Embrace change and hang on

Use these three tips to prepare for a season struggling to supply materials, equipment and labor.
Christopher Pine

There is no doubt that challenges with the supply and demand of materials, equipment and labor are the hot topic for irrigation contractors (or any business) these days.

While the intent is to develop some insight on how to manage these challenges, let’s start with some discussion on why all this happening. Sure, it may be easiest to point at one specific event or a political party or an individual, but the cause for this is really a combination of many things that have occurred and will take time to sort out. Having spent over four years studying economics, it is fascinating to see all these complex events colliding.

The root cause is the simplest of economic principles: supply and demand. When we look at what is going on in the world these days, there is a clear economic unbalance with demand greatly exceeding supply. This is primarily caused by a huge number of factors that also happened very quickly. Arguably, this is something that we haven’t ever experienced before, especially with the size of the global economy. It is going to take some time to balance so that the economy will be more predictable and not continuing to make large adjustments resulting in product shortages and inflation.

In our industry, during the last two years, we have seen availability issues of almost all materials from almost all manufacturers. While we can blame specific events such as the increased consumer demand from the pandemic or weather events that caused major increases in the demand for pumps and supply of resins for plastic or the delay in products arriving from offshore, the point is there are many events that have occurred to cause this combined impact.

Price inflation is the result of supply shortages and is also likely to continue until we achieve more economic balance. Many commodity products have seen extreme price increases, such as plastic piping, wire and bulkier products that have been highly impacted by the space they consume on trucks and containers. We have also seen the impact on equipment cost and availability, with many contractors waiting months for vehicles, trenchers, vibratory plows and paying prices exceeding list price or “book value” for used equipment.

Availability of labor is also tied to these economic principles, and although this problem has been going on for years, unfortunately it is likely to continue for a long time. We can say, “Kids today don’t want to work,” but that might not be that accurate, nor will it point toward the solution. We have been anticipating a demographic shift from the aging and retiring of baby boomers and its impact on our labor supply and economy for many years. It is now here, although the pandemic may have forced the hand of many who were just about ready to move into retirement. Our industry still requires a lot of physical labor and we are actively competing with other industries that need the same. There are contractors that are succeeding in this game, but they are making talent acquisition and development a year-round, full-time function of their businesses.

So, what can we do?

  • Have patience. We are starting to see some signs that many manufacturers in our industry have adjusted and have increased product availability. As much as this has been a fun ride with record demand for our industry’s products and services, it is starting to ease in some areas.
  • Accept rapid change and be able to adapt quickly. The management buzzword of being able to “pivot” is the word of the day. Businesses need to first be able to quickly integrate information about price increases or availability into their systems, so that they can quickly adjust their pricing and schedules to stay profitable. Office technology plays a huge role here in being able to move information efficiently.
  • Plan in advance. Having been involved in many discussions with suppliers of materials and equipment this season, this advice is heard from all. Communicate with your suppliers for your needs well in advance. If you are locked into a price, order now. Be prepared to have a second choice for certain materials. Keep an active dialogue.

We can and will get through this. We need to make a plan and take action to make the best of it, but in the meantime, hang on and enjoy the wild ride!

Christopher Pine, CLWM, CID, CIC, CLIA, CIT, MCLP, is a principal of IrriTech Training and the president of BluGreen Solutions in Pocasset, Massachusetts. He can be reached at chris@irritechtraining.com.

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