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2021 Is over 2022 may look worse!

AMER-FLINT U S GALLON
 
I’m sure most of us experienced all sorts of turmoil in 2021 personally and business-wise. Despite many supply chain problems and price increases. Last November, I realized that economically, we were heading for trouble, so we purchased as many raw materials that we could afford.  That foresight paid off, as we had basically enough raw materials to last through 8 months of 2021.  The result of this planning: Very minimal price increases, and for the most part no price increases on clears, primers and paints.  We did move up hardeners slightly, but we did not have the 16-22% price increases everyone else in the industry!  Across the board, on average, we had less than a 1% price increase.  Unfortunately, this trend probaly won’t continue much longer.
 
I want to thank everyone of you for understanding and supporting Tamco through a rough year.  At Tamco we were able to come thru some major obstacles, but continued to grow and add more products.
 
2021 will be a major expansion year, with many new products coming out.  My previous update named the major ones.  If things go smoothly, 2022 will be a banner year.  That being said, we will face many major obstacles.
 
1) Every raw material we buy has gone up from 7-65%!
   Our pigments are especially hit- This is a letter last week from a major pigment supplier to us:
         The following price adjustments will be effective with orders shipping on or after January 10th, 2022:
• All Quinacridone Red (PR122) and Violet (PV19) dispersions will be increased 12% due to feedstock issues affecting all dry pigment producers and driving up prices. Products include: WB 1519 Quinacridone Red, WB 15122-S Quinacridone Magenta, WB 1819 Quinacridone Violet, AD 2519 Quinacridone Red, AD 25122 Quinacridone Magenta, AD 2819 Quinacridone Violet, HP 3519 Quinacridone Red, HP 3819 Quinacridone Violet, H2Low VOC 8519 Quinacridone Red, H2Low VOC 8819 Quinacridone Violet, XVOC 0519 Quinacridone Red, XVOC 0819 Quinacridone Violet, RD 6819 Quinacridone Violet, and RD 6801 Sapphire Blue.
• All RD pigment dispersions not noted in bullet #1 will be increased 6.8% with the exception of RD 63184 which will be increased 17.45%.
• All XVOC pigment dispersions not noted in bullet #1 will be increased 8.9% with the exception of XVOC 0900 which will be increased 28%.
 
OUR SOLVENTS:  Like Gasoline our solvents prices doubled since January.  Doubled!  As oil continues to rise, so will solvent prices will follow.  Many are predicting $100.00 oil. If that happens our solvent prices would double again.
 
     RESINS:  Up until December, resin prices had very modest increase. From 3-7%…. This changed last month, where every resin (many come from China, others Europe) doubles in price due to shipping!  Our American made resins almost doubles (figure that out- it seems like price gouging to me).   ISO hardener resin went from about $3.25 to $11/ pound!   Our cost, not counting labor or shipping for a quart of HH-7605 is nearly $30.00!
 
    Freight and shipping:  Our single highest expense.  Shipping has again gone up about 45% in 2021, which followed a 12% increase in 2020.  Our shipping policy had to be changed, which we did from $275.00 for free shipping to $375.00 as well as actual shipping for anything that falls under.
 
My thoughts on 2022:
    In my thinking, inflation and supply chain issues will get worse in 2022. The federal government has deficit spent nearly $6 trillion dollars in the last two years. It continues to deficit spend about $200 billion monthly even today. That is pure excess demand and is the main driving force of the current inflation.
 
 Worker shortages will reach crisis proportions!   Tamco will have price increases, but so too will everyone else!  I am hearing that most of the big companies are going to have 15-25% Higher prices in 2022.  Remember a 15% price increase on a PPG clear would equate to a 40% Tamco price increase in real dollars!   And those increases are on top of last year’s huge increases by the other companies.
 
   My advice is to by products that do not go bad that you will need to run your shop as early as possible.  That applies if you buy from Tamco, or anyone else!  The majority of the members in the FED claim they plan at least 3 interest rate hikes this year. 3!  That would be catasptrophic to small businesses that aren’t prepared.  
 
Here are steps you should think about to maximize your cash.  Cash is king, debt in bad times is the fastest way to bankruptcy.  Hoard cash,  and learn to pay your bills in the most beneficial cash advantage to you.  I am quite amazed that many of our customers still use PayPal to pay for their paint purchases instead of “cash-back” credit cards!    Capital offers Spark business cards that give unlimited 2% cash back.  At Tamco, we try to pay every vendor with the Spark Card.  Amex is also good, but they average on 1.5% cash back.  I see some banks actually offering 5%!   So if you buy a $3,000 order, switching from PayPal to a business Spark Card lowered the bill by $60.00!  On top of that, you have (if you time correctly) about 25 days to pay the back without interest!  That’s worth a bunch more!  
 
We save enough money each month to actually cover the cost of several employees!  No kidding.  We put hundreds of thousands on cards each month, and apply the saving to the employee account.  
 
Little ways like this can add many dollars to the bottom line.  Here is an AMEX link worth reading: https://www.americanexpress.com/en-us/business/trends-and-insights/articles/27-money-saving-tips-from-successful-small-businesses-annie-mueller/
 
 
 
The lean and smart people out there can survive whatever 2022 throws at them, but you must be prepared and have a plan.

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