Contractor’s Market

“Nothing is as easy as it looks” the weather prognosticators lament after last year’s abysmally missed winter forecasts.

All the experts called for another brutal winter and it was anything but brutal.

So, what does that mean for deicing products in North America? It means that the market is long and it’s a buyer’s market; whatever products you need or want, are plentiful and lower in cost. That’s the good news. However, we are also saying “caveat emptor” – Latin for “buyer beware.” The reason buyers need to be extra careful right now is multifaceted; but in simple terms, a perfect storm of market conditions in the preceding two winters attracted a lot of attention.

The perfect storm consisted of a strong U.S. dollar, weak winters in Europe, weak oil drilling, weak ocean freight, and a sudden one-year spike of opportunity driven by the intense frequency of storms in North America two years ago. That all lead to a rush to the market of new and unproven players.

The salt shortages in February of 2015 illuminated an underserved market. That short market was more the result of unexpected intense velocity than actual shortages. Moreover, when we have 125 inches of snow in five weeks in the Northeast, the velocity of demand is such that no suppliers could ever meet all of that demand, and many end-users did not understand that it was a temporary condition. It is impossible to store an entire winter’s worth of inventory and then deliver that all in one month.

The oil and gas industries use many of the same materials that the deicing industry uses: salt, calcium chloride, and magnesium chloride. With the collapse of oil prices, drill bits stopped and so did the demand for these materials which we use in winter maintenance. Adding to the allure of an underserved market is the strength of the U.S. dollar against all foreign currencies. Companies servicing the oil drilling markets that had collapsed now saw hope for recovery in snow and ice control after hearing of high prices and demand that was not being serviced…or so they thought. While those industries use the same chemicals, they are in different forms not suitable for snow and ice unless you like spreading powders. Adding to this imbalance of economics is the simultaneous collapse of bulk ocean shipping from over-supply. Bulk ships that haul bulk commodities including salt from production points around the world were being parked with reduced demand.

Caveat Emptor

The quality, reliability, safety of production, and many factors that are part and parcel of ISO 9000-certified production are not at all the case in other countries. It is not as simple as saying “I’d like to buy a ship of salt” with no experience in the market, but that is exactly what happened last year as everyone hoped to cash in big on another hard winter with high prices. That winter never came so these tons sit outside, uncovered in many cases, and are not of the quality standards for gradation, moisture, and purity that many may expect.

What does this mean to the buyer? It means you may have a frozen solid pile of salt when you go to use it in sub-freezing temperatures, and it may also mean reduced performance when it is useable from the actual quality versus expected quality. If the temperatures plunge and that bargain buy on evaporated salt looked good at 40F, it’s going to not be the great experience you hoped at 5F as it needs jackhammers to move.

We also see some products showing up in the market which are low quality when produced and some are just old inventory that has been sitting around since the spring of 2015 waiting for a season to move them. As the market goes out to explore buying opportunities for the pre-season, it is essential to have a firm understanding of the manufacturer’s warranty on the condition of the product and to get that in writing. Additionally, with the rush of new companies from overseas, understand that if you have a quality or product performance problem that results in a catastrophe, you need to be comfortable being the first and possibly only line of defense legally for the problem you didn’t create in the product your company sold.

For example, we provide certificates of insurance to customers routinely showing our $4 million of product’s liability insurance in addition to the routine coverages of general liability and worker’s compensation. Products liability is not “general liability,” which covers only claims within our property. Rather, products liability insurance covers product failures and claims against the product. We constantly see certificates from companies that have liability insurance, but not products liability which is a separate and delineated line item on certificates. We represent companies with a substantial physical footprint and presence in the U.S, so there is a supply chain for any potential litigation help within the U.S. borders for claims. Try filing a slip-and-fall lawsuit against a seller with a laptop, cellphone, and leased car whose production is in a third world country and let us know how that works for you.

The market is long on every product offered. It has been a long dry spell from the producer’s viewpoint for snow and ice demand. We’ve fortified inventories to the ceiling and are awaiting the arrival of winter weather and the corresponding demand. End users and applicators of snow and ice products need to understand that if we see another high velocity winter like was saw in 2015, we will be back in the shortages again and at that point, the lower quality products will all rush the market; that is when you might find exposures to trouble. High moisture content in salt, calcium chloride, magnesium chloride, and blends from product sitting outside and uncovered in many cases for the past 20 months will either cause caking and hardening which means lumps that you have to hand remove from application equipment to keep going, or worse frozen salt piles that are more like a truckload of cantaloupes than free-flowing road salt.

Do your homework on the products. Demand a certified full chemical analysis on any product and don’t accept verbal assurances without a written certification. If the corrosion proof CMA deicer you purchased destroys $100,000 of new concrete, make sure you are not all alone paying for that product liability problem out of your pocket.

Ready to Get Started? Contact Us Concerning Your Ice, Snow & Dust Control Needs.