The price of lumber skyrocketed during the pandemic.

[woodferret]

You have the potential to make the same profit either way - final sale or start a leasing company.  I'd rather do final sale since I'm not in the business of running a leasing company and won't be efficient at it - and honestly will likely lose money.

 

[Crazyraceguy]

You have the potential to make the same profit either way - final sale or start a leasing company.  I'd rather do final sale since I'm not in the business of running a leasing company and won't be efficient at it - and honestly will likely lose money.

I agree. Making the money, 2 or 3 times, presumably at a lower margin, by leasing would be quite a logistical nightmare.
The Bourbon people would want them for at least 8 years, maybe more. Then someone would have to handle them again, taking on the responsibility of storing and then redistributing to the secondary users.
Again, after who knows how long, handle them again, for the third round? All spread out over how much time? Nope, sell it once and be done with it, concentrating on making them more efficiently.

 

[Packard]

Well CHEP has been leasing wood pallets.  They did this for many years in Europe.  They invaded the USA in the 1980s (I believe).

If you have ever seen the blue painted wooden pallets, those belong to CHEP.  They are leased to companies. 

The blue pallets belong to CHEP, and are supposed to be returned to CHEP.  Nonetheless, the company I used to work for bought used pallets and there were always a few of these blue pallets included.

I’ve heard that the blue pallets are a recycling nightmare.

I thought it was a screwy business model, but they had been successful in Europe.

 

[luvmytoolz]

Well CHEP has been leasing wood pallets.  They did this for many years in Europe.  They invaded the USA in the 1980s (I believe).

If you have ever seen the blue painted wooden pallets, those belong to CHEP.  They are leased to companies. 

The blue pallets belong to CHEP, and are supposed to be returned to CHEP.  Nonetheless, the company I used to work for bought used pallets and there were always a few of these blue pallets included.

I’ve heard that the blue pallets are a recycling nightmare.

I thought it was a screwy business model, but they had been successful in Europe.

They do the same in OZ but it's more akin to a return deposit on drink bottles generally. They used to be fairly militant about getting them back, not as much nowadays it seems.

 

[Packard]

About those CHEP pallets.  You can’t burn them.  Who knows what pollutants burning would create?

You can’t sand them.  Who knows what pollutants sanding would create?

You can’t plane them.  Who knows what pollutants planing would create.

So no easy end-of-service-solution. 

 

[Crazyraceguy]

The CHEP pallets have always been a bit of an oddity. As I understood it, they were supposed to be used for food products only. Ship - return, ship - return, etc like the old days of glass bottles for soda and beer.
I guess the receiver somewhat pays for them as part of the shipment and gets part of it back upon return. Technically, they don't have to be returned, they just lose the "credit".

It was supposed to keep them from being contaminated by who knows what and unable to be used as intended. They were not supposed to be sold, so if they get out into the wild, they had been stolen from behind grocery stores.

It's somewhat similar to decommissioned UPS trucks, those are never sold either. They get dismantled and destroyed.

 

[leakyroof]

I've read theories that pre-pandemic sellers were reluctant to pass along any price increases as they feared buyers would bolt over anything. The pandemic taught them this was not the case/buyers became inured to price increases. This led to a new belief that they could pass along price increases without decreasing overall profits, increasing earnings in many cases.

I tend to buy this theory, people gripe but still pay up if they have the ability. The test will come if/when consumers hit challenging times and are forced to scale back on discretionary spending.

Personally, I had the habit of buying extra during my salad days (I needed a sheet of plywood/bought 3 to "have it in case") and now I'm working my way thru material that has been stored for some time. I have hardwoods that spent more years of their existence in my storage areas than they did in the forest... A good problem to have.

RMW

I got an eye opener of prices during Covid. Cedar for an outdoor project was SO much higher than what I had paid for in the past. I didn't have any spare Cedar on hand, unlike the sheets of plywood, so no stock to pull from.
Around here it's dropped a good bit here and there on Construction lumber/ products, but plywood is still higher than before, and I haven't even tried to replace my Baltic Birch that I just used up recently.  [scared]
At one point during Covid I was pulling good 2x4s  or other 2x lumber out of Construction Dumpsters of torn down housing, since I knew how expensive new ones were going for. It was still worth my time to pull nails and cut out bad sections.  Even if it wasn't a full length stud, I'd find a use for it someday.... [smile] [smile]

 

[Packard]

Back in 1970 or 1971, the price of aluminum was skyrocketing.  I knew this because the company I worked for sold aluminum sheet goods.

A major wholesaler shut down for a month and gave all his employees a paid vacation.

When he came back, I visited him.  He asked what the current price of aluminum was and then got out the adding machine.  The old style machines would rattle and chatter for a bit and then spit out a number.

He said, “Ha!  I knew it!  I made as much sitting on my cheap inventory as I would have made by staying open last month.”

I wonder of any lumber wholesalers did the same.

 

[rmwarren]

At one point during Covid I was pulling good 2x4s  or other 2x lumber out of Construction Dumpsters of torn down housing, since I knew how expensive new ones were going for. It was still worth my time to pull nails and cut out bad sections.  Even if it wasn't a full length stud, I'd find a use for it someday.... [smile] [smile]

It's a temptation. On our little island the norm is to buy a 70's rancher, tear it down and build 3 stories with 6-7 bedrooms, all on a 40 by 100 lot. There are ~20 under construction at any time. My head swivels at the new construction dumpsters as I drive around, I know there's a ton of usable offcuts in each one.

The boss however would skin me alive...

RMW

 

[woodferret]

He said, “Ha!  I knew it!  I made as much sitting on my cheap inventory as I would have made by staying open last month.”

I wonder of any lumber wholesalers did the same.

Any wholesaler doing that would kill their business as trust in delivery is part of the game.  My local yard had a boatload of BB as COVID/Russia hit and they could have sat on it, but they would have been earmarked as not being a reliable supplier.  For a while they kept prices behind spot with the communication of their replenishment prices to properly set future expectations for future contracting budgets.

Picking up pennies on the track is not worth it.

 

[Packard]

He said, “Ha!  I knew it!  I made as much sitting on my cheap inventory as I would have made by staying open last month.”

I wonder of any lumber wholesalers did the same.

Any wholesaler doing that would kill their business as trust in delivery is part of the game.  My local yard had a boatload of BB as COVID/Russia hit and they could have sat on it, but they would have been earmarked as not being a reliable supplier.  For a while they kept prices behind spot with the communication of their replenishment prices to properly set future expectations for future contracting budgets.

Picking up pennies on the track is not worth it.

You might be right.  I never tracked their post-vacation sales to check on that. 

They were in the business of producing aluminum awnings, a big thing back then.  The retail contractors would call in the specs to him and he would quote a price.  My understanding was that the retail contractors would always get more than one price from various vendors.  He only needed to be the lowest price to get the order.  The customer loyalty was to price, not service.

He bought painted flat sheets and had a roll forming machine to make the “corrugations”. 

The other vendors bought the “corrugated” panels from our company.  So he had a competitive edge.

He made this type of awning.  His company also would do the installation if needed.  So some of his “contractors” were really just independent sales men.

An amusing side story was that he wan one of the first users of electronic calculators.  The older calculators were mechanical.  If you wanted to get 6 x 123 = X, the old calculators would add 123 six times.  Each time was printed on the adding machine tape.

So customers would call in the specs (this was before fax machines) and he would calculate the price while they were on the phone.  The old machines made a huge amount of chattering as it added all those numbers.  The calculator was faster and silent.

One of his customers stopped buying from him.  He called that customer up on the phone to find out why.  The customer said, “I used to hear you do all those calculations.  Now you just make up numbers.”

So he continued to use the calculator with one hand and with the other hand he repeatedly hit a key from the old calculator to make the appropriate amount of noise.

I also used that technique.  I called a a customer to see if I could get the order that I recently quoted on.  He complained about the price.  I said, “Let me see what I can do.”  And then I put the phone near my adding machine and added arbitrary numbers.  Then I said, “Yeah, we can match that price.”

I had to make it seem like it was a difficult matter to reduce the price.  But in reality, I knew immediately that the lower price was fine.  The sound effects just make it seem plausible.