Perspectives: How Global Issues Can Dictate Your Bottom Line

Perspectives: How Global Issues Can Dictate Your Bottom Line

One of the vital tasks that shops must undertake is managing the expectations of their customers. This is really a job for anyone who sells a product. When I complain about the price of a pair of jeans that my wife buys for herself, she always says, “They don’t cost the same amount as they did 20 years ago.” My brain thinks you shouldn’t have to pay more than $20 for a shirt or pair of pants. Her brain must be double the size of mine, because so are her price expectations. It must be that some marketers and sales associates have done a good job of “educating” her through the years. Today when consumers read the newspaper or watch the news, the price of oil and gasoline is always mentioned. We all know that we are paying more at the pump, but I don’t know if we all know why. We have also read about the rising price of steel for the last couple of years. Gradually, we are paying more for items because of this rise in steel costs. The factors behind both of these price escalations have to do with the global economy. Now add A/C refrigerant R-134a to the mix of commodities that is affected by supply and demand. Demand for R-134a is increasing. Why?

  • There are 113 countries in the process of phasing out the use of CFC-12 and are using R-134a as the replacement. Some of these are countries with growing vehicle populations like China, Brazil and Mexico.

  • More new cars in Europe and China are equipped with air conditioning systems.
    Supply of R-134a is not keeping pace with demand. Why?

  • Production difficulties are causing low inventory levels.

  • Producers are switching output to other refrigerants that are in higher demand.

  • Producers are hesitant to invest in more capacity because Europe will phase out R-134a starting in 2011.

These explanations may not make a lot of sense in your market, but the fact of the matter is, what happens across the oceans impacts your business and impacts what your customers pay for service. It is always a good idea to manage your customers’ expectations by keeping them informed of what is going. An intelligent explanation of the circumstances will give you a better chance to get the sale and keep a customer.

To download a summary of the variables affecting refrigerant prices, click here.

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