CEMCO Introduces Purchase Agreement Document
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 contractors.
“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 Porter.
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 two.
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.