The way suppliers of consoles and containers to the information destruction industry price their products depends largely on two things: the cost of raw materials and the value of the U.S. dollar. Unfortunately, with the price of resin, a by-product of petroleum, rising, and with the value of the U.S. dollar falling, manufacturers of consoles and containers are being forced to adjust their prices.
"In January 2007 the price of resin was 60 cents a pound, and today it’s up to 90 cents a pound," says Pete Pancel, general manager, All Source Security Container Manufacturing Corp., Barrie, Ontario.
During the past four years, the buying power of the U.S. dollar has fallen by as much as 50 percent, according to Richard Tennant, sales manager at
No Time To Waste |
For information destruction companies, the turnaround time for console and container orders is an important factor in meeting the demands of their clients. While opening new distribution centers helps cut down on freight costs, it also helps suppliers fill orders more quickly. For All Source Security Container Manufacturing Corp., Barrie, Ontario, 48 to 72 hours is its common turnaround time for standard products. "Shredding companies do not want to hold large inventories of containers because when you have to start paying for a product that you’re not using immediately, it becomes an expense," says Pete Pancel, general manager of All Source. The turnaround time for products from Otto Environmental Systems, Charlotte, N.C., depends on the size of the order. "We do injection molding, and it’s a volume-driven business, so the higher quantity orders take priority," says Kirsti Nelson, director of marketing for Otto. Opening new service centers also will help Kilch Enterprises, Marietta, Ga., with turnaround by putting the company closer to its customers. "Most of our customers have big trucks and have a large service area, so in some instances they could pick up at our location if they’re in the neighborhood," says owner Jim Kilch. |
Additionally, suppliers of consoles and containers must address rising transportation costs, which can make delivering orders to their customer a pricey proposition.
Even though these are challenging times for container suppliers to the information destruction industry, the sales climate for consoles and containers remains healthy, according to manufacturers. Although, for manufacturers to stay out of the red and yet still offer affordability to their clients, Pancel says it’s important to be proactive.
WELL DISTRIBUTEDAs resin prices have risen, many suppliers say they have tried to absorb the cost so it doesn’t reflect in the prices of their finished products. And as the price of raw materials continues to escalate, suppliers are being forced to find alternative ways to manage their costs.
Many console and container suppliers are combating the pressures of increasing fuel and freight prices by adding strategically located distribution centers throughout North America. For instance, All Source has set up multiple warehouses across North America. "By doing this, we want to hold inventory for our customers, provide faster turnaround time and minimize the influence freight has on [our costs]," Pancel says. Although All Source’s head office is based in Canada, the company has a regional U.S. presence, with locations in California for distribution to the Southwest U.S. and in North Carolina for distribution to the Southeast U.S.
Marietta, Ga.-based Kilch Enterprises also recognizes the benefits of distribution centers. Jim Kilch, owner of Kilch Enterprises, says the company hopes to open two new service centers in the Northeast and the middle of the country. It currently has facilities in Northern and Southern California, and the cities of Chicago, Cincinnati and Atlanta. "The idea is to keep enough locations opened and stocked close to the customers, so even though the price of fuel is going up, we’re diminishing the miles it takes to get shipments to the customers," Kilch says.
Otto Environmental Systems also has been investigating the addition of distribution centers, but the company’s current plan for dealing with the high price of resin and the weak U.S. dollar is to improve its cost efficiencies and manufacturing process through faster cycle times and leaner manufacturing.
"By improving our efficiencies, we have been able to offset a major portion of the price increase," says Kirsti Nelson, director of marketing, Otto Environmental Systems, Charlotte, N.C. By maximizing production at its North Carolina and Arizona plants, Otto has experienced more than 30 percent revenue growth since 2005.
Otto has also increased its efficiencies by buying more raw materials when their prices are reasonable and stocking them for future use.
Jake, Connor & Crew has also been proactive in its purchasing decisions when it comes to raw materials. "We have managed this process effectively
Online Sidebar - Green Alternatives |
Suppliers of consoles and containers are also looking into partnering with other manufacturers. Otto, for instance, currently partners with smaller manufacturers in the waste industry. These companies agree to co-manufacture, stock and ship containers from their plants, saving Otto freight costs. Nelson says this strategy could spill over into the information destruction side of the company’s business.
GOOD NEWSEven though many suppliers are feeling the squeeze created by the weak U.S. dollar and higher resin prices, many still say business is booming. How can this be?
Well, Kilch’s explanation is that new business is helping to balance escalating raw material and shipping prices. "We’re getting a lot of new business because the [information destruction] industry is growing, which in turn offsets the fact that we don’t have the margins that would be there if the dollar was stronger," Kilch says.
Nelson credits Otto’s growth to the fact that the information destruction industry isn’t as price sensitive as some other sectors, including the waste industry. "They are more focused on quality," she says of buyers from the information destruction industry.
To deal with increasing container costs, manufacturers and distributors say information destruction firms are trying to decrease their supplier base to one or two companies. "They are realizing if they go with one supplier, they can exercise better pricing because their volumes are going to go up," Nelson says. "Customers understand they will get better pricing with the more bins they buy," she adds.
Suppliers advise information destruction firms looking for consoles and containers to shop smart. "Shop your freight options and consider quality over price," Kilch says.
Tennant adds that customers need to focus on the soft costs when evaluating their console or container purchasing decisions. "The longevity of the console, strength and time associated with assembly and aftermarket transportation costs are critical for ongoing success," Tennant says. n
The author is assistant editor of Secure Destruction Business and can be contacted at kmorris@gie.net.
Get curated news on YOUR industry.
Enter your email to receive our newsletters.

Explore the July 2008 Issue
Check out more from this issue and find your next story to read.
Latest from Recycling Today
- Ship dismantlers navigate new regulatory regimen
- Gershow announces several community involvement projects
- McKinsey identifies engineering polymers as a recycling opportunity
- Metso acquisition focuses on mill liner recycling
- Malaysian customs office seizes scrap containers
- Lindner establishes Brazil subsidiary
- Tire recycling veteran predicts growth in pyrolysis
- ShearCore adds FC95 to concrete processor line