A letter from one of our suppliers - It blew me away!

Viva_La_Revolution

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Tue Oct-11-05 11:43 PM
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A letter from one of our suppliers - It blew me away!

We got this letter from one of our suppliers after Katrina hit (before Rita). Is it just me.. or does this company GET it?

I lost it during the move, otherwise I would have posted it sooner.

What do you guys think? Is this unusual?

(posted in full - names removed)

Sept. 12, 2005

To Our Valued Customers,

It seems that ever since the tragic events of September 11, 2001, all of us have been anticipating the return of a relatively stable economic environment in which to conduct our various businesses. Unfortunately, as you well know, an unprecedented series of events has made this virtually impossible. Some of these have included:

� wars in Afghanistan and Iraq;
� new governmental and regulatory guidelines (Sarbanes-Oxley, etc);
� a uniquely contentious political environment;
� the increasing influence of rapid economic development in Asia;
� the declining value of the U.S. dollar;
� the ever-changing landscape of international trade (tariffs, foreign subsidies, etc.)
� ongoing recessionary conditions in many industries (particularly manufacturing);
� heightened volatility of many raw material commodities;
� runaway costs of medical care for employers and employees

� and that�s to name just a few.

Now, as we are all painfully aware, our nation has been confronted with probably the most devastating natural disaster in our history. The loss of life and terrible hardship of our fellow citizens in Louisiana, Mississippi, and Alabama is foremost in our thoughts and prayers.

Unfortunately, the economic realities of this tragedy are also quickly becoming apparent. Even before Katrina struck, we had been enduring another round of significant inflation in both raw materials and energy costs. In the aftermath of the disaster, this pressure has further intensified. As most of you know, we typically absorb small amounts of inflation by optimizing and consolidating facilities, investing in more efficient manufacturing equipment, employing continuous improvement techniques, seeking better inventory management and capacity utilization and leveraging our purchasing efforts. However, inflation of the magnitude we�re now experiencing cannot be overcome by these initiatives. For example, oil-related products including natural gas, diesel, gasoline, and polymers have reached all-time highs, while steel scrap is already up 60% from its brief respite in June.

Looking forward, there is much uncertainty about the direction of raw material and energy prices. We have not fully decided what must be done with our won products pricing. For some products , it is clear that prices must be increased as the past few month�s inflation has already eliminated most of our operating margins. Accordingly, in some lines of business, we will be contacting customers very soon regarding price adjustments or surcharges.

We realize that in this environment any price adjustments or surcharges place a significant burden on our customers, especially those who face competition from �managed economies� that do not allow market issues to affect their pricing. During this difficult period for all of us, we are committed to working with you to find creative solutions.

Another consideration in the market today is simply the availability of raw materials. As a result of the devastation caused by Katrina, some raw material suppliers are invoking force majeure provisions regarding their supply contracts. Consequently, they may not honor the arrangements to which they previously agreed and some are not even certain they can deliver product to all of their customers. We want to quickly assure you that we are in a much stronger position than most competitors to obtain raw materials, due to our vertical integration and the large volume of products we buy, We do not believe we will experience any curtailments, bet we will likely have to pay more to maintain our supply chain.

In closing, we want to assure you that (name removed) is committed to supporting your success. We will continue our efforts to develop and patent new, proprietary components and products that allow you to offer innovative features to your customers. Working together, we can make sure that our collective output is a winning combination. We know it won�t be easy for any of us, but we embrace the challenge.

Thank you for taking time to read this letter. We greatly appreciate your business.

(name removed)
Chairman and Chief Executive Officer

(name removed)
President and Chief Operating Officer