Agenda - Council - 04/12/2022 - Laserfiche WebLink

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i A THE RIGHT WAY March 21, 2022 To: Customers, Distributors and Stakeholders OF AMERICAN Ductile Iron Pipe,American SpiralWeld Pipe&American Flow Control Subject: Impacts of Global Supply Constrictions on Product Availability and Cost For several weeks now, the world has both observed and been affected by the conflict between Russia and Ukraine. The global economy has struggled to adjust to the impacts of the conflict, and the already stretched global supply chain has now been further limited due to constrictions on supply from those countries. As a result of this supply shortage, many of the raw materials necessary for the production of our products have already experienced critically lengthened lead times and extreme cost volatility. Additionally, costs to transport our products to market have been impacted by rising fuel prices, equipment shortages, and limited workforce. The unusual nature of this current economy has made it very difficult to predict how the flow of products to market and production costs will fluctuate. Like many manufacturers who rely on raw materials which have been impacted by global shortages, AMERICAN has been forced to update our supply structure. Customers can expect further lengthening lead times and price volatility. For our ADIP/ASWP products, base pricing can be provided at bid time, and we will provide a bid-time volatility adder or escalator (as listed by various market indexes). Final, confirmed pricing will be provided at time of shipment. As for our AFC products, we have recently updated our pricing, but further pricing updates may be necessary as supply volatility continues to impact our ability to manufacture our products and get them to market. We will work to minimize the impacts of this market unpredictability, but we have no choice other than to adapt to these historic market circumstances. No longer can there be any long- term guarantees of price or availability. As AMERICAN (and many other companies) adjusts to these new market realities, we recommend that you consider including provisions within your bid and contract process to allow for supply and cost volatility. This will reduce the unexpected impacts of supply extensions and cost increases. Our personnel are available to discuss strategies to minimize the impacts of this volatility. While there is no perfect solution for these volatile market conditions, our new supply structure is intended to help our customers and partners to plan for and adapt to current and future market impacts.As always,we at AMERICAN appreciate your support, and we thank you for your business. Sincerely, W.D. "Skip"Benton John E. Hagelskamp VP, Sales —ADIP&ASWP VP, Sales —AFC AMERICAN Ductile Iron Pipe—AMERICAN Flow Control—AMERICAN Spirahlleid Pipe—AMERICAN Steel Pipe—AMERICAN Castings—International Sales P.O.Box 2727—Eirminghar�,Alabama 35202-2727—american-usa.com