If machine shops have been quoting you higher than usual lately, you may be feeling the effects of increased material costs. 

One of the major factors shops have to consider when quoting a project is the cost of materials. When material prices are low, customers benefit. Right now, shops and their customers are experiencing the opposite scenario. 

Demand for Inconel, nickel, aluminum, and copper is rapidly increasing while supply lags behind. And whenever demand outweighs supply, prices inevitably rise

There are a number of market factors that affect material costs, and unfortunately, there’s no quick fix for any of them. However, Heinz Engineering has the business background to forecast market trends and is proactively taking steps to help customers get the best possible pricing for their parts. 

Heinz Engineering Leverages Market Data to Time Material Purchases

Unlike many other shops, we carefully monitor important market data indicators reported by entities like the London Mercantile Exchange and the New York Stock Exchange. Analyzing real-time information on material cost per pound helps us strategically time raw material purchases.

From our experience, we know there’s usually a 2-3 week lag from anticipated market changes to real pricing changes. That insight gives us just enough time to make informed buying decisions. 

If the market reveals that we’ll soon face another increase, we may decide to take advantage of current pricing and buy now for a job that’s further in the future. These strategic decisions help our customers benefit from the best prices even when the market indicates otherwise.Material Prices

Helping Customers Accommodate for Increased Material Costs

Beyond forecasting market trends, we help customers navigate high material costs by: 

Conducting a design review.

A full design review allows us to analyze every aspect of your part and propose potential opportunities to cut material costs. For example, if you initially requested a round stock of material, we may recommend buying a plate of material instead if it’s more cost-effective.

Listening to Customer Feedback.

When we send an initial quote, we always ask for feedback so we can better understand our customers’ needs. If you’re surprised by the high cost of a quote relative to the last time you placed an order, let us know. We can explain any price differential and give you information to take back to your team. 

We’ve found that when we help our customers communicate challenges to their own teams, they’re more likely to get the approvals they need to move forward.

Setting up a Long Term Agreement (LTA).

Material PricesAn LTA is a great way to leverage buying power for reduced pricing.  If you have a high enough volume of work, LTAs give you the option to order material in bulk at a lower rate. You can then hold the material and provide it to us as needed.

LTAs are mutually beneficial agreements for shops and customers. Customers receive optimized pricing and we gain visibility into future orders. 

Between market data analysis and in-house strategy, Heinz Engineering is committed to helping our customers navigate the high cost of materials for as long as this trend persists. Request a quote and let us get you the best deal on materials for your next defense or aerospace machining project.