Salt Shortage… WHY? What you can do to cope!
When the opportunity arose to write an article about a topic I have built the last 30 years is not my best attribute, but I am very passionate about this subject and I hope that by sharing, you will find and apply a nugget or two of information and obtain the success you deserve!
Troy R Clogg, CLP, CSP
Troy R Clogg, CLP, CSP
I once wrote an article titled, “The Things We Do And The Things We Don’t.” When we boil it down this is what our lives are made up of and therefore what we make of our lives. In the simplest of terms, we are a compilation of the choices we make. As you read on, and I hope you do, there will be a list of facts. Some we can control and others we cannot. My first personal choice is I love a challenge, especially one as important as being a leader. I know that our industry is full of strong leaders LIKE YOU so let’s get on with it!
If just one thing resonates with you as you read this, know that most of you deserve more from all of your efforts and risks. You sacrifice your Thanksgiving, Christmas, New Year’s and family responsibilities (if it is snowing) to ensure your client’s site is safe for them. You work hard to learn more about our industry. You employ a strong hard working group of people that count on you to provide for their families, whether it snows or not. You take on more risk than our local municipalities do to ensure the roads, lots and walkways you maintain are safe. (FACT: Private contractors maintain more square footage of paved surfaces than public municipalities and WE can get sued for failure to do so properly). Heaven forbid one of us have a loved one get hurt or worse on a publicly maintained surface due to obvious negligence . . . no restitution can be awarded.
History and Logistics
Google historical salt prices — AND YOU SHOULD — in our market and in others, you will find that they were gently increasing from the early 90s, through the middle of the first decade of this century. Then, the game changed. There is no “shortage” of salt, BUT there IS a shortage of short-term availability and transportation to get it to us. It looks like this:
Salt is mined
Salt is screened
Salt is loaded in ships, trucks, barges, Laker vessels etc.
Salt is moved around the country and world to stock piles
Salt is sold to the highest bidder
Salt is then reloaded into one of the above mentioned vehicles and moved again
Salt is then moved one more time or possibly loaded into our vehicles and distributed on surfaces
Every step along the way adds costs. It is more about the transportation costs and seasonal window of time to move salt, (which is after winter and before agricultural season) than it is the cost of the raw material – SALT.
Marketing
When you do your due diligence in the salt world, what you will find is that the Detroit market has a pretty tough reputation out there. By that I mean, if you talk to the “people in the know” of the top salt suppliers in our country, you will find that they feel “as a whole” we are less than loyal customers and we expect and seem to obtain, salt at a very low cost relative to markets of similar size nationally.
Now, for just a minute, put yourselves in their shoes. Think about your customer list.
Are they LOYAL?
Is price more important to them than VALUE?
Historically, solid relationships usually “weather the storm”. This applies in our personal lives and in our business lives.
When we are talking about salt and the relationship between “us”, “salt suppliers” and “customers”- up until this season, if you were one of the people that have been loyal, honest and paid your bills on time, your relationship with your salt supplier was solid.
THE RULES HAVE CHANGED!
For good or bad, our fault or theirs, fabricated or real, getting the salt we need to fulfill our contracts will be more challenging this season than in any time in our history. The challenge in getting salt is a huge undertaking and one that must be moved to the top of your to do list!
It includes having the money to pay for it and the time it takes to re-write contracts, meet with customers and be educated in the topic (in order to accurately explain what, why, how and when to your clients).
I know there is a lot of emotion, feelings, frustrations and disbelief, etc. that comes with what is going on right now.
The Facts As I See Them
Salt comes from a handful of very large suppliers and another layer of brokers that, in today’s market, may not only be selling product mined in North America; they’re also bringing in product mined in South America, Africa and Europe.
WE HAVE NO CONTROL OVER THIS.
Salt is a commodity where there is a finite amount available each day/week/year from each mine.
WE HAVE NO CONTROL OVER THIS.
The first group of buyers to the table to buy salt is our government. In April, May, June and July of each year, municipalities in all snow states receive their offers to purchase salt from the large suppliers. Private contractors and resellers are typically not given the opportunity to purchase until this process is complete. This is to ensure the safety of the public.
WE HAVE NO CONTROL OVER THIS.
The next step is for large resellers, brokers and supply yards to receive their offers to purchase or not! As I mentioned earlier, up until this season, (or at least the last 30 years that I have been doing this), there has always been a fair amount distributed to this layer of resellers and at a price that was relatively “fair” to what the market can bear…this year is different, WE HAVE NO CONTROL OVER THIS.
Finally you get to us. When I say us, I mean smaller resellers and large, medium and small contractors. We must find salt, secure a deal, pay for it, (this year many deals are required to pay 100% up front). And, we must do this ASAP and usually without a clear understanding of how much work we will actually have this upcoming season.
WE ARE BEGINNING TO HAVE SOME CONTROL.
If You Step Back for a Minute and Think About it, it Looks Like This
We are hard-working people, determined to provide for our families and the mined to provide for our families and the families of those who work for and with us.
WE ARE IN CONTROL.
We go into season after season not knowing the exact amount of work we need to equip, staff and inventory for. Most of our clients don’t make their contract decisions until October, November and sometimes as late as December!
WE ARE IN CONTROL.
We sign contracts that indemnify just about everybody and with our signature we vow to risk our teams’ safety and all of our assets to ensure that our clients’ sites are safe for them and their patrons.
WE ARE IN CONTROL.
Remember we can say NO to clients who won’t award work in a timely manor. Typically we do all of this without any pre-payment from our clients, (skin in the game) and we wait many times months to get paid. So in essence we finance the deal while we accept all of the risk of any potential lawsuits.
So Your Challenge and Mine
Accept responsibility for those things in our business we can control and control them.
Get educated—Seek knowledge. Spend time, money and effort on this. There is NOTHING more important.
Educate your clients. Command respect and appreciation in a professional manor. We are First Responders, similar to police and firefighters.
Know your numbers. Price your work to make a profit; YOU DESERVE IT!
Share your knowledge and experience with others. It’s just good living.
The salt and bagged deicers that we need for our upcoming winter is something we should have a handle on RIGHT NOW!
IF YOU CAN FIND PRODUCT, I suggest you secure it with a contract, payment and, if possible, early delivery to your shop, yard or storage facility.
In closing, most of us reading this article are leaders in some sense of the word. Leaders take control of that which they can control and they put that which they cannot control on a shelf, or for some of us, into the hands of a greater being.
Our most important and number one responsibility as leaders is to create more leaders!
Do this at home, in your business and in your community.
Just do it!
You and I have control of this! Good luck, work hard and God bless.