Warehouse Rack & Shelf LLC News Bulletin:
In a continuous effort to enhance our customers’ knowledge base and provide them with the best service possible, we’ve outlined the details of a temporary new tax law beneficial to anyone currently installing, or considering installing, rack before the end of the year.
There may never be a more affordable time to improve your warehouse, and we encourage you to take advantage of this benefit in 2011.
If the shelving is a capital expense for the customer, and if the shelving is installed and in use by December 31, 2011, the new law can be advantageous if the customer wants to reduce their tax payments to the IRS.
Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 tax law, customers may use 100 percent of their federal tax deductible up front in 2011, instead of smaller annual deductions spread out over the life of the product.
As you are likely aware, the price of steel has been rising rapidly (see attached American Metal Market Chart / AMM chart). This is having a major effect on the cost of pallet rack, wire deck, steel shelving, wire baskets and steel containers. The factories are starting to raise their production prices and some have resorted to adding steel surcharges.
The Good news is that I am able to hold the price temporarily on material that I currently have in stock. The Bad news is that as soon as my stock is depleted replacement material will be more expensive. The cost of steel is rising quickly and is likely to continue upward so you should consider placing your orders sooner rather than later.
Cargotainer of Adrian likely will close in the next month, costing 59 people their jobs, the company’s top official said Thursday.
The business — which manufactures industrial-strength shipping containers — has already laid off 42 workers over the last 18 months, said Geoffrey Scully, president of Cargotainer. “It’s going to continue to get smaller,” Scully said. “We have 15 people that will be laid off as of Monday.
The U.S. Commerce Department said on Tuesday that it has set preliminary countervailing duties (CVD) on imports of steel wire decking from China, a move that might escalate trade disputes between the two countries.
The department said it "preliminarily determined that Chinese producers/exporters have received net countervailable subsidies ranging from 2.02 to 437.73 percent."
As a result of this preliminary determination, Commerce will instruct U.S. Customs and Border Protection to collect a cash deposit or bond based on these preliminary rates.
The product covered by this investigation is welded-wire rack decking produced from carbon or alloy steel wire that has been welded into a mesh pattern. The wire mesh is reinforced with structural supports and designed to be load bearing.
Wire decking reinforced with structural supports is designed generally for industrial and other commercial storage rack systems.
The Rack Manufacturers Institute (RMI) has specific testing requirements for pallet rack and wire decking. Most of the larger pallet rack & wire decking manufacturer's are members of RMI. If you are buying a product and it has the "R-Mark" it tells you that the product has been quality tested. The pallet rack and wire decking that Warehouse Rack & Shelf LLC sells have been manufactured to RMI specifications.
There are some things to consider when you select, install, use and maintain your pallet rack system:
Before buying rack you should analyze the volume of activity and number of SKU's in your warehouse to determine the appropriate amount of rack.
Choose a rack layout that best suits your building and requirements. Try to design the rack layout to reduce steps and increase efficiency.
Develop a rack elevation which shows number of beam levels and spacing of beam levels.
Develop a bill of material (B.O.M) with quantity and sizes of upright frames and beams.
I had an interesting conversation with Patrick Russell, Terminal Manager at Active USA in Chillicothe, OH. He is a Six Sigma Black Belt and he is implementing the Kaizen philosopy of lean manufacturing with value added items. According to Wikipedia, Six Sigma is a business management strategy, initially implemented by Motorola, that today enjoys widespread application in many sectors of industry:
Six Sigma seeks to identify and remove the causes of defects and errors in manufacturing and business processes. It uses a set of quality manufacturing methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts" etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase).
Patrick's goal is to reduce waste by 20%. By implementing some Kaizen steps he has been able to cut
Allen Klippel, SIOR, First Vice President, CB Richard Ellis, gives commentary on the dominant trends in the 2009 St. Louis industrial real estate market. He also discusses the impact of this paradigm shift in the industrial market.
“Over the last several years, St. Louis, MO has become recognized as a distribution hub for such fortune 500 companies as Dial, Unilever, Proctor & Gamble, Hershey Foods, Save-A-Lot, companies supplying the Chrysler & GM plants have also been a positive factor in our market. The economic slow down has put the brakes on facility expansion for many big name companies and auto manufacturer’s are starting to give back space as well. But we still see local and regional companies anywhere from 25,000 to 50,000 square feet active in the market.”
As for the impact of the paradigm shift on the industrial market, “Most notable may be the over built situation that we currently have in the big box distribution projects. Even as demand began to slow, local and national developers continued to build. Today there are a number of state of the art distribution center buildings ranging in size from 200,000 square feet to 500,000 square feet available for lease. With a halt in new construction it is our opinion that supply and demand will balance in the foreseeable future and that this excess warehouse capacity will disappear. But I believe that today, matter of fact right now today, is a historic opportunity for tenants in the market place.”
What are the hot spots in the industrial market right now?
I got a call from the plant manager at a food processing plant and he told me that the United States Department of Agriculture was mandating that he add folding security gates to all of the dock doors and man doors in his warehouse in an effort to protect the food supply. He was wanting to buy folding scissor gates and woven wire partitions to secure his building. Folding security gates are a very seasonal product. Warehouse Rack & Shelf LLC sell lots of these gates in the spring and summer months. Steel folding gates are used for ventilation, visibility and access control. They provide the ability to secure receiving doors, lift-up doors, entranceways, hallways and more.
Out of curiosity I contacted the USDA and spoke to a nice gentleman that told me the USDA does not mandate these changes. The USDA recommends that companies make food security part of their business plan. I was told that after 9-11-01 in an effort to improve homeland security, The USDA's Food Safety & Inspection Service (FSIS) offered a set of security guidelines for food processors. This was intended to protect the nations food supply from terrorist attack. The USDA asks food processors and food distributors to consider food security and draw up voluntary plans. The USDA offers an industry self-assessment checklist for food security. This USDA Food Security Checklist covers the following subjects:
Slaughter & Processing Security
Shipping & Receiving Security
Water & Ice Supply Security
Mail Handling Security
The largest pallet rack manufacturer in the world, Mecalux Group, has acquired the largest rack manufacturer in the United States, Interlake Material Handling, Inc. out of bankruptcy. After the acquisition the American division of Mecalux will be known as Interlake Mecalux. Together they will become one of the world's leaders in capacity and technology in the storage industry. The following is from a Mecalux press release dated March 6th, 2008:
The purchase, which totals 30 million dollars, includes the acquisition of the companies of UFC Interlake, the commerical network, all industrial properties, patents, trademarks, technology and the four plants for the American expansion of Mecalux: Pontiac, IL; Sumter, SC; Mexicali and Matamoros, Mexico.