The astounding 65% price hikes reported Tuesday here at the Fence Wizard Blog for new iron ore contracts may not be the last of the short term increase. This signals that 2008 will be the sixth straight year for record high iron ore prices. The key problem for any price relief is that just 3 companies control 75% of the worlds iron ore production and emerging markets continue to pressure supply even as U.S. demand slows. Two of those companies may combine as BHP Billiton has been attempting to takeover Rio Tinto for months.
Q> What does this hike mean for final products such as rolled steel or chain link for final buyers such as fence companies?
A> Most likely a 10% or so bump in finished product costs; some good news is that zinc is about 50% lower than the highs reached in Dec2006-Jan2007.
More:
Rio Tinto, BHP want more than 65% increase for iron ore. Rio Tinto (RTP) has indicated it is not satisfied with the 65% iron ore price increase negotiated by Vale (RIO) and Posco (PKX). If it doesn't back down, this may be the beginning of the end for iron ore's benchmark system, under which global iron ore prices follow prices set by Vale, Rio Tinto and BHP Billiton (BHP), who together produce almost 3/4 of the world's iron ore. Rio contends Asian steel mills are saving money due to its proximity to them, and wants a piece of their savings. There are rumors BHP will also hold out for more.
Rolled Steel Price Chart
Kitco Zinc Chart
Thursday, February 21, 2008
More pressure added to iron ore prices...
Outlook worsens for 2008 U.S. Construction Recovery
It may have seemed like a slow news day with a couple Presidential Primaries, the Dow Jones Industrial Average down just 10.99, and no updates to be found about Britney Spears. Unfortunately, some frightening data came forward today that will add pressure to Fence Installers and other construction services around the country.
1. Bush tax cuts will not become permanent and will expire.
2. Capital Gains taxes will rise from the current 15% to 28% or beyond on your investments.
3. Death Tax Law will likely become increasingly confiscatory with the current allowance of 3.5 million most likely reduced. Currently, 22,0000 families are penalized each year - many are family businesses. Large Corporations are not affected and will only gain the additional advantage of buying more small business at give away prices. (More on Obama's tax plan)
All in all Feb 19th, 2008 - A Day to forget - if you can.
Friday, February 15, 2008
The Fence Industry Online; A Traffic Report.
The "Wizard 50" is a list of the most visited web sites in the Fence industry. The Fence Wizard has been counting web hits in cyberspace for some time in order to complete the first known Fence Industry traffic list. In doing so we make the following conclusions:
First - It is likely that more than 500,000 prospective fence customers go online each month for product information, company research, and to purchase material from online retailers. Online retailers represent the bulk of the traffic. This is a direct result of the paid advertising they do with google, yahoo, and msn to secure product ads on search engines.
Second - Many of these companies did not exist 1 or 2 years ago - this tells us that online retailing in the fence industry is still growing and new capital is coming in to create some of these companies.
Third - These online retailers are typically competing with Home Depot and Lowe's - meaning that they are pushing inferior product in most cases and often selling products with specs that most of us would refuse to install ....see one of the Fence Wizard's past articles on the subject -click here.
Now without further delay - The "Wizard 50" with traffic totals (these are unique visitors per month as averaged over the past one year)......
Hoover Fence Company (On-line Fence Retail) www.hooverfence.com/ 51,834
Trex (Composite Fence and Deck Manufacturer) www.trex.com/ 29,374
Chamberlain (Access Control Systems) www.chamberlain.com/ 25,870
Invisible Fence (The no fence of fencing) www.invisiblefence.com/ 25,443
Master Halco (National Wholesale Distributer) www.fenceonline.com/ 23,690
Cali Bamboo (Complete Bamboo Product Line) www.calibamboo.com/ 23,153
Academy Fence (NY and NJ Resi - Retailer) www.academyfence.com/ 21,301
Vinyl Fence and Deck (Bufftech and More) www.avinylfence.com/ 18,650
Amazing Gates (Gates and Access Control) www.amazinggates.com/ 18,404
Fence Center (Total Residential Fence Dealer) www.fencecenter.com/ 17,176
Garden Structure (Plans, Custom Wood) www.gardenstructure.com/ 17,009
King Architectual Metals (Iron Parts and More) www.kingmetals.com/ 14,336
Kencove (Farm Fence Supply) www.kencove.com/ 12,313
Fence Depot (Residential Fence Sales) www.fence-depot.com/ 9,839
Long Fence (East Coast full service) www.longfence.com/ 9,308
Husker Vinyl (Westech Vinyl Retail) www.huskervinyl.com/ 8,897
Discount Fence (Resi and Access Control) www.discountfence.com/ 8,819
A Vinyl Fence and Deck Wholesaler www.vinylfenceanddeck.com/ 8,614
Fence Wholesale (Residential On-line Retail) www.fencewholesale.com/ 8,328
Global Fence and Gate (Iron/Aluminum) www.globalfenceandgate.com/ 6,850
Austintown Fence Company (Vinyl/Alum.) www.afencecompany.com/ 5,559
Fence It (Strange link only page) www.fenceit.com/ 5,591
Ameristar Fence ( Leader in Metal Fence) www.ameristarfence.com/ 5,116
Better Fences (On-line Residential) www.betterfences.com/ 4,732
Artisan Precast (Concrete Wall Stamping) www.artisanprecast.com/ 4,303
Completely Random Links Page www.fence4less.com/ 4,072
Pool Fence (Removable Mesh Fence) www.poolfence.com/ 3,885
AFA (official site) www.americanfenceassociation.com/ 3,458
Ametco (Steel Fence and Industrial Products) www.ametco.com/ 2,937
Fiberon (Composite Fence and Deck) www.fiberondecking.com/ 2,670
Pacific Gate Works (Very Custom Gates) www.pacificgateworks.com/ 2,501
Buy Vinyl Fence (Complete Vinyl Line) www.buyvinylfence.com/ 2,483
Fence City (Delgard Aluminum Fence) www.fencecity.com/ 2,303
Vinyl Fence (Residential Vinyl) www.vinylfence.com/ 2,038
Great Fence (Residential Aluminum) www.greatfence.com/ 2,018
Merchants Metals (Complete Wholesale) www.merchantsmetals.com/ 1,997
Protect A Child (Removable Mesh Fence) www.protectachild.com/ 1,736
Select Fence Distributers (Aluminum Fence) www.selectfence.com/ 1,661
Royal Outdoor Prodcuts (Complete Vinyl) www.royalcrownltd.com/ 1,585
Outdoor Fence (Complete Residential) www.outdoorfence.com/ 1,579
Privacy Link (Vinyl Slats) www.eprivacylink.com/ 1,561
Bufftech Vinyl (Official Site) www.bufftech.com/ 1,498
Apollo (Complete Access Control) www.apollogate.com/ 1,480
All Star (Access Control Systems) www.allstarcorp.com/ 1,477
Pro Tarps (Privacy Screen and Solar Shade) www.protarps.com/ 1,425
American Fence Co. (Largest Fence Installers) www.americanfence.com/ 1,386
Danielle Fence Mfg.(Florida Full Service) www.daniellefence.com/ 1,357
Softward Design Specialists (Custom Software) www.fencesoftware.com/ 1,025
Boundary Fence and Railing Systems www.boundary-fences.com/ 984
Collins Company (Custom Screen and Mesh) www.collinscompany.com/ 931
All Horse Fence (Vinyl Rail and other Equine) www.allhorsefence.com/ 789
Kiwi Fence (High Tensile Fence) www.kiwifence.com/ 684
Country Estate (Vinyl and Aluminum Wholesale) www.countryestate.com/ 608
World Fence News (Key Link to News / Trends) www.worldfencenews.com/ 603
Builders Fence Co (Complete Wholesale House) www.buildersfence.com/ 456
Friday, January 11, 2008
How to Improve Your Fence Companies Online Presence
Fence Industry Sites that you can participate with for free:
1. www.usfenceguide.com will give you a free listing and send you free traffic through their national fence company database. You are invited to create an advanced account with them but it is not required.
2. DMOZ - An open Directory Project Website. Basically just a Super List of fence company links that you can submit your company to.
Basic Free Advertising Through Company Directories (Find your base add and improve it for free; most of all make sure you are listed)
1. www.Local.com
2. www.Citysearch.com
3. www.Switchboard.com
4. www.Yellowpages.com
5. www.Listcorp.com
6. www.Superpages.com
7. www.Thomasnet.com
Post a free advertisement concerning any service you are offering at:
www.craigslist.com (also - try using it when you need to find a new employee; its free)
Networking Options:
1. Start a Myspace page and throw some pics on - you can do it in about an hour. Here is one company that did just that: Champi Fence
2. Join Facebook - Be an online member of your local community - Network! Network! Network! Join the United Fencers Association Here
3. Go to "Linked" and simply add your personal professional information, company name, and website link. It will take 15 minutes. When someone types your name into Google or Yahoo - your "Linked" information will come up every time.
Fence Discussion Sites that you can participate with, comment on, and leave a link:
1. The World Famous Fence Wizard - leave a comment on any article and link back to your website - Don't forget to sign our guestbook!
2. "Fence Resource" Discussion Page - Become a member for free and dive in!
Help with your website:
Track your traffic and see exactly where your hits come from, with Google Analytics
Find out exactly who is linking back to your website with: Who Links to Me?
Review the First Fence Industry Website Traffic Comparison:"The Wizard 50"
Rainy day reading advice:
Check your company record at The Better Business Bureau (even if you are not a member your company will be listed - you need to know what your customers are reading about you).
How do Google Searches work (how can you rank higher than your competitor who does not read the Fence Wizard Page)???? Click here and take a read!
This free marketing guide has been brought to you by: "Smart Business for Contractors: A Guide to Money and the Law (For Pros, By Pros)"
- A Fence Wizard approved resource that you can buy for just $4.48.
Tuesday, December 11, 2007
The Fence Economy by Wall Street
Lets give Wall Street a chance to help. The Wizard has developed the following fund (first of its kind) of publicly traded companies that are directly related to fence material, raw product, and the Construction Industry. The idea is to evaluate a group of companies and stocks to get an idea of what Wall Street is betting on going forward. The difficulty is that there are very few publicly traded companies that focus on the fence industry. The test fund is diversified but the focus is on companies with a strong American presence; this is not an international gauge at this time. When it comes to materials such as raw steel, zinc or timber we must remember that such markets are without doubt related to the world economy, if zinc prices are up worldwide then zinc stocks will rise even if domestic demand is weak. Also - high raw material prices often indicate a strong market but we must recognize they directly hurt end users like Fence Installers who have to pay more for product. So if world demand for zinc is high - Joe Blow's Chain Link Fence Company will pay the high demand price regardless of the strength of demand in his market . Without further ado here are the fund selections, split into three groups:
1. Residential Related industries
TWP (Trex, the largest composite fence and deck manufacturer).
HD (Home Depot - we must included the giant in building product retail).
XHB (This is an index fund of U.S homebuilders...... new homes = new fences).
WLK (Westlake Chemical Principal is a leader in manufactured vinyl products including fence).
Conclusions - as expected, residential related industry has been hit very hard, the worst of our 3 subgroups, the sub prime fiasco seems to have pushed these stocks down further, the 3 month drop is substantial.2. Commercial and Industrial Related Industries
ZRBA (Zareba Systems, Inc. is the world's leading manufacturer of electronic perimeter fence and security systems for animal and access control).
GVA (Granite Construction Co. is a regular play for those betting on increased spending on public works and building projects throughout the country)
DJ_2357 (Dow Jones Heavy Construction Fund - we all know that security and fence follow these projects at regular if not increasing rate)
Conclusions: Stronger then the residential indicators because it is not dependent on the rise and fall of new homes and less dependent on consumer spending and credit worthiness. The Government will keep spending on public works -that helps holds heavy construction spending closer to constant.3. Raw material / mining, lumber, chemical, steel etc.- again international demand affects this group and it relates to all types of end users. Did you know copper prices affect the cost of pressure treated wood posts?
VMC (Vulcan Materials;concrete and aggregate products).
DJ_1733 (Dow Jones US Forestry Index covers all the major lumber yards and mills).
DJ_1770 (This global mining index includes holdings in all the big names).
DJ_1757 (Dow Jones U.S. Steel Index)
Conclusion: this group has gathered significant profit from worldwide demand for material, strength in these stocks, especially mining, will actually create a burden for domestic construction to recover as foreign demand drives up pricing. Another issue - the weak dollar makes it more and more expensive for American business to buy anything on the world market. For example - if a vinyl manufacturer is buying chemicals and oil derivatives it will cost more in dollars as our currency remains weak. Conversely, If you are drilling for crude in Texas you are benefiting greatly from a weak dollar that is helping to push up the price of oil. World markets are affecting your local company, it is important to understand why.
The Wizard Fence Fund Indicator totals:
All groups combined past 1 year: Down 3.4%
All groups combined past 3 months: Down 3.1%
This suggests that the forward thinking is very negative. We need to see the past 3 months beat the 52 week trend and turn positive in order to conclude any positive outlook is occuring on Wall St. Most of the weakness remains in residential building - this wont change much in 2008 and will likely get worse. Lets check back on this in 3 months and see if we can locate any improvement.
Here is a tip - try to avoid investing in any of stocks or etf's that i listed in the first two categories. In fact, you would want to do the opposite - short those groups (bet against them). As a member of the fence industry and the overall construction industry you already have significant risk and reward already built in to everything on the list. To be diversified, you need to invest in other industry. Remember all of the workers at Enron who had all of their savings in Enron stock..... bad idea. You could take a small stake in the "raw material" group - this would help "Hedge" your company against rising material costs in the same way that Airlines invest in crude oil futures. You too would want to have some investment in energy, this would help to "Hedge" your bottom line against things that hurt your company like higher fuel prices and electric bills. If stock in Exxon Mobile drops - don't worry too much, your probably paying less on fuel for the company fleet. Please remember - these are very basic concepts to consider and not right for everyone.
Related Articles of interest:
World Fence News Contributer Jim Lucci describes the tight rope for the fence industry.
Jp Morgan Analyst predicts Lumber Markets have reached bottom.
Matt McCall, president of Penn Financial Group says its time to look at investing in homebuilders.
World Fence News Staff Aritcle "December Field Report"
Wednesday, November 21, 2007
A Wizardly Billing Tool - Yours For Free...
The Wizard has a free tool for you. Call it an early Xmas present. We have developed an Excel file that you can use to professionally bill for partial payments. All you have to do is figure out what percentage of work you have done and punch in the numbers. The rest of the headache of redundant math and percentage calculations will be done automatically for you. This file will also calculate the retention (you choose between 5% or 10% retention). Most General Contractors require a similar format - they should accept this (and they will be impressed with the automatic template). The only problem is that Google Blogger does not allow us to upload the file to this site. So if you want the excel file template just send an email to: fencewizard@gmail.com (Type "Request Excel" in the subject) and we will forward the file to you. You obviously need to already have Microsoft Excel to run this file.
Here is what the template looks like, you can enter in your own item list in the "B" Column - I entered in some example descriptions and values. (click on it to view a larger image):
Thursday, November 1, 2007
Fleet Decisions: Gas vs. Diesel
Numerous considerations must go into your decision. You have to worry about insulting the local Chevy dealer if you buy a Ford; will Jim (your best foreman) get mad that his truck is now the second newest because Franks 76' International is the truck your replacing and not his. Will your wife complain that you are spending 50K on a new "work" truck while she is still driving the Volvo that she has managed to dent on all four corners, top, and bottom. We can't calculate those items mathematically; we can estimate the cost per mile of a new truck. Your cost per mile vs. your evil competitor is all that matters here.
We all know that Diesel has outpaced the price of gas per gallon for some time now. Lets briefly review the past three years:
As you can see Diesel is projected to stay higher in 2008 but the cost gap is narrowing. The Fence Wizard Calculator says that Gas was running 5.5% cheaper than diesel in 2005 but that number is expected to narrow to 3.1% in 2008. Those who already own diesel trucks know that paying a small premium for fuel is well worth it - lets briefly review why that is the case:Diesel trucks get much better mileage when comparing gas trucks with equivalent power (if you can find one). Overall Diesel maintenance costs are cheaper despite higher costs for oil changes; lets skip to the chase - Fleet Central has performed an exhaustive fleet review cost comparison for "Medium Duty" trucks. We will not bother re-inventing the wheel so here it is:
If you are not familiar with the depreciation line item ask your accountant if and how he or she is depreciating your rolling stock and read this depreciation guide.Ready to go Diesel?
Popular Mechanics just completed a three-way comparison of light duty diesel pickups in their December 2007 issue (Fence Wizard readers may access the article and the video free of charge). They gave the trophy to the Chevy Duramax (fastest 1/4 mile and the best fuel economy of the bunch).The fact is that running 20 year old trucks will keep your cost per mile high - you have to ask yourself how much does one transmission failure 40 miles from town actually cost you? If your ready to upgrade - the Wizard recommends that you think Diesel.
Energy Information Agency
Get Popular Mechanics for just $1.00 per issue with this special Fence Wizard Link
