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Inflationary Pressure, Lead Times on Products Stabilizing

March 21, 2023

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.