California Expanded Metal Products Co. has introduced the CEMCO Project Purchase Agreement, a document that formalizes the purchase agreement between itself, the distributor and the contractor to guarantee prices and lead times throughout the life of a project.
Enacted in late July, the CEMCO PPA addresses contractors’ and distributors’
concerns that unstable steel prices were driving some manufacturers to not honor
quotes, price items not in the original quotes too high, and set lengthy lead
times that put them in a bad position with their general
“Steel prices have risen more than 80 percent, putting a strain on the entire
distribution chain, and in many projects, we were unable to pass along those
increases,” said CEMCO Executive Vice President Tom Porter. “So it was time
that we looked at the way we quote projects and the way we commit to future
work, and how those factors affect all stakeholders.”
At a special meeting, CEMCO solicited opinions from executive management teams
from the West Coast’s largest dealers and nine of the largest contractors, and
key industry leaders. The group discussed all of the factors that are causing
steel prices to rise quickly, as well as how the prices affect each party.
“We wanted input from everyone in the chain, including the distributor and
contractor, and come to an agreement that would benefit us all,” said
Most beneficial to the contractor and the distributor is the guarantee in
prices and lead times so they are able to plan better during periods of rising
prices and tight supply. Contractors will be able to tell their general
contractors with confidence that there will be no interruptions in service,
with no broken promises to sour the critical relationship between the
Conversely, CEMCO will be able to plan better for steel needs during tight
supply with the PPA in place. It will give service preference to projects
backed by the PPA.
CEMCO expects the PPA to set a trend in the steel-stud manufacturing industry
as volatility in pricing and supply is anticipated to continue for years.
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