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Sweeper Broom Raw Materials Hit All-Time High |
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April 20, 2010 Industry Update on Raw Materials Pricing for Brooms and Brushes
In April of 2010 the raw material for sweeper brooms and brushes was exceeding its all-time wholesale pricing high.by Ranger Kidwell-Ross Polypropylene homopolymer is the basic raw material used in most sweeper brooms and brushes. The cost of your curb and main brooms is largely dependent upon the price of the raw materials used to make them. Because the wholesale cost of those raw materials have increased 105% in the last year, sweeper main brooms and side brooms are now approaching or exceeding their historical cost. According to the April 13th edition of the weekly newsletter produced by The Plastics Exchange, LLC, "After taking a total of $.15/lb of increases during the first quarter of 2010, polypropylene buyers were facing the steepest increase of the year in April. With the April increase priced into new contract resin purchases, polypropylene prices are nearing the all-time highs seen in the aftermath of the 2008 hurricanes. "This time around feels very different as consumer demand is still suffering while the economy tries to recover. As such, many processors have had difficulty passing their rising resin costs downstream to their customers; some have faced reduced sales while others have lost product lines altogether. (April price increases) will actually translate to the largest polypropylene price increase for the year. ...it seems that polypropylene prices will remain elevated for the near-term." The initial impetus for this story came from Jack Moran, of Keystone Sweeper Brushes. Jack said he wanted to make sure those in sweeping were aware of the many upward pricing pressures his industry has been faced with throughout the last year and longer, and that the upward pricing curve currently shows no signs of abating. "Everyone in the brush manufacturing industry is being hit with the same factors," said Moran. "The only way any broom supplier won't have had a number of significant price increases in the last year is if they didn't have their eye on the ball. In addition to raw materials, all of us are being hit by major increases in other sectors like shipping and production costs, as well. "The important message for those using curb and main brooms is to keep track of those rising consumable costs and be sure to pass them on in bidding and pricing. With more than a doubling of raw material costs in the last year, not to mention all the other production factor increases, unless our industry purchasers account for them they may get into financial trouble. Municipalities will find their sweeper consumable budgets aren't large enough to get them through their budget cycle. For contractors, who have been faced with shrinking margins anyway, not passing those costs along may be the difference between making a profit or not. "The natural tendency during rising prices is, of course, to shop around. If you do that, however, be certain you're comparing the same quality, bristle count and other features between broom products sold by the different vendors. For longevity and good performance, those are factors that definitely make a difference in long run cost." For those in sweeping, one of the questions is "Should I buy large quantities of brooms now before they get even more expensive?" Unfortunately, the answer is not clear, especially in light of the large amount of space brooms take up in storage. Mark Kinter, Technical Consultant with Elgin, offers another insight. "With prices going up so much, there might be a temptation to buy 'cut rate' products in order to save money. However, that's typically not what actually occurs. Whereas a top line main broom should last for about 120 hours, a second-rate alternative might only last for 80 hours. "Especially with current raw material pricing at historic highs, I would encourage municipalities and contractors alike to track cost per hour of usage of their main and side brooms. Compare those numbers with any vendors used. That's the only way to determine the broom choices that provide the best value. "Contractors, especially, need to keep track of this cost per hour figure for another reason: keeping a handle on their variable expenses. Main brooms are one of the primary wear items on a broom sweeper. When main broom replacement costs go up significantly, that factor needs to be included in bidding strategy." 
To better put this story into perspective, I had a conversation with Michael Greenberg, CEO of The Plastics Exchange. Among other questions, I asked him if those in power sweeping should consider stockpiling brooms. Perhaps not surprisingly, Greenberg was non-committal on that topic. The fact is, the last time these record-setting levels were reached there was a subsequent drop of about 40%. You can see that drop reflected in the long-range chart in the animated graphic shown to the right. However, for the short term, the industry had to absorb an additional $.15/lb increase in pricing in April with currently no end to price increases on the horizon. Greenberg stressed the importance of vendors treating purchase of their polypropylene raw materials as a commodity. This means the relative pricing between wholesale polypropylene vendors is so volatile that significant shopping needs to be done by broom suppliers to ensure they are not charged higher than current market pricing. This implies there may be quite a variation in retail broom pricing, as well. 
Want to know more on this topic? To listen to a 7.5-minute audio interview with Michael Greenberg, CEO of The Plastics Exchange, click on the 'play triangle' in the audio player shown below. Note: The audio will play without downloading any files onto your computer. If you hear the interview at 'chipmunk speed,' you will need to download the latest version of Adobe's free Flash player. Note: If the player embedded above does not operate for your browser, click here to play the audio. If you'd like to contact Michael Greenberg's organization, call 312.202.0002. The company's website, where you can sign up to be on their newsletter email list, is www.ThePlasticsExchange.com. Finally, here is a link to the company's newsletter that was received by subscribers on April 13th. If you have a question or comment about this article, please let us know. If appropriate, we'll add it to the bottom of this page. |
 © 2010 World Sweeper
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