Whip Saw

There is a disturbing trend in the stove industry. I would like to say it is a new cycle but we seem to be repeating ourselves every few years (some would argue the cycle has been shortening) and this trend can be noted as far back as the 1970's with the "wood crisis." The sudden overwhelming desire of the masses to seek an alternative due to the "recent" high cost of oil.
While we certainly appreciate this desire to get away from oil, and of course our guys like having a full schedule and job certainty, you can't look at the feast without also looking at the famine.
Famine? You ask. What do you mean famine? I can't get even book a pellet delivery in the Northeast right now!

I mean the fact that historically the year after there is a mad rush on pellet stoves and fuel (and wood, coal, corn...) the bottom seems to fall out. Orders disappear, angry people blame the industry for not being able to keep up, and when oil prices go down a bit many go back to using oil. Others have bought so much additional fuel in the hectic times it keeps them through the next heating season. What this creates is a vicious product cycle. We ramp up as fast as we can to meet demand. In the high demand times we have to buy raw materials at higher prices, we use expedited shipping methods, manufacturer's dump large amounts of money to overtime, additional staffing, extra manufacturing equipment, and warehousing to stock up for next year... But each time the bottom falls out manufacturer's and dealer's are left with mass amounts of stock, big bills, high new overhead, and regretably a lost market. Which leads to decreased production, staffing, and supply.

The last turn of this cycle was very recent. Katrina. August 2005. The moment Katrina hit pellet stoves (and wood and coal) flew off the shelves faster than we could even realize. The first few weeks we were all ecstatic about the increased flurry of sales. People came in happy to give you their money to support an alternative to oil and propane. Stove shop owners and workers felt a warm sense of accomplishment that all the hard work they had done to promote the industry was finally paying off. Then the next stove order did not come in on time. Stoves are behind. Can't get pipe. Then the backorders begin. Then the pellets fall behind due instant off the charts demand...

Then we have our first frost of the season. Overnight the mood has changed. Stove shop owners and employees are not only working at warp nine to try to keep up with the overbooked installation, and delivery schedule they are now fielding service requests and calls from those waiting for their stove who wanted their stove by now and want you to do something about it. Stove shop owners are swamped with trying to track and secure orders. The manufacturers are in the same boat. Their guys are working overtime manufacturing, shipping, and trying to secure new raw materials as quickly as possible.

But now customers are getting angry. They are mad that they can't get product NOW! They are mad that the price has gone up and start saying that they are being gouged. They scream at the guys at the stove shops. They call and yell at the manufacturers...

Still, industry folks start to talk and plan 'how to avoid this in the future.' Often followed with massive outlays of cash to move and store product in advance.

It is a long hard season but at the end each and every person I know in this industry did everything they could to install and service as many units as they could. We all worked very diligently to make sure that people had pellets to heat their home. We discouraged hoarding and by the end of the season we were only able to get people enough fuel to get through the week.

But we made it.

Now the planning was in full swing. Pellet manufacturers made deals to rail in product from plants around the country that had excess fuel. Stove manufacturers planned additional stove lines, and warehouses started to rise. Stove shop owners beefed up their staff, added equipment, invested money for new or additional warehousing and committed large amounts of money to pre-buy and store the fuel coming in from the other coast of Canada. Everyone filled their stores, warehouses, and any vacant field they could with all the product they could squeeze in. We were ready!

Then the election came.

Then the next winter (winter one year ago- 2006-2007) was a warm one.

Then the price of oil dropped.

The rumor mill was in full swing about how the industry is not viable. Customers say it wasn't worth it. The are going back to oil. The savings aren't that great anyway... Too much bother. Oh yeah, and remember the hoarding?

The bottom fell out. The saw whipped back.

After all of the time and money we invested to keep up with demand the customers disappeared. Literally. Now we had all of this product but sales fell 50%, 60%, 80% from the year before. Staff were laid off. Bills fell behind. Pellets we expected to store short term were now stranded in not ideal locations for the winter. Thousands of tons were damaged, ruined, or sold at a loss. Stove manufacturers fell into receivership (Not just pellet stove makers mind you...). Stove shops and distributors started falling like flies. Warehouses full of stoves, fields full of hundreds of thousands of dollars of fuel. Million dollar manufacturing, processing, and warehousing facilities stood full but quiet...

This last winter was a stable one. Sales were not down anymore. We had scaled back as much as we could. Those left standing were able to work through what they had left on hand. The lucky ones were able to pay off the short term loans they had to take out the previous year. Some stove manufacturers were purchased by other companies, some went into bankruptcy. Many simply shut their doors and walked away.

This year the talk of oil in the news started early. Suddenly, as though someone turned on the light switch in the middle of the night, we are back at Katrina levels of demand (if not more). Already in June we are pulling up to throngs of people waiting to buy a stove/get their fuel...

The saw is in motion.

What is my point? I guess this is just a reminder/request to all of those out there who have decided to try to get off of oil. Be patient. We are all in the same boat. Yelling will hurt not help. We appreciate that you are ready to make a change and will do everything we can to accomodate your needs as soon as we can. Know that the dealers and everyone behind them are doing all they can to service as many as we can. These units can last twenty years if you take care of them. A few months wait is a small portion of the time you will own your stove, furnace, boiler system. STICK WITH YOUR LOCAL DEALER. They will be your best resource in high demand times as well as all others.

To those who have stoves and buy fuel each year; First, thank you. Second, please do not hoard. Buy your pellets in the quantities and at the time you normally do. If you buy double what you need right now it contributes to a dangerous cycle, and may keep this low(er) cost, local, renewable fuel out of that many more homes.

To all those stove owners (old and new) be consistent. Hot and cold running support hurts us all in the end. The whip saw action/reaction cycle we have is a dangerous game. Oil is up over 400% in the last ten years. Pellets right now are still less than two years ago, and not even up 40% from ten years ago. It is viable, but it needs consistent support to be able to maintain and grow.

To borrow a saying from Fire Fighters and Rescue Workers. "We didn't cause the problem. We're just trying to help."