I want to throw a riddle at you today—one that has perplexed me for years. See if you can solve it, as I’ve been trying to for most of my adult life and all of my adult career.
Riddle me this: When is the price increase not a price increase?
Answer: When it’s a price increase in the glass industry.
Our industry does pretty much anything it can to avoid owning a true price increase. It imposes mileage surcharges, fuel and gas surcharges, utility and load surcharges, additional overtime charges and a whole variety of other charges, but it rarely calls them price increases. My favorite technique ties price changes to some esoteric price of a foreign fuel index that no one’s ever heard of before.
So here’s the real riddle: Why is this? Why is it that the glass industry cannot call a price increase just what it is? What are we afraid of?
Price increases are normal and the usual course of doing business, and glass industry suppliers should not have to exempt themselves from them when they are warranted. I think some of the hesitancy goes back at least 40 to 50 years when some unscrupulous suppliers, most of whom no longer exist, were accused of price fixing. I’ve been told anecdotally, although I’ve never verified it myself, and people actually went to jail for those activities and that others were part of long consent decree.
So I can understand why those involved would be extremely concerned about price increases. Colluding about raising prices is wrong; but just raising prices is not, and there is a major difference.
Some people say it’s because our industry needs to keep its prices showing as artificially low because its customers, such as building owners and general contractors, simply won’t stand for higher prices. That’s a hard argument to accept, because usually by the time glass is being purchased, the project is so far down the construction road that using an alternative material has been precluded. Using a lesser glass of lesser value is possible—that’s true—but often those lesser types of glass don’t provide the same performance characteristics.
Others say the glass industry is price-increase shy because we’ve done such a good job of commoditizing glass that it’s hard to work buyers out of that mindset. Some buyers still see glass as purely a square-foot proposition, with many different manufacturers providing the same product. But that’s really not the case anymore, as many different types of value-added glass exist… all was slightly different performance characteristics.
So I was heartened recently to see a number of glass suppliers simply and quietly raising their prices. And they’ve done so the old-fashioned way, by letting their customers know, and by calling the price increase the price increase. So maybe there is hope for solving this riddle after all.