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Gold/Mining/Energy : Pallet Pallet Inc.
PPAL 60.100.0%Sep 23 11:27 AM EST
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To: Fred J Bealle who wrote (41)1/19/1997 12:42:00 PM
From: D.A.   of 451
 
Just to add to the subject of the cost of wood.In my industry (Building Contractor),it is normal to adjust prices of products as raw materials go up or down.As of Jan.10th/97 we have increased our pricing by aprox.10% in the Alberta area Canada.There was no opposition as this was based on raw materials .So it is with any industry.It would be silly to think that someone else can supply pallets at a lower price if all must pay for the same lumber.I think the issue was more,where is the price of wood going to land because it has been moving around so much.This is needed to nail down longer term service contracts with price guaranteies included.Other wise if wood prices do not stop jumping around,the whole industry may have to reprice contracts every 3 to 6 months,or some average will be agreed on.PLT being a larger volume buyer of lumber clearly has an advantage for getting cheaper lumber.And don't forget the option of plastic pallets,which PLT also sells.Possibly they would consider galvanized metal,plastic coated (metal 2x4's for example, are cheaper then wood 2x4's).Just a thought.Pallets are not a luxury.Shippers cannot do without them.In any case ,the "distribution network" is the key here no matter what the pallets are made of.PLT has the largest distribution network in North America.Finaly, the President's comment Jan 14/97,"we can anticipate margins going forward should return to historic levels".
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