1 00:00:10,640 --> 00:00:14,640 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:14,720 --> 00:00:19,360 Speaker 1: I'm Joe Wisenthal and I'm Tracy Halloway. Tracy, do you 3 00:00:19,360 --> 00:00:21,960 Speaker 1: remember our episode from I guess it was probably a 4 00:00:21,960 --> 00:00:25,240 Speaker 1: little over a month ago now about how how difficult 5 00:00:25,320 --> 00:00:27,160 Speaker 1: it is to buy or to build a home in 6 00:00:27,200 --> 00:00:31,360 Speaker 1: America right now. Um, I know there's a lot going on, 7 00:00:31,440 --> 00:00:33,560 Speaker 1: but yes, I remember the episode from a month ago. 8 00:00:33,720 --> 00:00:36,279 Speaker 1: It was a great episode. Yeah. So I kind of 9 00:00:36,280 --> 00:00:41,160 Speaker 1: think of like housing as the culmination of so many 10 00:00:41,800 --> 00:00:44,360 Speaker 1: different themes right now. And of course we talk about 11 00:00:44,520 --> 00:00:48,279 Speaker 1: lumber shortages, and the lumber lumber markets actually cooled back 12 00:00:48,320 --> 00:00:51,080 Speaker 1: off quit but since we talked about it, but land 13 00:00:51,200 --> 00:00:56,040 Speaker 1: constraints and interest rates and demographics and of course labor, 14 00:00:56,120 --> 00:01:00,680 Speaker 1: like everything kind of rolls up into housing. I would say, yeah, 15 00:01:00,920 --> 00:01:03,880 Speaker 1: that's exactly right. And I remember one of the themes 16 00:01:03,920 --> 00:01:08,000 Speaker 1: that emerged in that conversation was just the idea of 17 00:01:08,040 --> 00:01:11,520 Speaker 1: how difficult it is to build new supply at the moment. 18 00:01:11,640 --> 00:01:15,560 Speaker 1: So you had the ongoing um lumber shortage, which had 19 00:01:15,600 --> 00:01:18,520 Speaker 1: sent prices really really high. They've come down a lot 20 00:01:18,680 --> 00:01:22,480 Speaker 1: since we had that conversation, actually, But beyond lumber, there 21 00:01:22,520 --> 00:01:25,759 Speaker 1: were all these sorts of other components that go into 22 00:01:25,800 --> 00:01:29,479 Speaker 1: a house that we're also in short supply, so things 23 00:01:29,560 --> 00:01:33,240 Speaker 1: you might not necessarily even think about as you're building 24 00:01:33,280 --> 00:01:37,080 Speaker 1: a house. But I remember one thing in particular mentioned, 25 00:01:37,160 --> 00:01:41,559 Speaker 1: and that was bathtubs. Yeah, exactly right. And of course, 26 00:01:41,600 --> 00:01:43,960 Speaker 1: you know, you can have everything. You can build the 27 00:01:44,240 --> 00:01:47,440 Speaker 1: build the frame of the house. You can have the sink, 28 00:01:47,560 --> 00:01:49,240 Speaker 1: and you can have the windows, and you can have 29 00:01:49,240 --> 00:01:52,760 Speaker 1: everything else, but you know, obviously every little, every last 30 00:01:52,760 --> 00:01:55,320 Speaker 1: piece needs to be there for the house to actually 31 00:01:55,520 --> 00:01:58,560 Speaker 1: um sell, for the house to actually be ready to 32 00:01:58,600 --> 00:02:01,680 Speaker 1: move into all its ages. Is one one thing missing, 33 00:02:02,120 --> 00:02:05,040 Speaker 1: like say a bathtub or a sink or any other 34 00:02:05,080 --> 00:02:08,320 Speaker 1: piece of plumbing, and it's impossible to move into the house. 35 00:02:08,720 --> 00:02:11,639 Speaker 1: And so when you have shortages in everything all at once, 36 00:02:12,160 --> 00:02:16,120 Speaker 1: which our guest Ellie Wolf pointed out, that basically means 37 00:02:16,360 --> 00:02:20,240 Speaker 1: major headaches for the homebuilders. Yeah, and tight supply and 38 00:02:20,360 --> 00:02:23,520 Speaker 1: higher prices for what is actually out there. I would say, 39 00:02:23,560 --> 00:02:26,120 Speaker 1: though I would pay a higher price for a bathtub. 40 00:02:26,200 --> 00:02:29,240 Speaker 1: I haven't had a bathtub in like the apartments that 41 00:02:29,240 --> 00:02:32,880 Speaker 1: I'm renting for years now, and I really miss it. Yeah, 42 00:02:32,960 --> 00:02:35,840 Speaker 1: bathtubs are pretty great, well, that's so. Actually, at the 43 00:02:35,919 --> 00:02:37,840 Speaker 1: end of that episode, I think we have joked that 44 00:02:38,080 --> 00:02:40,440 Speaker 1: we're like, well, let's do a bathtub episode, and let's 45 00:02:40,440 --> 00:02:43,320 Speaker 1: just really drill down into one. And it took us 46 00:02:43,360 --> 00:02:46,160 Speaker 1: a while, but I think we're finally ready to do 47 00:02:46,320 --> 00:02:48,760 Speaker 1: the bathtub episode. We might expanded a little bit too 48 00:02:49,080 --> 00:02:51,800 Speaker 1: all of plumbing per se, but I think we're ready 49 00:02:51,840 --> 00:02:54,000 Speaker 1: to really drill down because this is an area. It's 50 00:02:54,040 --> 00:02:57,320 Speaker 1: not commodities per se, it's not land, it's not labor, 51 00:02:57,720 --> 00:03:00,400 Speaker 1: but it is a critical component. And I think we 52 00:03:00,440 --> 00:03:03,639 Speaker 1: can learn a lot by drilling down into one specific 53 00:03:03,919 --> 00:03:07,000 Speaker 1: component and learning about how this extraordinary moment of the 54 00:03:07,040 --> 00:03:11,760 Speaker 1: economy and supply chains is really affecting that totally. Um 55 00:03:11,840 --> 00:03:14,519 Speaker 1: Not only do I feel passionately about bathtubs, I feel 56 00:03:14,560 --> 00:03:18,640 Speaker 1: passionately about supply chain issues that manifest themselves in housing shortages. 57 00:03:18,720 --> 00:03:22,200 Speaker 1: So let's do it. I am very excited. We have 58 00:03:22,320 --> 00:03:25,240 Speaker 1: the perfect guest today who knows the space very well. 59 00:03:25,280 --> 00:03:28,280 Speaker 1: We're gonna be speaking with Trey Northrop. He's the America's 60 00:03:28,400 --> 00:03:32,960 Speaker 1: leader of the company LIXEL, which operates under multiple brands 61 00:03:33,000 --> 00:03:37,640 Speaker 1: including American Standard Grower d x V. He's a long 62 00:03:37,720 --> 00:03:41,000 Speaker 1: time veteran of the industry. Previously he was at Whirlpool 63 00:03:41,040 --> 00:03:44,000 Speaker 1: doing appliances, and he is going to speak to us 64 00:03:44,040 --> 00:03:48,040 Speaker 1: about bathtubs and plumbings and in this extraordinary year and 65 00:03:48,120 --> 00:03:50,880 Speaker 1: a half of selling those things in the middle of 66 00:03:51,240 --> 00:03:55,480 Speaker 1: this crisis. So Trey, thank you so much for joining us. Sure, 67 00:03:55,560 --> 00:03:59,480 Speaker 1: thanks Joe, Thanks Tracy. Uh, I'm really excited to be here. Absolutely, 68 00:03:59,520 --> 00:04:01,360 Speaker 1: So what are you just start? Uself? What? What don't 69 00:04:01,360 --> 00:04:04,880 Speaker 1: you tell us? What is lixil? What is it you sell? 70 00:04:04,920 --> 00:04:07,480 Speaker 1: Who are your customers like? Give us started the basic 71 00:04:07,560 --> 00:04:12,960 Speaker 1: overview of your business. Sure, we're We're fully integrated end 72 00:04:13,000 --> 00:04:16,920 Speaker 1: to end supplier of plumbing products, anything from toilets to 73 00:04:17,080 --> 00:04:21,279 Speaker 1: bathing two shower systems, faucets, vanities, et cetera. If it 74 00:04:21,360 --> 00:04:24,880 Speaker 1: has to do with plumbing, it exists in your bathroom 75 00:04:24,960 --> 00:04:30,680 Speaker 1: or your kitchen, we provide it. So I guess just 76 00:04:30,720 --> 00:04:33,920 Speaker 1: to step back for one second, is the business of 77 00:04:34,240 --> 00:04:39,040 Speaker 1: um bathroom supplies and plumbing is that unique in any 78 00:04:39,040 --> 00:04:43,359 Speaker 1: way to other manufacturing businesses? Are there specific aspects of 79 00:04:43,360 --> 00:04:47,080 Speaker 1: the business that make it unique? Sure? Certainly, right, it's 80 00:04:47,080 --> 00:04:51,000 Speaker 1: all about water and whether that's conservation or getting water 81 00:04:51,080 --> 00:04:52,960 Speaker 1: to the right places. In the house at the right 82 00:04:53,040 --> 00:04:57,359 Speaker 1: times to ensure that we're making better homes and reality 83 00:04:57,440 --> 00:05:01,040 Speaker 1: for everyone everywhere. That's that's primary really what we do now. 84 00:05:01,080 --> 00:05:03,960 Speaker 1: If I look at some of my other roles in 85 00:05:04,040 --> 00:05:08,800 Speaker 1: previous experiences, I think as it pertains to housing in total, 86 00:05:08,960 --> 00:05:11,719 Speaker 1: is you can't complete the house, you can't get a 87 00:05:11,760 --> 00:05:16,320 Speaker 1: certificate of occupancy without those products. And they're vital not 88 00:05:16,360 --> 00:05:20,000 Speaker 1: only to closing a home but to any homeowner. So 89 00:05:20,160 --> 00:05:24,400 Speaker 1: what is what is the the customer mix in terms 90 00:05:24,480 --> 00:05:28,039 Speaker 1: of what you sell? How much is sort of the 91 00:05:28,120 --> 00:05:30,760 Speaker 1: home's first bathroom, how much has sold through the home 92 00:05:30,800 --> 00:05:35,680 Speaker 1: builder itself versus say renovations in existing home. Someone wants 93 00:05:35,720 --> 00:05:39,160 Speaker 1: to install a new bathroom or new bathtub, or just 94 00:05:39,279 --> 00:05:41,640 Speaker 1: replace an existing thing, like give us this sort of 95 00:05:41,680 --> 00:05:46,560 Speaker 1: like the breakdown. Sure, yeah, that's a great question, Joe Um. 96 00:05:46,600 --> 00:05:49,200 Speaker 1: I think what's interesting is the evolution and it really 97 00:05:49,200 --> 00:05:51,839 Speaker 1: only accelerated over the last year and a half of 98 00:05:51,880 --> 00:05:55,479 Speaker 1: the pandemic. So previous to the pandemic, quite often the 99 00:05:55,520 --> 00:05:59,359 Speaker 1: average consumer would rely on a plumber or someone to 100 00:05:59,520 --> 00:06:02,840 Speaker 1: install these products in their house. And really what we 101 00:06:02,880 --> 00:06:05,560 Speaker 1: saw over the last year and a half was do 102 00:06:05,640 --> 00:06:09,039 Speaker 1: it yourself. Begin to really take off because of the 103 00:06:09,080 --> 00:06:11,919 Speaker 1: concerns people had over health and safety and allowing people 104 00:06:11,920 --> 00:06:14,839 Speaker 1: into their homes. So we've really seen a transition there. 105 00:06:14,839 --> 00:06:18,120 Speaker 1: And if you look today, the general route to market 106 00:06:18,520 --> 00:06:21,799 Speaker 1: for a consumer is either to go to a distributor 107 00:06:22,240 --> 00:06:24,760 Speaker 1: call up their local plumber, or go to a d 108 00:06:24,920 --> 00:06:28,400 Speaker 1: I y like a Menard's allows or a home depot 109 00:06:28,480 --> 00:06:31,280 Speaker 1: to purchase the products. Now, what we are seeing is 110 00:06:31,320 --> 00:06:35,120 Speaker 1: a transition more in this environment to online purchasing and 111 00:06:35,240 --> 00:06:40,120 Speaker 1: online behaviors. So just based off of that, maybe you 112 00:06:40,120 --> 00:06:43,320 Speaker 1: could walk us through what happened over the past year 113 00:06:43,440 --> 00:06:48,440 Speaker 1: or so. How extreme are the supply shortages that you're experiencing, 114 00:06:48,920 --> 00:06:52,440 Speaker 1: and how much of that is demand for components as 115 00:06:52,480 --> 00:06:55,080 Speaker 1: people you know, stay at home and decide to upgrade 116 00:06:55,080 --> 00:07:00,680 Speaker 1: their bathrooms versus actual supply shortages like use in your 117 00:07:00,680 --> 00:07:06,000 Speaker 1: supply chain. Sure, I think it was a perfect storm 118 00:07:06,040 --> 00:07:08,960 Speaker 1: of events right the pandemic hit us, we all took 119 00:07:09,000 --> 00:07:13,600 Speaker 1: a step back, um, certainly just as consumers, but also 120 00:07:13,640 --> 00:07:15,920 Speaker 1: as business leaders and said, hey, we don't know how 121 00:07:15,920 --> 00:07:18,800 Speaker 1: long this is gonna last. We want to make sure 122 00:07:18,840 --> 00:07:22,520 Speaker 1: we preserve cash and capital. We want to make sure 123 00:07:22,560 --> 00:07:26,080 Speaker 1: we keep our employees safe and engaged and what we 124 00:07:26,120 --> 00:07:27,680 Speaker 1: need to do in that space. And I think the 125 00:07:27,720 --> 00:07:31,720 Speaker 1: first reaction was to make sure we had the right 126 00:07:31,840 --> 00:07:34,720 Speaker 1: levels of safety and place for for our employees, and 127 00:07:34,760 --> 00:07:38,080 Speaker 1: then second make sure we had enough resources to sustain 128 00:07:38,120 --> 00:07:41,560 Speaker 1: our business and and be profitable until this was over. 129 00:07:42,240 --> 00:07:43,600 Speaker 1: And I think not only did you see that in 130 00:07:43,640 --> 00:07:46,200 Speaker 1: the plumbing industry, you saw it in terms of raw 131 00:07:46,240 --> 00:07:49,880 Speaker 1: materials and almost in any other business. And because of that, 132 00:07:50,200 --> 00:07:54,080 Speaker 1: we saw a sharp drop in demand initially right and 133 00:07:54,120 --> 00:07:56,960 Speaker 1: then everybody took a couple of weeks, and then what 134 00:07:57,000 --> 00:08:00,120 Speaker 1: we saw was is people stayed at home, um they 135 00:08:00,120 --> 00:08:03,400 Speaker 1: started to work on their houses themselves or their apartments. 136 00:08:03,800 --> 00:08:06,800 Speaker 1: And what happened was then a huge rush and spike 137 00:08:07,120 --> 00:08:10,080 Speaker 1: in demand. And so we kind of had a whipsaw 138 00:08:10,200 --> 00:08:13,480 Speaker 1: effect and our factories and certainly from our third party 139 00:08:13,520 --> 00:08:18,760 Speaker 1: suppliers and trying to preserve preserve our business to oh wow, 140 00:08:18,800 --> 00:08:21,960 Speaker 1: there's a significant amount of demand. And so with that spike, 141 00:08:22,080 --> 00:08:26,040 Speaker 1: certainly what we saw was an increase in lead times 142 00:08:26,400 --> 00:08:28,960 Speaker 1: to get the raw materials we need to produce our 143 00:08:29,000 --> 00:08:32,240 Speaker 1: products or from third party suppliers. And then when you 144 00:08:32,240 --> 00:08:36,240 Speaker 1: start to add logistics into this, because our products come, um, 145 00:08:36,240 --> 00:08:39,640 Speaker 1: primarily from North America, but we also do source from 146 00:08:39,640 --> 00:08:43,240 Speaker 1: all around the world. You started to see constraints within 147 00:08:43,280 --> 00:08:46,560 Speaker 1: the logistics chain, so whether it were not enough ships 148 00:08:46,960 --> 00:08:51,040 Speaker 1: or not enough containers, and then huge spikes and inflation 149 00:08:51,120 --> 00:08:53,640 Speaker 1: in those And then once we kind of got that 150 00:08:53,760 --> 00:08:57,560 Speaker 1: whole predicament sorted and settled out, then what we saw 151 00:08:57,679 --> 00:09:01,000 Speaker 1: was a huge change in labor. So now you didn't 152 00:09:01,000 --> 00:09:05,080 Speaker 1: have enough plumbers. Um, Now we didn't have enough qualified 153 00:09:05,080 --> 00:09:07,360 Speaker 1: truckers once the products were here to get them to 154 00:09:07,400 --> 00:09:09,400 Speaker 1: the right places in the right times. And then we 155 00:09:09,440 --> 00:09:13,520 Speaker 1: didn't have enough people to do the work necessary to 156 00:09:13,600 --> 00:09:15,920 Speaker 1: bring a lot of this to life. And so um, 157 00:09:15,960 --> 00:09:18,680 Speaker 1: just when you think you've figured it all out and 158 00:09:18,720 --> 00:09:21,160 Speaker 1: you've got your supply chain ready and up and rolling, 159 00:09:21,480 --> 00:09:23,679 Speaker 1: something new kind of jumps in front of us. So 160 00:09:23,679 --> 00:09:26,160 Speaker 1: so it's really given us an opportunity to be more 161 00:09:26,240 --> 00:09:29,880 Speaker 1: agile and effective and really position ourselves better for the 162 00:09:29,920 --> 00:09:33,160 Speaker 1: future through this. Sorry, I just want to back up 163 00:09:33,200 --> 00:09:36,400 Speaker 1: and clarify a previous questions. So you mentioned this sort 164 00:09:36,400 --> 00:09:39,640 Speaker 1: of the shift from the consumer. Okay, more d I Y, 165 00:09:39,720 --> 00:09:42,120 Speaker 1: But how much of a sort of the total sales 166 00:09:42,200 --> 00:09:46,640 Speaker 1: mix is a consumer doing something to their house, upgrading 167 00:09:46,640 --> 00:09:51,120 Speaker 1: their bathroom or whatever, versus say a new installation at 168 00:09:51,160 --> 00:09:55,360 Speaker 1: an apartment or a new home construction. Sure, so I 169 00:09:55,400 --> 00:09:58,080 Speaker 1: think in the total business, you'd be looking at a 170 00:09:58,240 --> 00:10:00,679 Speaker 1: d I Y which has grown significant only again over 171 00:10:00,720 --> 00:10:03,600 Speaker 1: the last year and a half, but it's probably up 172 00:10:03,640 --> 00:10:08,480 Speaker 1: in the industry just somewhere in the neighborhood of thirty. 173 00:10:09,120 --> 00:10:12,439 Speaker 1: But how what percent of a new we say, bathtubs 174 00:10:12,520 --> 00:10:16,720 Speaker 1: or showers are not sold to the consumer doing an upgrade, 175 00:10:16,760 --> 00:10:20,440 Speaker 1: but just an original installation within a home. Right, that's 176 00:10:20,480 --> 00:10:26,000 Speaker 1: the other six percent is done whether it's in new construction, 177 00:10:26,320 --> 00:10:29,240 Speaker 1: whether it's in remodel through a distributor, or remodel through 178 00:10:29,360 --> 00:10:34,480 Speaker 1: got it. I'm just curious in terms of shortages, are 179 00:10:34,520 --> 00:10:37,680 Speaker 1: there is there a variation across your products, Like are 180 00:10:37,760 --> 00:10:42,480 Speaker 1: some things more available than others? So I was reading recently, 181 00:10:42,480 --> 00:10:47,000 Speaker 1: for instance, that bathroom vanities apparently had been impacted by 182 00:10:47,120 --> 00:10:50,280 Speaker 1: a shortage of acrylics. So I'm just curious, like, are 183 00:10:50,280 --> 00:10:52,680 Speaker 1: you seeing a variation or is it sort of across 184 00:10:52,679 --> 00:10:56,280 Speaker 1: the board. It is primarily across the board, But you're 185 00:10:56,360 --> 00:10:58,400 Speaker 1: right in terms of acrylics, and that's a big part 186 00:10:58,400 --> 00:11:00,960 Speaker 1: of bathing um in bathtub ubs, and there is a 187 00:11:01,000 --> 00:11:03,200 Speaker 1: shortage there as well. I think you are also seeing 188 00:11:03,200 --> 00:11:06,520 Speaker 1: shortages in anything that takes copper at the moment right, 189 00:11:06,559 --> 00:11:09,319 Speaker 1: which is primarily our faucets and a lot of instances. 190 00:11:09,360 --> 00:11:13,199 Speaker 1: So raw materials is having a huge effect not only 191 00:11:13,559 --> 00:11:16,200 Speaker 1: in terms of what we can procure, but also in 192 00:11:16,360 --> 00:11:21,240 Speaker 1: terms of the price increases we've seen from from our 193 00:11:21,280 --> 00:11:25,200 Speaker 1: suppliers UM to get those products today. I think even 194 00:11:25,480 --> 00:11:29,120 Speaker 1: if you look at containers, containers are a huge huge 195 00:11:29,120 --> 00:11:32,240 Speaker 1: issue for us from a logistics standpoint today as well. 196 00:11:32,440 --> 00:11:35,200 Speaker 1: Let's let's back up even further a little bit. Actually, 197 00:11:35,280 --> 00:11:39,080 Speaker 1: let's just talk about normal times. What's in a bathtub? 198 00:11:39,360 --> 00:11:42,040 Speaker 1: If someone buys a bathtub, what what goes into it? 199 00:11:42,120 --> 00:11:45,720 Speaker 1: And where is it likely where would it be manufactured? 200 00:11:46,280 --> 00:11:50,959 Speaker 1: Most of our bathtubs are produced here in the America's UM. 201 00:11:51,000 --> 00:11:56,120 Speaker 1: We do source some products from overseas, but primarily here 202 00:11:56,120 --> 00:11:58,560 Speaker 1: and so generally when you talk about bathtubs, you have 203 00:11:59,360 --> 00:12:03,600 Speaker 1: SMC or acrylic are the primary components and they're formed 204 00:12:04,240 --> 00:12:07,480 Speaker 1: to create the bathtub that you're used to seeing today. 205 00:12:07,559 --> 00:12:10,560 Speaker 1: Now you certainly have drains, so there's steel is a 206 00:12:10,600 --> 00:12:13,719 Speaker 1: piece of that um. But but in total, that's primarily 207 00:12:13,760 --> 00:12:15,560 Speaker 1: what you see. Now. You may think a little bit 208 00:12:15,600 --> 00:12:18,360 Speaker 1: about whirlpools in total that pushed the water around, but 209 00:12:18,800 --> 00:12:22,160 Speaker 1: that segment in total is really declined quite a bit 210 00:12:22,520 --> 00:12:26,079 Speaker 1: over the last year. Is people transition more into showers 211 00:12:26,360 --> 00:12:28,880 Speaker 1: than they do into tubs and total, and so you're 212 00:12:28,920 --> 00:12:33,400 Speaker 1: seeing that kind of move. What's SMC. It's a more 213 00:12:33,640 --> 00:12:37,800 Speaker 1: value raw material that we use. It's a little bit 214 00:12:37,880 --> 00:12:40,440 Speaker 1: cheaper than acrylic and creates more value in the market. 215 00:12:40,760 --> 00:12:43,600 Speaker 1: It's less durable by the way as well. And where 216 00:12:43,640 --> 00:12:47,079 Speaker 1: are your products mostly manufactured? So we have a few 217 00:12:47,200 --> 00:12:53,440 Speaker 1: different manufacturing plants in the US, so Ohio, Dallas, and 218 00:12:53,480 --> 00:12:56,600 Speaker 1: then we also produce quite a bit of Mexico and 219 00:12:56,679 --> 00:13:00,560 Speaker 1: that those the SMC or the acrylic. Where where would 220 00:13:00,559 --> 00:13:03,480 Speaker 1: that typically be sourced from? So so we do a 221 00:13:03,480 --> 00:13:06,240 Speaker 1: bit of that in Ohio, and then we sourced it 222 00:13:06,280 --> 00:13:09,840 Speaker 1: from other manufacturers in the US, but also overseason Asia. 223 00:13:11,160 --> 00:13:15,200 Speaker 1: So I guess we're trying to pinpoint specific issues in 224 00:13:15,559 --> 00:13:18,320 Speaker 1: your supply chains. So I think we're all familiar with 225 00:13:18,360 --> 00:13:23,040 Speaker 1: this idea that COVID through a bunch of businesses off guard. 226 00:13:23,280 --> 00:13:26,240 Speaker 1: People thought there would be a big drop in demand 227 00:13:26,360 --> 00:13:29,360 Speaker 1: for various goods, and instead we saw a surge and 228 00:13:29,880 --> 00:13:32,080 Speaker 1: businesses had cut back on production and so they had 229 00:13:32,120 --> 00:13:35,319 Speaker 1: to ramp it up very very quickly. But I'm just curious, 230 00:13:35,679 --> 00:13:39,920 Speaker 1: in terms of your supply chain, were there particular pressure 231 00:13:40,000 --> 00:13:46,400 Speaker 1: points that you weren't expecting as that that dynamic unfolded. So, 232 00:13:46,520 --> 00:13:50,000 Speaker 1: for instance, would you have expected an acrylics supplier to 233 00:13:50,200 --> 00:13:52,880 Speaker 1: ramp up supply but then they weren't able to do 234 00:13:52,920 --> 00:13:56,200 Speaker 1: that because I don't know one of their suppliers had 235 00:13:56,240 --> 00:13:59,400 Speaker 1: also experienced issues. What I guess what surprised you the 236 00:13:59,440 --> 00:14:04,160 Speaker 1: most out the supply chain shortages? Yeah? Sure, so, so 237 00:14:04,200 --> 00:14:06,560 Speaker 1: I think what's really interesting about this and I look 238 00:14:06,600 --> 00:14:10,319 Speaker 1: at the supply chain in total um, The first impact 239 00:14:10,640 --> 00:14:12,440 Speaker 1: that hit us that maybe a lot of people don't 240 00:14:12,480 --> 00:14:16,000 Speaker 1: think about is safety. Right. So if you're used to 241 00:14:16,040 --> 00:14:18,360 Speaker 1: being in a facility where the person if you're an 242 00:14:18,360 --> 00:14:21,520 Speaker 1: operator and the person next to you is working within 243 00:14:21,600 --> 00:14:25,200 Speaker 1: two feet, they needed to be distanced to six ft, right, 244 00:14:25,240 --> 00:14:27,840 Speaker 1: and so that's going to really affect your yield. So 245 00:14:27,880 --> 00:14:30,640 Speaker 1: if you were producing what you thought was going to 246 00:14:30,680 --> 00:14:34,200 Speaker 1: be twenty thou toilets a day, you've got to cut 247 00:14:34,280 --> 00:14:38,520 Speaker 1: that in some instances by a third right and just 248 00:14:38,560 --> 00:14:41,560 Speaker 1: to create the right safety because safety is and continues 249 00:14:41,600 --> 00:14:44,880 Speaker 1: to be paramount for us at LIXEL, for every one 250 00:14:44,920 --> 00:14:47,720 Speaker 1: of our employees, even when we return to the office, 251 00:14:47,720 --> 00:14:49,440 Speaker 1: it will be the same way. So that might be 252 00:14:49,480 --> 00:14:52,800 Speaker 1: one of the first things that impacted us. And so 253 00:14:52,880 --> 00:14:55,520 Speaker 1: we might have had the ability to produce more or 254 00:14:55,560 --> 00:14:59,280 Speaker 1: able to procure enough raw materials to produce more, but 255 00:14:59,360 --> 00:15:01,760 Speaker 1: we didn't have the space. And so that kind of 256 00:15:01,800 --> 00:15:04,600 Speaker 1: leads you to the next piece that says, should we 257 00:15:04,680 --> 00:15:09,760 Speaker 1: make bigger capital investments to our plants to create more 258 00:15:09,840 --> 00:15:12,960 Speaker 1: space inside of them? And what what does that mean? Right, 259 00:15:12,960 --> 00:15:15,120 Speaker 1: Because if we're going to do that, that's a large 260 00:15:15,120 --> 00:15:17,760 Speaker 1: investment and we're just going to go back to distancing 261 00:15:17,800 --> 00:15:20,280 Speaker 1: people two feet. Well, now you've got all this extra 262 00:15:20,320 --> 00:15:23,000 Speaker 1: space that you might not need. And we're very conscious 263 00:15:23,000 --> 00:15:25,360 Speaker 1: about how we how we do that and how we 264 00:15:25,400 --> 00:15:27,840 Speaker 1: look at it. And so from a first standpoint, that 265 00:15:27,880 --> 00:15:30,480 Speaker 1: was kind of the first bottleneck that we saw. Once 266 00:15:30,560 --> 00:15:32,960 Speaker 1: we were able to change our factory master plans and 267 00:15:33,040 --> 00:15:35,840 Speaker 1: aligne everything, we felt really comfortable there, right, and we 268 00:15:35,920 --> 00:15:38,240 Speaker 1: got our outputs up. And so the next big thing 269 00:15:38,280 --> 00:15:43,000 Speaker 1: that hit us is we we change our mix in 270 00:15:43,120 --> 00:15:48,360 Speaker 1: plumbing based on production needs UM and spikes in that 271 00:15:48,520 --> 00:15:52,080 Speaker 1: supply chain, and we start with the America's first, because 272 00:15:52,120 --> 00:15:54,880 Speaker 1: it's the easiest for us to get and move all 273 00:15:54,880 --> 00:15:58,400 Speaker 1: around the America's itself UM. From there we go overseas 274 00:15:58,800 --> 00:16:02,760 Speaker 1: UM and generally we happened to excess capacity we have 275 00:16:02,880 --> 00:16:05,840 Speaker 1: in other regions, being a global manufacturer, and so we 276 00:16:05,880 --> 00:16:07,600 Speaker 1: had all of our plans set up for that. Well, 277 00:16:07,680 --> 00:16:10,560 Speaker 1: the next big surprise we had was we couldn't get 278 00:16:10,720 --> 00:16:13,760 Speaker 1: enough containers. I think there's a round about two and 279 00:16:13,840 --> 00:16:17,200 Speaker 1: a half million containers in the world at the time. 280 00:16:17,640 --> 00:16:20,520 Speaker 1: That two and a half million were all full, like 281 00:16:20,760 --> 00:16:24,480 Speaker 1: within a week, and so now we had all of 282 00:16:24,520 --> 00:16:27,560 Speaker 1: this extra product that we couldn't get on a container, 283 00:16:27,960 --> 00:16:31,640 Speaker 1: and prices for containers went from about three to four 284 00:16:31,720 --> 00:16:34,600 Speaker 1: thousand a container to bring them over here to now 285 00:16:34,640 --> 00:16:37,360 Speaker 1: today somewhere between depending where you get it on the market, 286 00:16:37,360 --> 00:16:41,040 Speaker 1: thirteen to fifteen thousand. So that's created a huge spike 287 00:16:41,360 --> 00:16:44,880 Speaker 1: and costs there. So once we were able to understand 288 00:16:45,440 --> 00:16:48,960 Speaker 1: in in align the containers that we needed, guess what 289 00:16:49,040 --> 00:16:52,240 Speaker 1: the next problem is, not enough boats and not enough 290 00:16:52,240 --> 00:16:56,360 Speaker 1: ships to get tost containers here, and because what you'll 291 00:16:56,400 --> 00:16:59,480 Speaker 1: see what's really interesting is getting them from Asia to 292 00:16:59,600 --> 00:17:02,880 Speaker 1: here is a big issue. Sending them back. Many things 293 00:17:02,920 --> 00:17:05,760 Speaker 1: are going back empty right now, right and so it's 294 00:17:05,800 --> 00:17:08,520 Speaker 1: just not as efficient as anyone would like it to be. 295 00:17:08,640 --> 00:17:11,560 Speaker 1: And so kind of my point earlier was as we 296 00:17:11,640 --> 00:17:14,720 Speaker 1: start to whack them all, all of these new things 297 00:17:14,800 --> 00:17:17,720 Speaker 1: come up that we just never anticipated before. Maybe part 298 00:17:17,720 --> 00:17:20,280 Speaker 1: of that's on us, but part of it is is 299 00:17:20,320 --> 00:17:23,160 Speaker 1: a bit of the nature of this beast as it evolves. 300 00:17:40,160 --> 00:17:42,280 Speaker 1: I want to go back to the raw materials question 301 00:17:42,359 --> 00:17:45,080 Speaker 1: for a second. So you mentioned shortages of say just 302 00:17:45,119 --> 00:17:48,720 Speaker 1: even basics like acrylic. What happens when you go to 303 00:17:49,680 --> 00:17:52,680 Speaker 1: one of your acrylic suppliers and you say, okay, we're 304 00:17:52,960 --> 00:17:55,840 Speaker 1: but we need this much for this many tubs or 305 00:17:55,880 --> 00:17:59,560 Speaker 1: whatever it is, or or or sinks, and they come 306 00:17:59,560 --> 00:18:02,199 Speaker 1: back to you they talk about either higher prices or 307 00:18:02,280 --> 00:18:05,120 Speaker 1: longer lead times. What are they saying. What are they 308 00:18:05,119 --> 00:18:09,080 Speaker 1: saying is the cause of their own constraints, their own 309 00:18:09,160 --> 00:18:13,800 Speaker 1: inability to get you supply as fast as you'd like. Sure, 310 00:18:13,880 --> 00:18:17,560 Speaker 1: the biggest issue is capacity in total. And again, as 311 00:18:17,600 --> 00:18:21,840 Speaker 1: we talked earlier, everybody kind of took a second took 312 00:18:21,880 --> 00:18:24,479 Speaker 1: inventory of where they were when this started and in 313 00:18:24,520 --> 00:18:28,640 Speaker 1: many instances really went into preservation mode. And because of that, 314 00:18:28,720 --> 00:18:31,160 Speaker 1: you just can't ramp back up fast enough. And so 315 00:18:31,560 --> 00:18:33,480 Speaker 1: UM we have a lot of great partners, a lot 316 00:18:33,480 --> 00:18:35,959 Speaker 1: of great third party suppliers, and we really try to 317 00:18:36,080 --> 00:18:39,760 Speaker 1: work with them UM to create when when scenarios for 318 00:18:39,840 --> 00:18:44,240 Speaker 1: everybody UM. And certainly they have passed along pricing to us, 319 00:18:44,720 --> 00:18:47,320 Speaker 1: and we've tried to mitigate that in every effort and 320 00:18:47,400 --> 00:18:51,840 Speaker 1: instance that we can through efficiencies, but that's not always 321 00:18:51,880 --> 00:18:54,760 Speaker 1: the case. And so the kind of conversations that we 322 00:18:54,800 --> 00:18:59,240 Speaker 1: have with our suppliers are how important is the relationship, 323 00:18:59,800 --> 00:19:02,440 Speaker 1: How how much can we stretch what we can produce 324 00:19:02,880 --> 00:19:07,119 Speaker 1: without putting risks to our commitments to our consumers and customers? 325 00:19:07,359 --> 00:19:10,280 Speaker 1: And then what can we do and how fast can 326 00:19:10,280 --> 00:19:14,720 Speaker 1: we increase capacity knowing that at some point you're going 327 00:19:14,800 --> 00:19:17,199 Speaker 1: to reach the top end of the capacity needed and 328 00:19:17,240 --> 00:19:20,080 Speaker 1: you don't want to create extra capacity that you then 329 00:19:20,160 --> 00:19:23,080 Speaker 1: have to wean off of over time that can be 330 00:19:23,119 --> 00:19:26,200 Speaker 1: an additional cost as well. And we're still having those 331 00:19:26,240 --> 00:19:30,280 Speaker 1: conversations today in many instances across a lot of our products. 332 00:19:30,840 --> 00:19:33,080 Speaker 1: This is something that I want to ask you about so, 333 00:19:33,200 --> 00:19:36,800 Speaker 1: in terms of raw materials, does it feel like you 334 00:19:36,880 --> 00:19:40,280 Speaker 1: have to compete in order to get your hands on 335 00:19:40,560 --> 00:19:43,399 Speaker 1: those supplies? Um. And the reason I asked that is 336 00:19:43,400 --> 00:19:46,800 Speaker 1: because we've spoken a lot about the container shortage over 337 00:19:46,840 --> 00:19:48,879 Speaker 1: the past year, and one of the things that comes 338 00:19:48,880 --> 00:19:53,040 Speaker 1: out from those conversations consistently is that if you're a 339 00:19:53,040 --> 00:19:55,359 Speaker 1: big ship or you know, someone like a Walmart or 340 00:19:55,400 --> 00:20:00,920 Speaker 1: an Ikea, you can probably still source some supply of containers. 341 00:20:01,080 --> 00:20:03,480 Speaker 1: But if you're a smaller player, that's going to be 342 00:20:03,520 --> 00:20:07,320 Speaker 1: more difficult. Yeah, I don't I don't think we've really 343 00:20:07,440 --> 00:20:12,560 Speaker 1: seen an issue procuring raw materials, containers, things like that, 344 00:20:12,600 --> 00:20:15,919 Speaker 1: as long as you're willing to pay the premium for those, right, 345 00:20:15,920 --> 00:20:17,840 Speaker 1: And that's driven up the cost. And I think not 346 00:20:17,920 --> 00:20:20,960 Speaker 1: just in plumbing, but I think everywhere you're seeing inflation 347 00:20:21,119 --> 00:20:23,280 Speaker 1: start to to take hold, and a lot of it 348 00:20:23,320 --> 00:20:25,960 Speaker 1: is because of that, right, there's excess demand and there's 349 00:20:26,000 --> 00:20:28,760 Speaker 1: a shortage of supply. Now, I think we've also seen 350 00:20:28,840 --> 00:20:32,680 Speaker 1: in lumber that's coming back to normally even crashing back 351 00:20:32,680 --> 00:20:35,320 Speaker 1: to normal in some instances. We haven't really seen that 352 00:20:35,560 --> 00:20:38,159 Speaker 1: in the raw materials that we have used yet. And 353 00:20:38,320 --> 00:20:42,960 Speaker 1: I don't think we will see relief from that, certainly 354 00:20:43,000 --> 00:20:45,159 Speaker 1: within the next twelve months, and I could see it 355 00:20:45,200 --> 00:20:49,720 Speaker 1: being elevated longer than that, only because there's still really 356 00:20:49,800 --> 00:20:53,440 Speaker 1: high demand for housing as well as do it yourself 357 00:20:53,560 --> 00:20:56,800 Speaker 1: based on the projections that we're seeing. What you know, 358 00:20:56,880 --> 00:21:00,280 Speaker 1: you mentioned the surging price of containers. Of course, there's 359 00:21:00,320 --> 00:21:03,280 Speaker 1: something we've discussed. But okay, so it goes from three 360 00:21:03,359 --> 00:21:07,639 Speaker 1: thousand two in the teens thousands. What is the I 361 00:21:07,640 --> 00:21:10,600 Speaker 1: don't know the value of what's being shipped, like how 362 00:21:10,680 --> 00:21:13,640 Speaker 1: much of this sort of how much does that eat 363 00:21:13,720 --> 00:21:17,000 Speaker 1: into the total the gross the gross value of what's 364 00:21:17,000 --> 00:21:22,040 Speaker 1: in that container. Yeah, it is significant enough that we 365 00:21:22,200 --> 00:21:26,560 Speaker 1: can't offset it through other measures, um within our own business, 366 00:21:26,600 --> 00:21:30,399 Speaker 1: and so that's why we've had to pick pricing in 367 00:21:30,440 --> 00:21:33,080 Speaker 1: the market ourselves, and we've tried to minimize that to 368 00:21:33,119 --> 00:21:36,240 Speaker 1: the extent we can to ensure that we're creating value 369 00:21:36,520 --> 00:21:39,280 Speaker 1: for our customers and for the consumer. But it's something 370 00:21:39,280 --> 00:21:41,399 Speaker 1: we just haven't been able to offset in total, and 371 00:21:41,440 --> 00:21:44,080 Speaker 1: it's it's a large number, um when you add up 372 00:21:44,320 --> 00:21:46,360 Speaker 1: all of the products that we sell on the containers 373 00:21:46,400 --> 00:21:49,359 Speaker 1: that we purchase. So on that note, can you maybe 374 00:21:49,359 --> 00:21:52,520 Speaker 1: describe what's happened to your margins over the past year 375 00:21:52,760 --> 00:21:56,000 Speaker 1: and if there's anything you're doing to offset that. Yeah, well, 376 00:21:56,000 --> 00:21:58,520 Speaker 1: we're trying to be as efficient as possible and as 377 00:21:58,640 --> 00:22:01,640 Speaker 1: as the world's changed, we've it's been all about give 378 00:22:01,720 --> 00:22:04,600 Speaker 1: and take, right. Um, So we've seen a lot of 379 00:22:04,600 --> 00:22:09,040 Speaker 1: our budgets that were allocated towards traveling and those types 380 00:22:09,080 --> 00:22:11,439 Speaker 1: of expenses really come down and that's been able to 381 00:22:11,520 --> 00:22:14,879 Speaker 1: offset some of the inflation and higher production costs that 382 00:22:14,920 --> 00:22:19,080 Speaker 1: we've had. As we've had the social distance within our facilities. Um, 383 00:22:19,119 --> 00:22:22,320 Speaker 1: we found new ways to market, new ways to partner 384 00:22:22,359 --> 00:22:25,679 Speaker 1: with our customers, and for us, we've been able to 385 00:22:25,720 --> 00:22:30,080 Speaker 1: remain stable throughout this time. But again we've also had 386 00:22:30,119 --> 00:22:32,560 Speaker 1: to take pricing to be able to do that. One 387 00:22:32,640 --> 00:22:34,840 Speaker 1: of the ironies, and this has come up before on 388 00:22:34,960 --> 00:22:39,360 Speaker 1: previous episodes, is with people flying less, there's less air cargo, 389 00:22:40,160 --> 00:22:43,640 Speaker 1: and so everyone cuts back on travel expenses, and then 390 00:22:43,840 --> 00:22:46,560 Speaker 1: there's less air uh, and then there's less air travel 391 00:22:46,560 --> 00:22:48,800 Speaker 1: and there's less air cargo, and then more even more 392 00:22:48,840 --> 00:22:51,560 Speaker 1: demand for shipping, and so people end up paying the 393 00:22:51,640 --> 00:22:54,359 Speaker 1: price at the other end. You know you mentioned, Okay, 394 00:22:54,359 --> 00:22:56,480 Speaker 1: we we've seen this crash and lumber, but you don't 395 00:22:56,520 --> 00:22:59,639 Speaker 1: really see it elsewhere. Why do you think that is? Like, 396 00:23:00,040 --> 00:23:02,359 Speaker 1: do you have any why have we not seen the 397 00:23:02,480 --> 00:23:06,720 Speaker 1: sort of supply and demand reaction that we've seen in 398 00:23:06,760 --> 00:23:10,159 Speaker 1: this one specific area across other across the commodities that 399 00:23:10,200 --> 00:23:12,840 Speaker 1: you deal with, Joe, this is a great question, and 400 00:23:12,840 --> 00:23:16,960 Speaker 1: so I'm sure I'm not doing anything different than other 401 00:23:17,040 --> 00:23:20,360 Speaker 1: business leaders in yourselves. I'm listening to the quarterly reports 402 00:23:20,359 --> 00:23:23,600 Speaker 1: of a wire houser and and basically what I've surmised 403 00:23:23,680 --> 00:23:28,280 Speaker 1: is that they were able to increase capacity much faster 404 00:23:28,359 --> 00:23:31,960 Speaker 1: than maybe some other areas. And maybe there is less 405 00:23:32,000 --> 00:23:36,520 Speaker 1: complexity and lumber than there is in a faucet um 406 00:23:36,840 --> 00:23:39,920 Speaker 1: or a toilet or or a bathtub um, and maybe 407 00:23:39,960 --> 00:23:42,440 Speaker 1: that makes a little easier to react when there's less 408 00:23:42,480 --> 00:23:45,400 Speaker 1: inputs right in terms of raw materials than than there 409 00:23:45,400 --> 00:23:50,920 Speaker 1: are for us. So this gets into a question that 410 00:23:51,000 --> 00:23:53,240 Speaker 1: I wanted to ask you, which is you mentioned in 411 00:23:53,280 --> 00:23:55,800 Speaker 1: the in the beginning of the conversation, this idea of 412 00:23:55,840 --> 00:24:00,479 Speaker 1: a whiplash effect. So everyone underestimated demand and then they 413 00:24:00,480 --> 00:24:03,720 Speaker 1: had to scramble to ramp up production. And now we 414 00:24:03,840 --> 00:24:09,000 Speaker 1: are seeing various industries respond to higher prices and higher 415 00:24:09,040 --> 00:24:14,840 Speaker 1: demand by increasing their output. Do you worry about an overshoot? 416 00:24:15,000 --> 00:24:17,119 Speaker 1: I guess another way of saying it is, do you 417 00:24:17,119 --> 00:24:20,920 Speaker 1: worry about the bull whip effect? Um? This idea that 418 00:24:20,960 --> 00:24:24,840 Speaker 1: we're going to get extremes in terms of imbalances of 419 00:24:24,880 --> 00:24:29,760 Speaker 1: supply and demand. Absolutely um. And if you're not, I don't. 420 00:24:29,800 --> 00:24:32,760 Speaker 1: I don't think as a business leader, you're being fiscally responsible, 421 00:24:32,840 --> 00:24:34,960 Speaker 1: right I'm the easy thing right now would be to 422 00:24:35,040 --> 00:24:39,560 Speaker 1: react to this industry and react to the pandemic and 423 00:24:39,640 --> 00:24:44,320 Speaker 1: just invest heavily in capacity and production because we are 424 00:24:44,400 --> 00:24:46,680 Speaker 1: at the top levels of that today as an industry. 425 00:24:46,880 --> 00:24:49,600 Speaker 1: I don't think that exists into the future, and I 426 00:24:49,640 --> 00:24:52,440 Speaker 1: would be concerned that any investments that we'd be making 427 00:24:52,440 --> 00:24:55,080 Speaker 1: today we wouldn't get a payback on longer term. And 428 00:24:55,080 --> 00:24:58,160 Speaker 1: that's why it's so important for us to make sure 429 00:24:58,200 --> 00:25:02,200 Speaker 1: we're being as efficient as possible with that inventory UM 430 00:25:02,240 --> 00:25:07,160 Speaker 1: and trying to understand when do we pull products from Asia, 431 00:25:07,400 --> 00:25:10,240 Speaker 1: when is it not worth it? UM? Do we add 432 00:25:10,280 --> 00:25:14,159 Speaker 1: capacity within the Americas that we could use longer term? 433 00:25:14,200 --> 00:25:18,000 Speaker 1: Certainly tariffs play play a play into this, as well 434 00:25:18,040 --> 00:25:21,840 Speaker 1: as the inflation, but I also don't want who's in 435 00:25:21,920 --> 00:25:26,040 Speaker 1: office to determine our strategy, right um. I think when 436 00:25:26,080 --> 00:25:28,120 Speaker 1: you do that, you may be having to change your 437 00:25:28,160 --> 00:25:32,639 Speaker 1: strategy every four years, and I don't think that's sustainable either. 438 00:25:32,760 --> 00:25:36,240 Speaker 1: And it's really trying to create this balance, um across 439 00:25:36,280 --> 00:25:40,439 Speaker 1: everything that we do to make sure we're prepared as 440 00:25:40,520 --> 00:25:44,639 Speaker 1: we can be, but really agile enough to uh to 441 00:25:44,760 --> 00:25:49,240 Speaker 1: make changes to any surprises that that we didn't anticipate. Well, 442 00:25:49,400 --> 00:25:52,160 Speaker 1: this gets back to like a broader theme that we've 443 00:25:52,200 --> 00:25:55,880 Speaker 1: touched on too. So obviously expectations of the future play 444 00:25:55,920 --> 00:25:59,200 Speaker 1: an important role in thinking about your capital investment plans. 445 00:25:59,680 --> 00:26:04,240 Speaker 1: I've aslee. Prior to the pandemic, and especially in the 446 00:26:04,400 --> 00:26:08,600 Speaker 1: years after the Great Financial Crisis, the home building industry 447 00:26:08,760 --> 00:26:12,240 Speaker 1: was in pretty terrible dire straits and there was a 448 00:26:12,280 --> 00:26:14,960 Speaker 1: lot of I guess maybe d investment or a hollowing 449 00:26:15,000 --> 00:26:19,280 Speaker 1: out of capacity, and people just saw this very sluggish industry. 450 00:26:19,359 --> 00:26:21,200 Speaker 1: And I know you weren't at looks all at the time, 451 00:26:21,240 --> 00:26:24,120 Speaker 1: but you're a whirlpool and you probably saw it from 452 00:26:24,240 --> 00:26:29,560 Speaker 1: the pure appliance side. It's like very slow housing for years, etcetera. 453 00:26:29,760 --> 00:26:32,920 Speaker 1: How much do you see that now that that period 454 00:26:32,960 --> 00:26:35,919 Speaker 1: the years following the Great Financial Crisis, the sort of 455 00:26:35,920 --> 00:26:39,760 Speaker 1: hollowing out of capacity, shrieking of the supply side is 456 00:26:39,800 --> 00:26:42,960 Speaker 1: having come back to bite us now as we enter 457 00:26:43,119 --> 00:26:46,400 Speaker 1: as we have like this period of rapid growth. Yeah, 458 00:26:46,520 --> 00:26:48,840 Speaker 1: that's a that's a great question. And certainly I lived 459 00:26:49,640 --> 00:26:53,439 Speaker 1: through that recession, and I think that hangover is a 460 00:26:53,480 --> 00:26:58,240 Speaker 1: lot of what drove the whiplash of UM tightening your 461 00:26:58,240 --> 00:27:01,320 Speaker 1: belt really quickly and not reacting fast enough to the 462 00:27:01,400 --> 00:27:04,080 Speaker 1: change because of what we all lived through in the past. Now, 463 00:27:04,119 --> 00:27:08,159 Speaker 1: I don't believe it had any effect on where we 464 00:27:08,160 --> 00:27:11,320 Speaker 1: were when the pandemic started, because I think many companies 465 00:27:11,560 --> 00:27:14,879 Speaker 1: had made the necessary of investments to keep up with 466 00:27:14,960 --> 00:27:17,800 Speaker 1: the market and where we were going, and and it 467 00:27:17,840 --> 00:27:20,479 Speaker 1: was far enough in the rear view mirror UM that 468 00:27:20,560 --> 00:27:24,199 Speaker 1: people felt good about adding capacity. I think now for 469 00:27:24,880 --> 00:27:30,080 Speaker 1: fiscally responsible organizations, you're asking yourself, should we be investing 470 00:27:30,280 --> 00:27:33,320 Speaker 1: in capacity? And the answer in certain areas is yes, 471 00:27:33,400 --> 00:27:36,280 Speaker 1: by the way, UM. But the question is more about 472 00:27:36,880 --> 00:27:39,480 Speaker 1: where do we do it, when do we do it, 473 00:27:39,760 --> 00:27:43,000 Speaker 1: and how big an investment do we make when we 474 00:27:43,040 --> 00:27:46,640 Speaker 1: do that. So I realized we haven't spoken much about 475 00:27:46,800 --> 00:27:51,080 Speaker 1: labor issues. Although you briefly mentioned them earlier. Are you 476 00:27:51,119 --> 00:27:53,800 Speaker 1: seeing trouble You always read my mind. You always read 477 00:27:53,840 --> 00:27:55,640 Speaker 1: my mind with where you got now we're all pulling 478 00:27:55,680 --> 00:27:59,119 Speaker 1: in the same direction. It's great. But are you experiencing 479 00:27:59,800 --> 00:28:03,480 Speaker 1: labor shortage? And I guess could you maybe just provide 480 00:28:03,520 --> 00:28:06,959 Speaker 1: some color on what labor actually means to your business? 481 00:28:07,080 --> 00:28:09,360 Speaker 1: So on the one hand, you have people making goods, 482 00:28:09,359 --> 00:28:12,320 Speaker 1: but on the other hand, the sales of your products 483 00:28:12,359 --> 00:28:16,119 Speaker 1: also kind of depend on plumbers who are able to 484 00:28:16,160 --> 00:28:19,840 Speaker 1: install them. Sure, Tracy, that's a wonderful question. The answer 485 00:28:19,920 --> 00:28:23,600 Speaker 1: is yes. I mean, depending on whether you're talking about 486 00:28:23,600 --> 00:28:27,720 Speaker 1: within our facilities, whether you're talking about logistics, whether you're 487 00:28:27,760 --> 00:28:32,479 Speaker 1: talking about sales folks, whether you're talking about executives. I 488 00:28:32,520 --> 00:28:38,240 Speaker 1: think there is pressure on labor everywhere within our system, um, 489 00:28:38,280 --> 00:28:40,760 Speaker 1: and I think it's a healthy pressure, quite frankly, and 490 00:28:40,800 --> 00:28:44,440 Speaker 1: it's required us to really look at our business and 491 00:28:44,560 --> 00:28:48,080 Speaker 1: think about what kind of organization do we want to 492 00:28:48,200 --> 00:28:52,400 Speaker 1: be going forward. Um. I think you've read plenty, certainly 493 00:28:52,760 --> 00:28:57,520 Speaker 1: enough journals and newspapers and seen enough shows about return 494 00:28:57,560 --> 00:28:59,560 Speaker 1: to work and what does that look like? And maybe 495 00:28:59,560 --> 00:29:02,680 Speaker 1: we'll just start there and we can work our way back, 496 00:29:02,800 --> 00:29:05,640 Speaker 1: but when we start there is we really want to 497 00:29:05,800 --> 00:29:10,440 Speaker 1: envision the future of Lixel being a place where individuals 498 00:29:10,440 --> 00:29:13,480 Speaker 1: can own their own day on where they're empowered to 499 00:29:13,520 --> 00:29:17,160 Speaker 1: be successful, and that doesn't necessarily have to require that 500 00:29:17,200 --> 00:29:20,200 Speaker 1: they're in the office five days a week. We and 501 00:29:20,240 --> 00:29:22,800 Speaker 1: many others have learned to be successful with a remote 502 00:29:22,800 --> 00:29:27,120 Speaker 1: work culture that allows us um to really focus not 503 00:29:27,200 --> 00:29:31,120 Speaker 1: only on the employee and what they bring to the business, 504 00:29:31,160 --> 00:29:34,000 Speaker 1: but also their personal lives. And because of that, our 505 00:29:34,040 --> 00:29:36,640 Speaker 1: business is thriving and our employees are thriving, and they're 506 00:29:36,680 --> 00:29:40,480 Speaker 1: able to link their personal purpose with the overall Lixel 507 00:29:40,520 --> 00:29:44,080 Speaker 1: purpose to make better homes a reality for everyone everywhere. 508 00:29:44,280 --> 00:29:45,920 Speaker 1: And for us, that's great, and I think it's going 509 00:29:45,960 --> 00:29:50,520 Speaker 1: to unlock an opportunity for us to acquire talent because 510 00:29:50,560 --> 00:29:53,080 Speaker 1: we are in the growth mode and we are hiring, 511 00:29:53,160 --> 00:29:54,920 Speaker 1: and it's going to allow us to tap into a 512 00:29:54,920 --> 00:29:57,280 Speaker 1: market that we might otherwise not have been able to 513 00:29:57,360 --> 00:30:03,120 Speaker 1: do previously. What about at the sort of pure the facilities, 514 00:30:03,160 --> 00:30:06,040 Speaker 1: and you mentioned the Dallas that you had a facility 515 00:30:06,040 --> 00:30:08,920 Speaker 1: in Dallas, which is interesting because I know Texas is 516 00:30:08,960 --> 00:30:12,480 Speaker 1: one of the states where you know they've pulled back 517 00:30:12,560 --> 00:30:15,480 Speaker 1: on the unemployment insurance expansion. Can you just talk a 518 00:30:15,480 --> 00:30:19,800 Speaker 1: little bit about staffing, say that facility, what that's been like, 519 00:30:20,120 --> 00:30:24,400 Speaker 1: the challenges of hiring their etcetera. Sure, Um, And I'll 520 00:30:24,400 --> 00:30:26,080 Speaker 1: talk a little bit about Dallas, and I'll talk a 521 00:30:26,080 --> 00:30:30,200 Speaker 1: little more more broadly as well. Dallas specifically, we really 522 00:30:30,280 --> 00:30:33,720 Speaker 1: struggled in the middle of the pandemic getting our yield 523 00:30:33,960 --> 00:30:38,840 Speaker 1: up because we were struggling to add labor within the facilities. 524 00:30:38,920 --> 00:30:42,400 Speaker 1: Now we've seen that come back wholeheartedly and really, um, 525 00:30:42,480 --> 00:30:45,680 Speaker 1: we're at a great level today. And and maybe a 526 00:30:45,680 --> 00:30:49,160 Speaker 1: piece of that is pulling back on the stimulus and 527 00:30:49,200 --> 00:30:51,440 Speaker 1: the aid has had people come back to work. But 528 00:30:51,480 --> 00:30:54,400 Speaker 1: I'd also like to believe it's the kind of environment 529 00:30:54,800 --> 00:30:59,160 Speaker 1: that we're creating at Lexel and the opportunities that we're 530 00:30:59,200 --> 00:31:01,280 Speaker 1: offering it really helped drive that as well. And so 531 00:31:01,320 --> 00:31:04,600 Speaker 1: I really don't see labor as big of an issue 532 00:31:04,720 --> 00:31:08,400 Speaker 1: today in our production facilities as it was in the past. 533 00:31:08,440 --> 00:31:11,719 Speaker 1: Now when I transition and I talk a little bit 534 00:31:11,760 --> 00:31:14,520 Speaker 1: about our d C s UM as well as our 535 00:31:14,960 --> 00:31:20,160 Speaker 1: logistics and truckers, we have a bigger issue there, right, 536 00:31:20,200 --> 00:31:24,080 Speaker 1: And so their bottlenecks they're all over and we're seeing 537 00:31:24,360 --> 00:31:27,680 Speaker 1: line rates go up pretty significantly because of that, and 538 00:31:27,720 --> 00:31:30,360 Speaker 1: you're seeing a lot of our partners in the trucking 539 00:31:30,440 --> 00:31:33,840 Speaker 1: space have to move away from certain lanes they used 540 00:31:33,880 --> 00:31:36,480 Speaker 1: to use. Can you just talk what's it? I mean 541 00:31:37,200 --> 00:31:42,240 Speaker 1: the pay scales at a manufacturing facility versus a DC 542 00:31:42,360 --> 00:31:44,640 Speaker 1: a distribution center. I assume that's what it means at 543 00:31:44,640 --> 00:31:47,520 Speaker 1: a distribution center. How do they compare and how might 544 00:31:47,680 --> 00:31:50,360 Speaker 1: that Where do they stand on this sort of pay scale, 545 00:31:50,360 --> 00:31:52,760 Speaker 1: and how might that be? How might that be explaining 546 00:31:53,200 --> 00:31:56,760 Speaker 1: some of the challenges and hiring. Sure, they're they're pretty 547 00:31:56,800 --> 00:32:00,880 Speaker 1: comparable from an entry level standpoint. I think what what 548 00:32:01,000 --> 00:32:05,360 Speaker 1: you see in our facilities in terms of production and 549 00:32:05,640 --> 00:32:10,080 Speaker 1: versus the d cs is that many of the individuals 550 00:32:10,080 --> 00:32:13,200 Speaker 1: in the dcs are seeing opportunities within trucking that you 551 00:32:13,240 --> 00:32:18,400 Speaker 1: don't normally see in a production facility. What about plumbers? 552 00:32:18,760 --> 00:32:21,160 Speaker 1: We we've spoken a lot about truck drivers on a 553 00:32:21,200 --> 00:32:24,360 Speaker 1: previous episode, but what's the supply of plumbers like at 554 00:32:24,400 --> 00:32:28,640 Speaker 1: the moment, I really have no idea. Sure, thank you 555 00:32:28,680 --> 00:32:31,400 Speaker 1: for using that question. It's it's very concerned. Um, And 556 00:32:31,440 --> 00:32:34,400 Speaker 1: so what we're seeing depending on what you read and 557 00:32:34,400 --> 00:32:38,600 Speaker 1: what we're actually experiencing is you're seeing plumbers retired at 558 00:32:38,600 --> 00:32:42,200 Speaker 1: a faster rate than they can be replaced today. And 559 00:32:42,320 --> 00:32:46,600 Speaker 1: in some instances, uh, it's five to one is what 560 00:32:46,640 --> 00:32:50,560 Speaker 1: we're reading. In other instances it's just half. But either way, 561 00:32:50,640 --> 00:32:53,480 Speaker 1: that's not enough plumbers for the future. And I think 562 00:32:53,800 --> 00:32:58,000 Speaker 1: the one stigma attached to plumbers by the general public 563 00:32:58,160 --> 00:33:00,560 Speaker 1: is that it's not a great job and it's not 564 00:33:00,600 --> 00:33:04,240 Speaker 1: a high paying wage, which couldn't be further from the truth. 565 00:33:04,320 --> 00:33:07,520 Speaker 1: And and we're really spending a lot of time investing 566 00:33:07,800 --> 00:33:10,360 Speaker 1: in something we call a trade up program to help 567 00:33:10,360 --> 00:33:14,360 Speaker 1: them individuals within a trade space understand the value of plumbing, 568 00:33:14,600 --> 00:33:19,440 Speaker 1: and then fostering partnerships with other other organizations to really 569 00:33:19,480 --> 00:33:23,160 Speaker 1: get the message out for us because it is a concern. Now. 570 00:33:23,560 --> 00:33:26,840 Speaker 1: We can't just rely on plumbers coming back to the 571 00:33:26,880 --> 00:33:29,880 Speaker 1: industry in total. We've got to figure out ways to 572 00:33:30,160 --> 00:33:34,680 Speaker 1: lighten or at least release pressure on plumbers and total 573 00:33:34,760 --> 00:33:37,440 Speaker 1: and our need for them going forward as well. And 574 00:33:37,680 --> 00:33:41,040 Speaker 1: that's through innovation primarily. Yeah, what does they look like? Well, 575 00:33:41,280 --> 00:33:43,520 Speaker 1: what is the you know, is there is it? Is 576 00:33:43,520 --> 00:33:46,200 Speaker 1: it going to be that in five years or maybe 577 00:33:46,240 --> 00:33:49,600 Speaker 1: today versus twenty years ago. Is it easier or faster 578 00:33:49,760 --> 00:33:52,480 Speaker 1: to install a bathtub than it would have been? Yeah, 579 00:33:52,480 --> 00:33:54,320 Speaker 1: that's that's really the hope. Right. A lot of the 580 00:33:54,360 --> 00:33:58,160 Speaker 1: innovation doesn't have to be a connected bathtub or a 581 00:33:58,160 --> 00:34:02,440 Speaker 1: connected toilet, and quite frankly, I'm sure everybody wants that anyway. 582 00:34:02,480 --> 00:34:06,880 Speaker 1: I think it's making easier to install products. It's creating 583 00:34:06,960 --> 00:34:11,600 Speaker 1: content that also makes it easier to install UM for 584 00:34:11,880 --> 00:34:14,719 Speaker 1: the general lay person. And not to be afraid of 585 00:34:14,800 --> 00:34:17,319 Speaker 1: plumbing is maybe many of us have grown up to 586 00:34:17,400 --> 00:34:23,799 Speaker 1: be nervous about. I have a non supply chain slash 587 00:34:23,840 --> 00:34:27,160 Speaker 1: supply shortage question. But you know, I mentioned at the 588 00:34:27,200 --> 00:34:31,200 Speaker 1: beginning of our discussion this idea that, Um, I haven't 589 00:34:31,239 --> 00:34:34,200 Speaker 1: had a bathtub in the apartments that I've rented for many, 590 00:34:34,200 --> 00:34:37,280 Speaker 1: many years, and I'm just wondering, why do bathtubs seem 591 00:34:37,360 --> 00:34:41,040 Speaker 1: to have fallen out of favor UM, at least with 592 00:34:41,160 --> 00:34:45,799 Speaker 1: landlords in large cities. Great question, Um, I think it 593 00:34:45,840 --> 00:34:49,080 Speaker 1: has a lot to do with constraints. Right. It's easier 594 00:34:49,440 --> 00:34:53,040 Speaker 1: to put a shower into a home than it is 595 00:34:53,040 --> 00:34:56,040 Speaker 1: a bathtub. It takes less space. I also think just 596 00:34:56,400 --> 00:34:59,840 Speaker 1: the way that our lives have evolved in total. Is 597 00:35:00,200 --> 00:35:03,239 Speaker 1: those days of laying in the tub and soaking for 598 00:35:03,360 --> 00:35:06,480 Speaker 1: hours on end, maybe with a glass of wine, just 599 00:35:06,560 --> 00:35:09,799 Speaker 1: isn't what the norm is today, and I think we're 600 00:35:09,840 --> 00:35:13,080 Speaker 1: seeing a move away from it now. A great question is, 601 00:35:13,480 --> 00:35:16,120 Speaker 1: now that people are spending more time in their homes, 602 00:35:16,640 --> 00:35:19,640 Speaker 1: will we see a transition back? And I think the 603 00:35:19,680 --> 00:35:22,120 Speaker 1: answer could be yes, and we need to be prepared 604 00:35:22,160 --> 00:35:24,799 Speaker 1: for that now we we haven't seen it. I think 605 00:35:25,120 --> 00:35:28,919 Speaker 1: bathtubs in general are increasing with the industry, so they're 606 00:35:29,000 --> 00:35:30,920 Speaker 1: they're not outpacing it, but I think that's something we 607 00:35:30,960 --> 00:35:34,080 Speaker 1: should all be mindful of. Hotels don't really seem to 608 00:35:34,080 --> 00:35:35,920 Speaker 1: have as many bathrooms as they used to either, do 609 00:35:36,000 --> 00:35:39,799 Speaker 1: they No, You're right, they don't. Um. I've noticed that 610 00:35:39,920 --> 00:35:42,839 Speaker 1: in in my travels as well. Certainly when we look 611 00:35:42,840 --> 00:35:47,120 Speaker 1: at our projects and going forward, many large hotels aren't 612 00:35:47,160 --> 00:35:50,759 Speaker 1: projecting bathtubs and what they're planning to build over the 613 00:35:50,800 --> 00:35:54,360 Speaker 1: next two years. You know, one of the big questions is, 614 00:35:54,560 --> 00:35:57,000 Speaker 1: you know, continue to have this debate, well, what's going 615 00:35:57,040 --> 00:36:02,480 Speaker 1: to change pre impost pandemic. And you mentioned that obviously 616 00:36:02,520 --> 00:36:05,200 Speaker 1: you had to figure out ways to get up yield 617 00:36:05,239 --> 00:36:08,879 Speaker 1: within the production facilities even with increased spacing. And I'm 618 00:36:08,920 --> 00:36:13,520 Speaker 1: curious if you've learned or discovered sort of like productivity 619 00:36:13,600 --> 00:36:17,920 Speaker 1: gains that you will keep with you regardless of the 620 00:36:18,080 --> 00:36:21,200 Speaker 1: sort of health and public situation that will last. Like, 621 00:36:21,239 --> 00:36:25,479 Speaker 1: what kind of productivity enhancements have you seen? Definitely, Uh, 622 00:36:25,520 --> 00:36:29,279 Speaker 1: it's all about agility and efficiency, honestly, and it's how 623 00:36:29,320 --> 00:36:34,000 Speaker 1: do we create, certainly within our manufacturing footprint, the ability 624 00:36:34,440 --> 00:36:39,319 Speaker 1: to produce anything anywhere at any time to be able 625 00:36:39,360 --> 00:36:42,799 Speaker 1: to react to these global changes that that we couldn't anticipate. 626 00:36:42,920 --> 00:36:46,399 Speaker 1: So an example would be for us making sure that 627 00:36:46,440 --> 00:36:50,800 Speaker 1: we are qualifying as many different products to be produced 628 00:36:51,080 --> 00:36:54,600 Speaker 1: and as many different facilities as possible, so we have 629 00:36:54,680 --> 00:37:00,480 Speaker 1: the ability as we see things change in terms of logistics, costs, tariffs, 630 00:37:00,800 --> 00:37:04,719 Speaker 1: to produce similar products in different places, to take advantage 631 00:37:05,000 --> 00:37:06,839 Speaker 1: of what we're doing. And I think the same by 632 00:37:06,880 --> 00:37:10,640 Speaker 1: the way it goes for our office workforce is how 633 00:37:10,640 --> 00:37:13,799 Speaker 1: do we create a space that allows us to be 634 00:37:13,840 --> 00:37:17,279 Speaker 1: flexible and agile enough to take advantage of any of 635 00:37:17,280 --> 00:37:21,799 Speaker 1: the changes in the environment. What about automation, Is that 636 00:37:21,960 --> 00:37:25,600 Speaker 1: something that you've been investing in over the past year 637 00:37:25,960 --> 00:37:31,440 Speaker 1: given issues with things like labor given these unexpected disruptions 638 00:37:31,560 --> 00:37:34,680 Speaker 1: to the way people are actually working, or is it 639 00:37:34,760 --> 00:37:37,759 Speaker 1: something that you hold off on just because you're uncertain 640 00:37:37,800 --> 00:37:42,160 Speaker 1: about the future business environment. So today some of our 641 00:37:42,200 --> 00:37:46,000 Speaker 1: products are manufactured with more automation than others. I don't 642 00:37:46,120 --> 00:37:49,680 Speaker 1: think that in the shorter term that will try to 643 00:37:49,800 --> 00:37:55,279 Speaker 1: overcompensate with the concerns of labor or the pandemic with automation, 644 00:37:55,640 --> 00:37:59,440 Speaker 1: because we do realize how vital our employees are to 645 00:37:59,560 --> 00:38:01,399 Speaker 1: what we do and what we create, and in many 646 00:38:01,440 --> 00:38:05,279 Speaker 1: instances you really need a skilled labor force to do 647 00:38:05,480 --> 00:38:07,799 Speaker 1: some of the things that we do that automation just 648 00:38:07,880 --> 00:38:10,799 Speaker 1: can't do and can't can't handle. So I think for us, 649 00:38:11,080 --> 00:38:13,719 Speaker 1: we'll automate where it makes sense and where we can 650 00:38:13,760 --> 00:38:17,760 Speaker 1: gain efficiencies um but not at the risk of losing 651 00:38:17,800 --> 00:38:38,480 Speaker 1: some of our most skilled and artistic labors. You mentioned 652 00:38:38,640 --> 00:38:40,560 Speaker 1: this is something I was thinking about when you talked about, Okay, 653 00:38:40,600 --> 00:38:43,720 Speaker 1: the future of plumbing and maybe making items easier to install. 654 00:38:43,800 --> 00:38:45,440 Speaker 1: And also I thought about this when you were talking 655 00:38:45,480 --> 00:38:48,040 Speaker 1: about making factories such that they could be flexible and 656 00:38:48,160 --> 00:38:52,720 Speaker 1: produce anything. And this might be a very uninformed question, 657 00:38:52,840 --> 00:38:54,759 Speaker 1: or maybe a stupid question, but you know, when I 658 00:38:54,760 --> 00:38:58,200 Speaker 1: think about like certain technologies, I think about like the 659 00:38:58,280 --> 00:39:01,840 Speaker 1: rise of standards and idea of like, okay, a USB cable. 660 00:39:01,920 --> 00:39:06,200 Speaker 1: Everybody knows what it is, and numerous different UM players 661 00:39:06,239 --> 00:39:08,680 Speaker 1: can produce the USB cable and we just know that 662 00:39:08,719 --> 00:39:10,919 Speaker 1: it will work. And of course I'm sure obviously there's 663 00:39:10,920 --> 00:39:15,000 Speaker 1: a lot of standardization within plumbing and certain size of 664 00:39:15,040 --> 00:39:18,120 Speaker 1: pipes and so forth. But is that something that you 665 00:39:18,200 --> 00:39:21,560 Speaker 1: think about sort of advancing in the future. I guess 666 00:39:21,560 --> 00:39:25,160 Speaker 1: like more plug and play, so to speak, when it 667 00:39:25,280 --> 00:39:29,279 Speaker 1: comes to these sort of irregular items like faucets and 668 00:39:29,719 --> 00:39:33,280 Speaker 1: bathtubs and shower heads and faucets, more things that people 669 00:39:33,360 --> 00:39:35,640 Speaker 1: just know how to fit them together in an easy 670 00:39:35,680 --> 00:39:41,560 Speaker 1: manner such that they require less specialization of knowledge. Sure. Yeah, 671 00:39:41,680 --> 00:39:46,719 Speaker 1: today things are pretty standardized regionally, I'll say, I think 672 00:39:46,960 --> 00:39:49,880 Speaker 1: when you start to globalize or where you start to 673 00:39:49,920 --> 00:39:53,040 Speaker 1: have some differences. And that's something that we're working on 674 00:39:53,120 --> 00:39:56,440 Speaker 1: today UM to really try to make us more efficient 675 00:39:56,520 --> 00:39:59,120 Speaker 1: than we've been in the past. And one thing that's 676 00:39:59,120 --> 00:40:02,040 Speaker 1: really important that I think a lot of people don't 677 00:40:02,080 --> 00:40:06,240 Speaker 1: anticipate or plan because here in America there's a less concern. 678 00:40:06,360 --> 00:40:09,319 Speaker 1: But it's water conservation and it's coming. I think you 679 00:40:09,440 --> 00:40:11,600 Speaker 1: see it as we look out on the West Coast 680 00:40:11,640 --> 00:40:13,520 Speaker 1: now and the droughts that we have in the really 681 00:40:13,640 --> 00:40:16,880 Speaker 1: high heat and the global warming. Is how do we 682 00:40:17,080 --> 00:40:23,880 Speaker 1: create products, specifically faucets, showers, bathtubs that are standardized for 683 00:40:24,080 --> 00:40:27,440 Speaker 1: us to really be able to be sold anywhere in 684 00:40:27,440 --> 00:40:30,400 Speaker 1: the world, but also anywhere regionally within the US as 685 00:40:30,480 --> 00:40:34,839 Speaker 1: the standards begin to change in terms of water converse conservation, 686 00:40:34,880 --> 00:40:37,440 Speaker 1: excuse me, and what's allowed and so, Joe, I don't 687 00:40:37,440 --> 00:40:39,399 Speaker 1: think it was a dumb question at all, and those 688 00:40:39,400 --> 00:40:42,239 Speaker 1: are the kind of things that we're trying to get 689 00:40:42,280 --> 00:40:45,279 Speaker 1: ahead of. So we're not reacting and we're being proactive 690 00:40:45,280 --> 00:40:48,759 Speaker 1: and being able to deliver for our consumers and our customers. 691 00:40:49,640 --> 00:40:54,799 Speaker 1: Is that the big technological um development in bathtubs then, 692 00:40:54,840 --> 00:40:56,920 Speaker 1: because I think a lot of people, or at least me, 693 00:40:57,000 --> 00:40:59,480 Speaker 1: and again I'm probably not a good person to ask 694 00:40:59,480 --> 00:41:01,760 Speaker 1: about this because I haven't had access to a bathtub 695 00:41:01,800 --> 00:41:04,680 Speaker 1: for a long time. But when I think about bathtubs, 696 00:41:04,680 --> 00:41:08,920 Speaker 1: there's sort of the static home appliance that don't seem 697 00:41:08,920 --> 00:41:11,520 Speaker 1: to change very much unless you get a very very 698 00:41:11,520 --> 00:41:15,000 Speaker 1: fancy one with you know, whirlpool jets and things like that. 699 00:41:15,080 --> 00:41:18,640 Speaker 1: But what's the next big thing in bathtubs? Is it 700 00:41:18,719 --> 00:41:22,920 Speaker 1: water conservation? Is it the standardization aspects that you are describing, 701 00:41:23,200 --> 00:41:26,799 Speaker 1: or is there something on the horizon um that's very 702 00:41:26,880 --> 00:41:30,040 Speaker 1: very different. Sure, Tracy, I'm the exact same way. I 703 00:41:30,040 --> 00:41:32,759 Speaker 1: don't remember the last time that I took a bath personally, 704 00:41:33,200 --> 00:41:35,279 Speaker 1: and so maybe I'm not the best person other than 705 00:41:35,320 --> 00:41:38,239 Speaker 1: the fact that we sell them to have the discussion. 706 00:41:38,320 --> 00:41:41,279 Speaker 1: But but we are looking at innovation across all of 707 00:41:41,320 --> 00:41:45,560 Speaker 1: our products. Bathtubs included on how can they conserve water 708 00:41:45,960 --> 00:41:49,880 Speaker 1: and how can we ensure that they're safe and that 709 00:41:50,760 --> 00:41:56,080 Speaker 1: we're creating an environment where we're not opening ourselves up 710 00:41:56,120 --> 00:41:59,080 Speaker 1: for damage. So bathroom overflows, how do we ensure that 711 00:41:59,120 --> 00:42:01,920 Speaker 1: doesn't happen? Right, So that's a big deal, and that 712 00:42:02,040 --> 00:42:06,120 Speaker 1: would certainly solve the conservation issue one, but to also 713 00:42:06,200 --> 00:42:09,560 Speaker 1: additional repair costs that that might come from that standpoint. 714 00:42:09,600 --> 00:42:12,799 Speaker 1: But but in total, you're going to see over the 715 00:42:12,840 --> 00:42:16,920 Speaker 1: next five to ten years water become much more of 716 00:42:16,960 --> 00:42:20,160 Speaker 1: a scarcity, not only the America's because it is and 717 00:42:20,200 --> 00:42:22,319 Speaker 1: it's happening on the West coast, but all over the 718 00:42:22,360 --> 00:42:26,880 Speaker 1: world and products that can really deliver a great experience 719 00:42:27,280 --> 00:42:29,880 Speaker 1: with less water are going to win in the market. 720 00:42:30,440 --> 00:42:33,799 Speaker 1: My kids splashed at the bathtub too much and then 721 00:42:34,000 --> 00:42:38,920 Speaker 1: some leak down into the downstairs neighbor apartment and they complained, 722 00:42:39,360 --> 00:42:41,680 Speaker 1: as they should have. So if you could solve that 723 00:42:42,280 --> 00:42:46,000 Speaker 1: a bathtub that my kids could splash it without annoying 724 00:42:46,040 --> 00:42:49,080 Speaker 1: the neighbors, I would be very very appreciative of that. 725 00:42:49,440 --> 00:42:51,960 Speaker 1: Maybe a shower that fills up. How's that? That's a 726 00:42:52,040 --> 00:42:55,719 Speaker 1: that's an interesting idea. I guess the big question is, um, 727 00:42:55,800 --> 00:42:58,919 Speaker 1: how long would you expect these issues to last and 728 00:42:59,360 --> 00:43:03,400 Speaker 1: what's going to be the change that finally brings the 729 00:43:03,440 --> 00:43:06,400 Speaker 1: market back into balty. So I think housing is going 730 00:43:06,440 --> 00:43:08,160 Speaker 1: to be a real big piece of this. And we're 731 00:43:08,160 --> 00:43:12,960 Speaker 1: even seeing housing begin to slow down. It's it's comping 732 00:43:13,239 --> 00:43:15,719 Speaker 1: previous year, which was a huge spike, but we're not 733 00:43:15,760 --> 00:43:17,719 Speaker 1: seeing a huge spike on a huge spike, So you'll 734 00:43:17,760 --> 00:43:19,759 Speaker 1: see that come back into line, and then I think 735 00:43:19,760 --> 00:43:22,560 Speaker 1: you're going to have an affordability issue for the general 736 00:43:22,600 --> 00:43:25,960 Speaker 1: public when it comes to housing, which will also slow 737 00:43:26,000 --> 00:43:28,759 Speaker 1: down this train a little bit and help things right 738 00:43:28,800 --> 00:43:31,600 Speaker 1: size themselves and get back in line. Now saying that 739 00:43:32,000 --> 00:43:35,080 Speaker 1: I would expect for the next twelve months, we will 740 00:43:35,120 --> 00:43:39,240 Speaker 1: still be in this environment and you'll see it slowly 741 00:43:39,280 --> 00:43:42,879 Speaker 1: start to subside, and you'll start to see with US 742 00:43:42,880 --> 00:43:46,040 Speaker 1: and other manufacturers begin to add capacity back in and 743 00:43:46,080 --> 00:43:49,360 Speaker 1: be able to meet the demands. The demands that that 744 00:43:49,520 --> 00:43:53,320 Speaker 1: you'll see less pressure and ability to find the exact 745 00:43:53,360 --> 00:43:57,000 Speaker 1: products you want instead of having to purchase the product 746 00:43:57,120 --> 00:44:00,120 Speaker 1: it's on the shelf um not necessarily the one that 747 00:44:00,200 --> 00:44:02,000 Speaker 1: you want. And so I think for the next year 748 00:44:02,360 --> 00:44:04,680 Speaker 1: you're gonna see it start to lighten up, and then 749 00:44:04,719 --> 00:44:08,680 Speaker 1: after that, I think in general, as an industry, we 750 00:44:08,680 --> 00:44:12,200 Speaker 1: should be able to manage any of the demand headed 751 00:44:12,200 --> 00:44:15,080 Speaker 1: our way. You know. The one the one thing that 752 00:44:15,239 --> 00:44:19,480 Speaker 1: came up during this crisis is the idea of just 753 00:44:19,560 --> 00:44:22,840 Speaker 1: in time inventory and the lack of buffers, and I 754 00:44:22,840 --> 00:44:26,759 Speaker 1: think people were pretty surprised. Obviously the PPE equipment was 755 00:44:26,800 --> 00:44:28,880 Speaker 1: a very stark example of this. But people are just 756 00:44:29,480 --> 00:44:32,319 Speaker 1: at toilet paper and all kinds of things. It's like, well, 757 00:44:32,440 --> 00:44:35,959 Speaker 1: we get we run into a shortage very fast. Well 758 00:44:36,000 --> 00:44:39,400 Speaker 1: that change your planning going forward? Or will that not 759 00:44:39,560 --> 00:44:42,480 Speaker 1: necessarily the risk of another pandemic? Though I guess that 760 00:44:42,520 --> 00:44:47,560 Speaker 1: could happen. But thinking about supply contingencies and how you 761 00:44:47,600 --> 00:44:50,759 Speaker 1: have backups and so forth, does that something that will 762 00:44:50,800 --> 00:44:54,359 Speaker 1: factor in permanently into your thinking. Definitely? And I think 763 00:44:54,400 --> 00:44:56,440 Speaker 1: it's for us. It's making sure we have the right 764 00:44:56,440 --> 00:45:00,360 Speaker 1: partnerships with the right customers that understand that same value, 765 00:45:00,400 --> 00:45:03,160 Speaker 1: because it's going to be incumbent on all of us 766 00:45:03,520 --> 00:45:07,400 Speaker 1: to make sure we have the right inventories, um, not 767 00:45:07,520 --> 00:45:10,120 Speaker 1: just in our dcats but in our customers dcs right 768 00:45:10,200 --> 00:45:12,480 Speaker 1: to be able to buffer that and that that's an 769 00:45:12,480 --> 00:45:15,360 Speaker 1: investment that we all need to make together to deliver 770 00:45:15,440 --> 00:45:19,279 Speaker 1: for the consumer in total. And and so ensuring you 771 00:45:19,320 --> 00:45:23,759 Speaker 1: have the right strategic partnerships is paramount to winning. You know, 772 00:45:23,800 --> 00:45:26,319 Speaker 1: I mentioned toilet paper. Our bid day is ever going 773 00:45:26,360 --> 00:45:29,399 Speaker 1: to be a thing in the United States? They should be, 774 00:45:29,840 --> 00:45:33,000 Speaker 1: They really should be. Um, we've got great innovation there 775 00:45:33,400 --> 00:45:37,000 Speaker 1: and we've seen great strides and innovation there, but for 776 00:45:37,080 --> 00:45:41,279 Speaker 1: some reason America, Americans in general are reluctant. But it 777 00:45:41,400 --> 00:45:44,040 Speaker 1: is growing. Sorry, what does the innovation look like? They're 778 00:45:44,440 --> 00:45:49,799 Speaker 1: uh So, the innovation could be anything from heating the water, uh, 779 00:45:49,880 --> 00:45:54,799 Speaker 1: certain air drying techniques as well incorporating them all in 780 00:45:54,920 --> 00:45:59,520 Speaker 1: one having heated seats, uh, seats that open and close 781 00:45:59,560 --> 00:46:02,600 Speaker 1: as you will to them. So it really is going 782 00:46:02,640 --> 00:46:05,960 Speaker 1: to be quite a change to the toilet in total 783 00:46:06,000 --> 00:46:08,359 Speaker 1: in the coming years. Tracy, I think that's a good 784 00:46:08,400 --> 00:46:12,799 Speaker 1: spot to leave it on the days. Yeah, sure, day 785 00:46:12,880 --> 00:46:18,400 Speaker 1: Innovation Trade Northrope, thank you so much for coming on 786 00:46:18,400 --> 00:46:22,080 Speaker 1: Odd Lots. Yeah, Joe, Tracy, it was an absolute pleasure. 787 00:46:22,080 --> 00:46:25,120 Speaker 1: I'm really passionate about not only plumbing products but the 788 00:46:25,160 --> 00:46:28,719 Speaker 1: supply chain and I really enjoyed this time together. That 789 00:46:28,800 --> 00:46:32,080 Speaker 1: was great. Thanks Trade, Thanks True that was so interesting. 790 00:46:32,560 --> 00:46:48,040 Speaker 1: I hope bathtubs come back in a big way. Thank you. Well. 791 00:46:48,080 --> 00:46:51,600 Speaker 1: I'm glad we finally did the bathtub episode. There was just, 792 00:46:51,760 --> 00:46:55,200 Speaker 1: once again just so many like different interessecting parts to 793 00:46:55,400 --> 00:46:58,080 Speaker 1: the story that of course now I have like five 794 00:46:58,160 --> 00:47:00,160 Speaker 1: more episodes in my mind that we have to do, 795 00:47:00,360 --> 00:47:05,160 Speaker 1: including definitely the Future of Plumbers one. How about Acriylics 796 00:47:05,200 --> 00:47:10,160 Speaker 1: and the plastic shortcrylics Future of Plumbers one, Plenty plenty 797 00:47:10,200 --> 00:47:14,239 Speaker 1: of to talk about. I mean it does say a 798 00:47:14,239 --> 00:47:18,400 Speaker 1: lot doesn't have like one supply shortage or supply chain issue. 799 00:47:18,560 --> 00:47:21,560 Speaker 1: Episode kind of leads into another because you just keep 800 00:47:21,800 --> 00:47:25,080 Speaker 1: identifying problems further down the chain, and of course supply 801 00:47:25,160 --> 00:47:27,480 Speaker 1: chains are so long and complicated and everything is so 802 00:47:27,560 --> 00:47:31,200 Speaker 1: interconnected nowadays, um that you can just keep going forever. 803 00:47:31,360 --> 00:47:33,680 Speaker 1: But on that note, so one thing that I found 804 00:47:33,719 --> 00:47:37,799 Speaker 1: pretty interesting was this idea. I guess it's obvious in retrospect, 805 00:47:37,800 --> 00:47:40,359 Speaker 1: but I hadn't really thought about it before that you 806 00:47:40,440 --> 00:47:44,600 Speaker 1: can't actually sell a house without the plumbing in place, 807 00:47:45,200 --> 00:47:48,400 Speaker 1: because I mean, just because of restrictions on what you 808 00:47:48,440 --> 00:47:50,759 Speaker 1: can sell, right, like the the whole plumbing has to 809 00:47:50,760 --> 00:47:53,520 Speaker 1: be done in order to make it habitable for people, 810 00:47:53,840 --> 00:47:56,880 Speaker 1: and so this plumbing issue ends up being a real 811 00:47:57,680 --> 00:48:02,200 Speaker 1: obstacle to new housing supply totally. The other thing that 812 00:48:02,239 --> 00:48:05,279 Speaker 1: I keep thinking about is like, so much really does 813 00:48:05,320 --> 00:48:08,200 Speaker 1: seem to just come down to containers. And you know, 814 00:48:08,280 --> 00:48:11,800 Speaker 1: some of our first episodes that we did very early 815 00:48:11,920 --> 00:48:14,360 Speaker 1: in the year, I think maybe even like in January 816 00:48:14,440 --> 00:48:19,000 Speaker 1: or February, were we started with the container and since 817 00:48:19,040 --> 00:48:22,520 Speaker 1: then containers have only gotten more expensive, and it really 818 00:48:22,520 --> 00:48:25,920 Speaker 1: does seem to be like the choke point of everything. Yeah, 819 00:48:26,080 --> 00:48:28,839 Speaker 1: but again, like if you think container shipping is sort 820 00:48:28,840 --> 00:48:32,160 Speaker 1: of at the center of globalization, and we've had this 821 00:48:32,200 --> 00:48:35,840 Speaker 1: discussion before almost everything gets shipped in a container, although 822 00:48:35,880 --> 00:48:38,239 Speaker 1: as we know from previous episodes, we also have great 823 00:48:38,320 --> 00:48:41,040 Speaker 1: bulk shipping and things like that. But then if you 824 00:48:41,080 --> 00:48:44,280 Speaker 1: have any issues in the transport method, then of course 825 00:48:44,560 --> 00:48:48,160 Speaker 1: it's going to filter out into everything else. We got 826 00:48:48,160 --> 00:48:51,160 Speaker 1: to solve that. We got we got, we got we 827 00:48:51,200 --> 00:48:53,880 Speaker 1: either we gotta make more containers, that seems to be 828 00:48:53,920 --> 00:48:56,279 Speaker 1: the issue. We gotta fly more so that people can 829 00:48:56,320 --> 00:48:59,920 Speaker 1: ship more via via air cargo, and we need to 830 00:49:00,160 --> 00:49:03,320 Speaker 1: buy less stuff so that there's just less physical goods. 831 00:49:03,360 --> 00:49:05,200 Speaker 1: How does it needs to slow down on a little 832 00:49:05,239 --> 00:49:07,520 Speaker 1: bit so that there isn't quite so much demand and 833 00:49:07,520 --> 00:49:09,440 Speaker 1: we need more containers, And then I think everything will 834 00:49:09,440 --> 00:49:11,040 Speaker 1: be solved. We just need to do all those things. 835 00:49:11,480 --> 00:49:15,120 Speaker 1: So two things. I hope there's someone well. First of all, 836 00:49:15,160 --> 00:49:17,800 Speaker 1: I hope people are taking you know, people are listening 837 00:49:17,800 --> 00:49:20,320 Speaker 1: to all thoughts while taking a bath in an actual bathtub. 838 00:49:20,440 --> 00:49:22,120 Speaker 1: That is my hope. And I hope that they're also 839 00:49:22,160 --> 00:49:25,600 Speaker 1: thinking about how to increase the world's supply of containers 840 00:49:25,880 --> 00:49:28,320 Speaker 1: and that will get a good outcome from this episode. 841 00:49:29,360 --> 00:49:33,839 Speaker 1: This is our long national nightmare, will be Okay, let's 842 00:49:33,920 --> 00:49:36,200 Speaker 1: leave it there, because this is getting weird. Let's leave 843 00:49:36,200 --> 00:49:39,360 Speaker 1: it there, all right. This has been another episode of 844 00:49:39,400 --> 00:49:42,280 Speaker 1: the All Thoughts podcast. I'm Tracy Alloway. You can follow 845 00:49:42,280 --> 00:49:45,279 Speaker 1: me on Twitter at Tracy Alloway and I'm Joe Why 846 00:49:45,320 --> 00:49:48,320 Speaker 1: Isn't All? You can follow me on Twitter at the Stalwart. 847 00:49:48,600 --> 00:49:52,600 Speaker 1: Follow our producer on Twitter, Laura Carlson. She's at Laura M. Carlson. 848 00:49:52,920 --> 00:49:56,239 Speaker 1: Followed the Bloomberg head of podcast, Francesca Levi at Francesca 849 00:49:56,320 --> 00:49:59,839 Speaker 1: Today and check out all of our podcasts at Bloomberg 850 00:50:00,120 --> 00:50:02,640 Speaker 1: unto the handle at podcasts. Thanks for listening,