Labor and steel alloys would be the big ones. Steel alloys, carbon steel, stainless. Labor
would be another one. We are looking at OCTG oil country tubular goods AMM.com
do track it. They track what OCT is going up or down – but do not track the drivers or
the make up of the OCTG – what alloys make up the carbon steel that drives the price up.
It is more than the manufacturing process – the raw material make up that goes into the
OCTG products. We understand what drives the cost – but what we don’t have is – enter
into a negotiation – someone says steel has gone up 30% - but nickel has gone up 50%
which makes up 30% of steel – so you deserve a price increase – but maybe not the
whole amount. The raw materials that make up steels and OCTG commodities – and tie
the raw materials to some index – and a combination of the percentage of components
that drives up the steel price for the various compositions. The deliverable would be a
tool, but also the sources of information and indices driving. Initial contacts will be Jan
and Gene, and Rick as the key contacts. We are the internal expert for nuts and bolts for
commodities – expected to know it from end to end, and we need to build category
management group – we often bring in a field engineer to be category manager – because
they have the relationships in the field. But they are not necessarily category experts –
and the team helps to bring them along. Tool could be useful in both upstream and
downstream. Can help to drive the long-term relationship with the supplier on
negotiations – and we can tie pricing to the indexes….so track it both ways.
For cost model perspective – Shovan has some good examples that he can use.
We would be willing to spend some time with the teams out there – we want to make it