Last winter, the United States was pounded with record snowfalls across the Midwest and the upper East Coast. And as a result of all that white precipitation, the entire jan/san supply chain was up in arms over widespread shortages of ice melt.

Detroit-based Allied Eagle Supply Co., was one of numerous jan/san distributors who found itself turning back customers who were inquiring about ice melt late in the season, says Ron Schneider, operations manager in the company’s Holland, Ohio, location. That’s because the company’s primary ice melt supplier ran out of product. So, Schneider went to the company’s backup plan — it’s secondary ice melt source. But, his backup supplier was tapped dry, too.

“Last year our secondary source didn’t work for us because they found themselves in the same situation that our primary found themselves in,” says Schneider. “They were short on product and weren’t able to respond to our needs very quickly.”

Up until the last two or three weeks into the season, Schneider says Allied Eagle was able to successfully supply ice melt to its customers. But near the end of the season, the company didn’t have any other choice than to decline order requests. Luckily, for Schneider, his customers understood that there was a widespread scarcity of ice melt across the country. Thus, Allied Eagle didn’t lose any of its customers in the fiasco.

“Pretty much everybody in the market was in the same boat as us,” says Schneider. “So it didn’t matter where they went or who they called. There wasn’t any product available so the customers pretty much understood and left it where it was. We didn’t lose any customers because a majority of them were understanding of the situation.”

Widespread Shortages

Most end users and distributors have pointed fingers at ice melt manufacturers for not being prepared for last winter. However, most manufacturers in fact had their warehouses stocked full with product going into the winter even though numbers were low the previous four years because of relatively mild seasons.

“It was just an unusual winter throughout the Midwest and all parts of the country,” says Gene Melzer, president of Nassco Inc., a New Berlin, Wis.-based distributor. “You can’t anticipate that, you can’t predict the weather. But most of the ice melt manufacturers fill their warehouses and are ready for what the season brings. They fill it up and see what happens.”

Manufacturers say last winter was a little tougher than in previous years, because of one main component — snow.

“It snowed,” says Ken Ossian, owner and president of Ossian Inc., Davenport, Iowa. “It snowed a lot. It snowed every three days. And, there was an awful lot of ice. Traditionally, there’s not a lot of ice.”

Because of all the snow and ice, a heavy demand for ice melt came from every facet, including municipalities and private businesses. Thus, the product pipeline couldn’t keep pace with the elements and the usage by end users.

“The pipeline was totally empty,” says Ossian. “Therefore, you had people buying anything and everything they could find.”

Manufacturers say there was a widespread shortage of rock salt. This put municipalities, who salt roadways for public transportation, in an uneasy situation. They were forced to ration the product as well as use alternatives to traditional ice melt on roads.

“An awful lot of sand got used,” says Ossian. “Municipal accounts mixed a lot of sand and salt where they don’t like to do that. They would have preferred to just use the salt.”

Expectations For This Winter

Because of the arctic conditions and shortages of ice melt last year, manufacturers are expecting that more end users will purchase earlier than usual for this upcoming winter.

“We’re having a lot of early season interest,” says Rich Otterstrom, chemist with CP Industries, Salt Lake City, Utah. “What predicts early season sales for us is how harsh the winter was in the tail end of the season. So if all your customers didn’t get to use up all their stock because the winter petered out in February, then sometimes early season sales are slow. But we had a fairly solid winter all the way through.”

So, it’s reasonable for distributors to expect heavier than normal buy-in in the preseason, both because of depleted inventories and the experience of last winter, says Todd Spencer, sales director for North American Salt, Overland Park, Kan.

And ice melt manufacturers recommend that distributors begin thinking about stocking up on ice melt well before the winter months.

“We urge our distributors to think in terms of two phases,” says Spencer. “The first is to build up inventory in the September and October time frame, with a mid-October target date. The second phase comes as they assess their pass-through and order additional melter to assure they remain in stock from the middle of November through the rest of the winter. The fact is that whatever else happens, there will be precipitation from November through January.”

Oddly enough, the hot and sunny summer months is the best time for distributors to start preparing for winter.

“Usually you start preparing for the winter months in July,” says Schneider. “You start talking to the sales reps for the ice melter starting in July and you try to determine who you’re going to deal with before the end of August and you start pushing your sales reps to sell the product starting in September before the winter months ever show up.”

Most manufacturers offer distributors early bird discounts to encourage early purchasing, says Otterstrom.

“If they order early and pay within terms, they get a discount or delayed billing for their orders,” he says. “So you can order early and pay like you ordered later. That’s one way to encourage our distributors to purchase early. And if we can get them to start placing orders by the end of August, early part of September, we can definitely get their warehouses full. And with the early bird specials or delayed billing they can save a little money, too.”

Most distributors who take advantage of a manufacturer’s early buy incentives not only ensure that they will have enough product for the winter, but then are also able to offer their customers better pricing through their own early buy-ins.

Typically, end users wait until the last minute to order ice melt because they don’t want to tie up their revenue into ice melter because they’re not sure they’re going to need it. They also don’t have the allotted storage space.

“The users all have limited space,” says Greg MacDonnell, senior marketing manager for Dow Calcium Chloride, Ludington, Mich. “And so they don’t want to bring in pallets of ice melter that gets in the way of their pallets of fertilizer or whatever they may have limited space for. So, they’ll bring it in closer to when it’s realistic that there’s going to be a need for it.”

Because of the ice melter shortage last season, manufacturers and distributors predict that end users’ sensitivity may be a little higher this year.

“They may bring it in a month before rather than a week before,” MacDonnell says. “If they were left short from last year with their supplier, and they feel that their supplier is not in good position to cover them this year, maybe those guys are out there buying it now because they’re afraid it might not be available later.”

Ice melt manufacturers also are taking the necessary steps to ensure that last year’s shortages do not arise in the near future.

“We are in the process of increasing our storage capacity,” says Ossian. “We certainly increased the amount of raw material that we’ve had in comparison to last years probably three fold.”




POSTED ON: 7/1/2008