Will prices come down? 

Record inflation, raising interest rates, the aftermath of 2020, 2021 & 2022 (yes that was 3 years!!). What does this mean to the electrical contractor and the consumer you service? 

My comments are for electrical goods only as that is what I deal with 24/7 but I feel like we could see some price decreases in the coming months! Here is why I think this. Am I always right? Sometimes.  Lol 

By no means do I have a crystal ball and can see the future but this is what I have put together from talking to people in the industry and also my personal experience with distribution, contracting and importing from overseas for the last 30 years. Here are my thoughts. 

  1. Overseas freight is recently back to normal prices, sometimes even lower than pre-pandemic. During the last year, we saw the price of freight go from $2500 to over $25,000 for a 40 ft container. If you think about it in widgets or low-cost items.  A $1.00 item that you can put 100,000 pieces of into a 40 container just went from .025 cents of freight to .25 cents!  Just the higher ocean freight caused a 25% increase overnight! This forced many manufacturers to make quick and large price increases to cover these costs. 
  2. Unprecedented demand for materials as people bought more due to the rapid price increases and supply shortages. Couple that with an all-time high in building and construction. This caused another increase. It is the old adage. Supply and demand, the more demand the higher the price. We saw this with building wire and commodities. As supply became scarce prices drove up!  The copper shortage matched with high demand as folks were trying to mitigate increased costs drove the price of 14/2 and all copper wire to very high levels! 
  3. Natural disasters hit plants that make raw materials used by our manufacturers, particularly plastics and PVC. These plants were damaged in storms and had to be repaired or rebuilt before they could start production again. So we saw raw materials go up in cost and a shortage of raw materials, which are still affecting distribution materials like panels and breakers and PVC pipe today. 
  4. On top of all that we had a pandemic! Orders for personal protective gear were put on priority. Some factories switched production from what they typically made to building masks, face shields and gowns. Containers were left behind in delivery ports and ships returned empty to speed up delivery from China. The pandemic alone was enough to create havoc! 

So why do I think prices will come down?

The same reason they went up but in reverse. The pandemic is all but over, factory’s are back up and running and slowly catching up. Overseas freight is back to normal and demand is down. 

What does that mean for you? I really don’t know, remember I still don’t have that crystal ball! Manufacturers may wish to keep prices higher and recover their losses. Some manufacturers didn’t increase their costs drastically and took a more long-term view on cost increases and took the hit to support their customers, so prices will not decrease from them.  Shoot, some other crazy thing could happen still! 

There are other considerations like ongoing wars, future wars, new pandemics, and who knows what else will be thrown at us over the next years. But overall, humans are pretty resilient and have made it through tough times in the past. 

My final thought is this if it went up really fast it will probably come down. How far? How soon? Well, we will all have to see. As always, we will do our best to help as much as we can! 

Posted on Categories : Residential Panels