Simple and more complex methods of customer price reductions from Johnson Bros., in today�s market.

August 25, 2009

Hello Everyone,

Thank you for your patience in waiting for another newsletter. I wanted to announce a new plan to help some of you get reduced prices on your orders of more than $10,000.00. From time to time we receive notices of special buys of raw metal coil stock material. We do not know when a notice will be sent with the special priced material which means you may have to wait a while before we receive a notice for special buys. We have received these notifications that are mainly raw cold rolled or hot rolled steel and galvanized and prepainted steel. Occasionally we receive a notice for galvanneal coated steel. From time to time we also get notices on stainless steel but not very often. We almost never receive notices for aluminum. Thickness ranges offered are from .012" thru .150" thickness with the majority of the raw material between these minimum and maximum thicknesses.

The material we may be offered can be: perfectly good prime material, leftover drops from larger master coils, slightly off color prepainted steel, and other distressed material conditions. Distressed conditions may be problems that could slow our production rate down and increase quote pricing, such as: smaller pup coils, cutouts and holes, laminations or constant temper or thickness changes. Some useable distressed conditions that may be seen in the parts after forming are: oil canning wrinkles, ink lettering from a galvanized mill, oil stains from the mill or cross breaks that are still slightly seen after forming. These conditions don’t adversely affect our production speeds or cause higher quote pricing by using them. Another distressed condition may be galvanized, tin plate or painted coatings that may have pinhole bare metal spots on the metal’s coated surface that would allow corrosion to occur quickly. These also do not create slower production and higher prices by using them. Then there are the worst of distressed conditions which many customers would not want such as rust on steel and white rust and red rust on galvanized, black corrosion in the form of dark smudges that come off a Tin Plated and Aluminum surface in varying amounts. These conditions do not adversely affect production as well.

For those customers that don’t require any protective coating on the steel and can even take a poor steel coating or a distressed surface; they are the ones most likely to find a good deal with prices using that material. Customers may also get good deals on prepainted steel colors that are slightly different than they would normally ask for.

It should be known that Johnson Bros does not buy any material other than prime quality for your parts now. We don’t presently consider any offers we get on distressed raw metal coil material available. There are other roll formers that will try to use less than prime quality metal without telling their customer in order to get orders for very low priced parts or extra profit. Johnson Bros. will not use that distressed material unless a customer informs us first; that they don’t need prime material and distressed conditions are acceptable for them that don’t adversely affect our production speed and thus, increase our quoted pricing to them.

If you can place orders whenever a deal for prime or distressed metal comes around which would cause you to hold extra inventory when that happens, there is a good possibility that you will be able to get lower priced roll formed parts from us, using that metal. If good deals on raw material are not available throughout the year, your orders would need to remain as they are now, for normally priced parts. There are more chances that we will not find deals on the metal you use than the chances we will find a deal for you. But, perhaps it can happen and be a big benefit for your company.

If you wish to order your parts whenever a deal for prime conditioned metal may be available, or if you can take distressed material with surface problems that you may or may not see on the surface after our forming, you need to inform our salesmen. Once you inform our salesmen, our salesmen will let us know and our buyer will keep that record for your raw material needed, and many of us will check for special metal deals as we get them and let your salesman know, to see if it can be used for your parts. Your salesman will let you know if the metal is available and the problem with it if it is not prime metal coil stock you’ve said you can accept.

When this happens, it is required to formally agree to accept this raw metal coil for your parts asap, as other companies are getting the same offers we see for all kinds of different forming needs other than roll forming. With prime coil in drop cuts or overstock, getting a sample for you to approve is not necessary but taking inventory when the special metal is available, is required. When metal being offered to us that has a distressed surface condition or is an off color painted color than normal, it is imperative that a sample gets sent to us and then to you for approval immediately so the decision to buy that distressed surface material can be formally made by you that allows us to buy that metal before others buy it, before we do. As you may guess, it gets gobbled up quickly, especially in this economy. Your formal, not verbal purchase orders would then need to be sent to us quickly and need to reflect and describe a particular distressed surface in the metal for your parts that can be used. If you can formally notify us in advance that you will accept parts from us using up all of the lower priced material, whenever the special metal buy is available to us, your chances of getting a special deal increases.

If it doesn’t matter what type of distressed condition the surface of the metal has, sampling would not be required and a quicker, better chance of getting that good deal on your metal would then be possible.  However, you would need to state and describe the distressed surface in your purchase order and send that order quickly or formally send us that information to keep in your file ahead of any offer we may receive on material. That would be the quickest way to allow us to purchase special priced metal and get a better than normal deal for you.

You need to know that Johnson Bros. has not offered distressed materials in the past but with the economy the way it has been, customers need every effort we can make to get lower priced parts out of prime or distressed surface material and perhaps more sales for your company as a result. This planning will be extra work for Johnson Bros not provided before but we are happy to do it for you but only if you desire it. If not, there will be no change in how we presently provide top notch quality parts for your company with good prices, using prime material as we have used always.

Most customers with orders under  $10,000.00 will not be able to take part in this offer as the notices we receive on special deals for raw material are very limited. For those who can formally tell us in advance that they can take parts whenever good priced deals on metal are available or can formally tell us in advance what surface imperfections they can take, there is a better chance that those customers will benefit from these deals we receive notice on from time to time.

Thank you for your time reading this newsletter. I hope it may be possible for you to take advantage of this plan. If so, we will do our best to find lower prices for you by using this plan whenever possible.