RESCO President and CEO Matt Brandrup was a recent guest on author Robert Bryce’s ‘Power Hungry’ podcast, where he shared his insights on industry topics such as the challenges of inflationary pressure and labor shortages; the impact of new regulatory guidelines and proposals; and the advantages of the RESCO co-op model. Conducted weekly, the podcast features top thinkers, writers, and influencers within the energy and power space.

Click here to view the podcast.

The impact of unstable supply chains and rising inflation over the past two years has affected the operations of RESCO and our members and customers. From long (and sometimes uncertain) lead times to higher pricing due to inflationary factors like increased pricing on raw materials, labor shortages, and transportation challenges, we’ve been weathering the storm while continuing to provide top-notch and reliable service and product inventory to utilities through the Upper Midwest.

While supply chain conditions and inflation have yet to return to “normal” conditions within the utility material sector, we are happy to report that we’re seeing positive improvement, both in terms of lead times and product pricing.

Here are a few updates we’re happy to share with you:

• Stabilizing manufacturer pricing. Over the past two years, we’ve experienced significant cost increases in the products we distribute, due to inflationary pressures. In 2021, the average inflation rate on all products we provide was approximately 14%; in 2022, that number rose to 18%. However, while prices continue to rise, we are now seeing a slow down on the velocity of price increase. And while it’s difficult to predict economic conditions for the remainder of 2023 and into 2024, we expect the utility-product-cost inflation rate to moderate this year and fall back into the 4% to 8% range.

The operating budgets of our members and customers have always been a top priority for RESCO, and we will continue to work with our manufacturer partners to help deliver the most competitive pricing within the industry. RESCO’s not-for-profit cooperative business model helps us accomplish this!

• Continued growth of RESCO product inventory. As stated in previous posts, RESCO continues to focus on maintaining high inventory levels to ensure our members and customers have access to the products they need, when they need them. To that point, our record inventory levels continue to grow: as of this edition of Plugged in With RESCO, we’re currently maintaining $45 million in inventory housed in our seven warehouses.

And as our inventory continues to grow, so does our warehouses capacity. In addition to the opening of a new office and warehouse last spring in Elkhart, IA—which provides us with 30,000 square feet of indoor space and 35,000 square feet of outdoor space—we also expanded our storage capacities in Mt. Pleasant, MI, late last year, providing us with an additional 8,000 square feet of indoor storage. In 2023, we’ll be adding 15,000 square feet of indoor storage space at our Moorhead, MN, location, as well as breaking ground on a new 40,000-square-foot warehouse in Stanley, WI. (Located on 15 acres, the new Wisconsin facility will provide us with expansive outside storage as well, enabling us to deliver even more exceptional service to our members and customers in Wisconsin, Minnesota, and northern Michigan.)

With spring and summer utility projects and construction starting soon, our goal is to help ensure that you have the necessary materials, supplies, and equipment. Our Purchasing Department has been busy placing product orders to keep our inventory levels very robust for most items.

Faced with continued long lead times and higher cost of supplies, equipment, and materials, utilities can lessen the impact of current supply chain disruptions by focusing on multi-year planning of projects and construction. RESCO is also helping members and customers combat these challenges by carrying $42 million in product inventory in its warehouses. President and CEO Matt Brandrup discussed this topic in a recent article published by the National Rural Electric Cooperative Association (NRECA). To read the article, click here.

‘Supply chain’ and ‘inflation’. The two words all of us have probably heard enough over the past year. Both have greatly impacted the operations of utilities and the everyday lives of their members and customers, with seemingly no short-term end in sight.

In terms of supply chain disruptions, more than half of supply chain executives don’t expect a “return to normal” until the first half of 2024 or beyond, according to survey results reported by SupplyChainBrain.

And with inflation at its highest level since November 1981, fears of an impending recession–which some experts believe has already begun–are on the minds of businesses and consumers alike.

While it’s difficult for organizations to pivot their operations during unstable market conditions without skipping a beat, recognizing potential operational concerns early on and taking a proactive approach to address them can help weather the storm.

That’s the approach RESCO has taken, increasing our utility product inventory by over 70% in the past 12 months alone. We’re pleased to report that, as of the writing of this article, our inventory stands at over $42 million — an all-time record high for RESCO.

And thanks to our strong relationships with our manufacturer partners and our dynamic Purchasing Department, we’re also able to pivot quickly and obtain additional quantities of specific products when needed, such as when severe weather impacts your service area.

This record amount of inventory is much more than just a number. It’s an assurance that your utility has access to the materials, supplies, and equipment that you need, when you need it. Utility operations–whether it’s regular maintenance, storm-related repairs, or ongoing projects–cannot wait for better market conditions to develop or for the supply chain to normalize. That’s why we take pride in our ability to provide reliable availability and prompt delivery of products you need.

We thank you for your partnership with RESCO and look forward to continued growth of our relationship with your utility.

As we’ve reported previously (and which you’ve undoubtedly experienced in your own operations), supply chain and inflation issues have plagued our sector over the past year or so, impacting lead times and creating inventory challenges.

While we are not any closer to a correction in the market, we are noticing a stabilization in the market, both in terms of product lead times and inflationary impacts on pricing. We’re hopeful that this stabilization will soon turn into positive adjustments within the supply chain and, ultimately, normalized operations of our members and customers.

As we’ve done throughout our history as your valued partner, we’ll continue to provide the knowledge, support, and products you depend on for efficiently and successfully managing your utility operations. Here are a few things that we’re currently focused on (and for you and your organization to keep in mind) as we continue to successfully navigate through the current logistical challenges:

• Record inventory on hand. In the January edition of this newsletter, we reported record inventory across all of our warehouses. And that amount continues to rise. As of April, we now are housing $35 million of inventory in our warehouses. This enables us to meet your requests for equipment, supplies, and materials, whether for routine maintenance, emergency repair services, or planned construction or projects. Adequate inventory is always a major focus of RESCO, and we will continue to expand our inventory to meet our members’ and customers’ needs
• Opening of our new Iowa office/warehouse. We completed our move from our previous location in Ankeny to our new and larger office and warehouse facility in Elkhart the last week in April. Our new building—which encompasses 30,000 square-feet—enables us to store two-and-a-half times the inventory that the Ankeny location did, allowing us to better service the needs of not only our Iowa members and customers, but those from surrounding states as well. The added space allows for even greater inventory.

As an extension of your organization, your success is our success. We thank you for your continued support of RESCOrder placement for 2023. Given the extended lead times our manufacturer partners continue to face, placing orders early for 2023 is essential in helping us ensure that product is available when you need it. If you haven’t already done so, please work with your account representative to identity needs for the upcoming year.