Blog posts by John Hattery

Reflecting on Resins

October 03, 2017 by John Hattery

The market for plastics and resins continues to be somewhat confusing, operating under very different market conditions as compared to other raw material commodities. Though resin producers have learned the value of managing capacity to stabilize (and potentially to increase margins), the way they’ve been building up inventories is puzzling, even in the face of steady and increasing demand. The fact that producers were pushing for price increases as of August indicates that they anticipate increasing demand, decreasing capacity, or a combination of both, and have some confidence of realizing higher prices for their products. After Hurricane Harvey, demands for increased pricing have only strengthened as stockpiles are drawn down and infrastructure restarts are slower than hoped for. What can you do to keep up with these continually changing trends? Be responsible for your own defense. The best defense for a small manufacturer is to have multiple sources of resin pre-validated in your manufacturing process and pre-approved by your customers. This allows you to seamlessly shift from one supplier to another if faced with an unpalatable pricing demand. Be prepared to play suppliers against each other to ensure they remain in a reasonable margin band as market conditions vary, and

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Metal Musings

September 26, 2017 by John Hattery

For the past few years, manufacturers have enjoyed declining and advantageous input costs on most commodity industrial metals – copper, zinc, aluminum, iron, tin, steel, etc. The party has most definitely come to an end. As the global economy heats up, demand for industrial metals to supply the manufacturing sector in all markets likewise increases, resulting in a steady upward pressure on raw material input costs. Barring another major economic or geopolitical crisis, we have likely seen the last of a softening commodity market for quite a while, and must prepare for a period of increasing cost pressures. Manufacturers in the USA, particularly small manufacturing enterprises, need to be aware and be taking proactive steps to prevent margin erosion due to negative purchase price variance resulting from these commodity pressures. Know what your metal purchases should cost - be better informed than the salesman across the table from you. Hopefully as a manufacturer you haven’t been a passive, price-taking buyer, or a seller allowing larger customers to dictate how material cost inputs are to be dealt with. Hopefully, you already have indexing agreements in place with both suppliers and customers. Most importantly with suppliers, because without such agreements you have

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Equifax: A Financial Tempest

September 12, 2017 by John Hattery

On the heels of Hurricane Harvey, and as we prepared for Irma, another storm was announced on Sept. 7th, this one a financial typhoon. To make matters worse, this particular tempest was actually discovered way back in early July, and could have begun as early as mid-May. Hackers hit Equifax, the oldest of the three largest credit reporting agencies that gather and maintain financial and personal information on hundreds of millions of consumers, and tens of millions of businesses worldwide. The fact credit reporting agencies monitor consumers is broadly known, but people tend not to consider these agencies’ role monitoring businesses. Though it will be more challenging for hackers to make hay with stolen business information, the fact they now have enough personal information on up to 143 million Americans to easily commit identity theft on an unheard-of scale certainly gives one pause. It doesn’t beggar the imagination to envision some enterprising young hacker cross-referencing troves of stolen consumer and business data to see if there might be anything else interesting to exploit. What might this mean to a worried executive? For a large business, likely somewhat little, so long as they keep a weather eye carefully trained on their

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Hurricane Harvey Hits Here?

September 05, 2017 by John Hattery

Hurricane Harvey hit the Gulf Coast with a vengeance on August 25th, delivering the largest single storm amount of rainfall in the continental USA, ever. We have all seen the devastation and misery inflicted upon the residents of southeast Texas, and our hearts go out to them. If you wish to help fellow Americans in need, make sure you do so effectively and intelligently. See what Consumer Reports or other sources you trust have to say about giving before you break out your checkbook. But once we get past our sympathies, we have to begin to wonder - Will this disaster have any impact on me, or on my business? The answer is yes, most definitely. We are all used to seeing above-average rainfall in parts of the Midwest after a named storm system inflicts its mayhem in the gulf area, then meanders along a northeasterly path toward us. But we should expect more than just rain to fall out as a result of Harvey. The Gulf Coast holds about a third of the nation’s refining capacity, and serves as a critically important nexus of America’s “energy superhighway system.” In normal times, crude comes in, refined products go out, either

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