. In any other business this is automatic and should be in yours also. This trend is shifting but not fast enough. As a contractor or even an independent electrician you are buying in quantities that are much larger than your clients. You are naturally buying at a lower price than is available to them. This is your advantage. Even if you add just 10 percent to the price, you have increased your profit margin.
Your Time Is Worth $$$
There is no reason you should not markup what you supply. You’re not just supplying wire. You are supplying the time and effort that has made you able to supply wire of the best quality at the lowest price by virtue of your increased buying power and years of building relationships with your suppliers. Even with you adding a few pennies you should be able to beat any price they can find on their own. As my Granddad taught me “pennies make dollars” and by the foot the pennies add up fast.
Use Recycling to Your Advantage
The other bright side to higher metal prices is that recycling becomes more viable in your business. Many states now require contractors, by law, to have a recycling plan. Even if your state doesn’t it is good marketing to be able to tell clients you are a “Green Company” and show them the effort you put into recycling your scrap and leaving their job site neat and tidy. This is actually something they can pass along in their own marketing by telling people they hire contractors that have gone Green. Be sure to add this to your Bid Proposals it really does look good.
Of course to make recycling work you have to have your crews behind you. You can use the recycling income to increase your bottom line or you can use it as an incentive to keep your people happy or I suggest both.
One friend of mine with a smaller company (10-25 employees) splits the funds from recycling down the middle with his workers. This increases his people’s desire to make sure all the scrap gets collected and prepped for the scrap yard. Some other ideas I’ve seen are using the money from recycling to fund company parties or even a company sponsored trip for the workers.
What will work for you; will depend on the size of your company, the number of your employees, and the amount of scrap your company generates. I will add a word of caution here; watch how your program affects your waste generation. It is easy to trim an extra few inches from every connection if your people know there is profit in it for them and this can get out of control.