Monday, July 14, 2008

Record Sales on Stoves

Both Sweeps USA and BAC Sales have had record sales in pellet appliances in June. The feeding frenzy is similar to that of 2005. The differences this year is that the heating season started in May rather than September.

In 2005 we had a banner year of pellet and wood stove sales. Most of the Pellet stove manufacturing companies were not prepared for the onslaught of stove sales. By early November there was not a pellet stove to be had. Any truck loads of stoves that we received were sold before they were unloaded off the truck. Actually all of the stoves that we were scheduled to received were sold.

The demands for Pellet Appliances were estimated to be between seven to ten times the demands for an average heating season. Manufactures had an impossible task to meet the demand. Their assembly lines just could not keep up. They couldn’t hire experienced personnel even if they ran a second shift, and the most important deterrent to production was the lack of components for the stoves. Most require at least two or more motors to operate and they also need a control board, snap switches and other sensors. All of these components take months to fill and deliver these orders. Steel was on a roller coaster on pricing and availability.

Over the late winter of 2005 and the spring of 2006 many manufactures expanded their production facilities, and they started to build massive inventories. This was all done so when the 2006 heating season arrived, they would be ready.

Another player in this scenario was the fuel supply. Because the demand was so overwhelming supplies were limited. Pricing started off the season $125 a ton finishing at nearly $300 a ton or more there for supplies were rationed.

Now here we go into the 2006 heating season. In the Northeast we had our first substantial snow storm on January 15th 2007. Oil was in low demand so prices were relaxed because of such a warm winter.

Now here comes Murphy’s Law, remember stove inventories were at record. Many manufacturers borrowed money to improve manufacturing facilities and more important purchased steel, glass and electrical components.

The 2006 Heating season turned into a disaster for many dealers. Pellet stove sales were rare. Customers were afraid that if they bought a stove, they wouldn’t have a steady supply of pellets or the pricing wouldn’t be competitive with oil or other fuels.

This non season caused both heart ache in both manufacturing and distribution alike.
One of the largest pellet stove manufacturing companies had to sell out. Some others claimed bankruptcy.

Now for the 2007 Heating season.

As a result of poor financial situation many dealers could not survive the financial burden of carrying large inventories. This most affected the hearth shops; Most of the Sweeps do not carry an inventory of appliances.

We experience many dealers closing their doors. They just could not pay their suppliers. This added the stress to the industry. Many manufacturers were giving large discounts to lesson there inventory and even with that incentive did not relieve the stressful situation.

The weather did cooperate and we had a more normal winter. Sales did pick up moderately, but not in time for all.

Spring of 2008

Oil Speculators to the rescue. Pellet manufactures increased in numbers. Pellet prices were retailed from $175 to $225 a ton and oil prices went to $4.60 + a gallon.

People had there first oil delivery in the spring and were shocked to see that it cost them a Thousand Dollars!!!!!!

The rush is on!!!!!

Now remember many manufactures are financially stressed. So there inventories are low. There materials inventories are low and they are gun shy, afraid or unable to borrow more money to build inventories and meet sales demand.

Human nature, being what it is, people usually wait until it gets cold to think about heat. Not this year! Being that the media is painting such a bleak picture as far as oil pricing, many people started looking for alternative fuels. Electric and Gas are both predicted to have large pricing increases.

Other alternatives looked great at first, bio fuels corn wheat and other grains. The competition for alcohol for auto fuel and of course the increased demand for food has driven the price of these alternatives to record costs.

Pellet manufactures for seen an increase in demand and increased their production capabilities. New pellet manufacturer have come on line, they should be better prepared to meet this year’s demand.

New products and manufactures also have come on line. St Croix is now offering two sizes of Pellet Warm Air Furnaces. Napoleon has increase there pellet line to offer a fireplace insert. The Hudson River Stove Company is offering five new models.

Of coarse the supply currently is limited, but at least the manufactures have time to react
and build units for this heating system.

Sweeps USA and BAC Sales are offering two pellet educational programs for both sales and service. The first is on August 12th for St Croix Pellet Appliances and on August 21st
Napoleon Hearth Products will give a sales and service presentation for their complete line pre registration is a must. Seminars are limited so register early so you can get the latest information. Both Seminars will be held at BAC Sales in Hudson, NY. Feel free to call me at (800) 873 1330 Ext 235.

Sweeps Luck and a Prosperous Year
Russ Moore
Sweeps USA

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