'true' price of sprinkler materials

Discussion in 'Irrigation' started by greenworldh20, Apr 10, 2005.

  1. greenworldh20

    greenworldh20 LawnSite Senior Member
    Posts: 659

    does anyone know what a rotor 'really' cost the manufacturer to make? i'm guessing it is around $3.00/rotor head.

    Lets take Hunter Industries for example. before the plant opened on the east coast, hunter made all rotors in san diego. all labor came from mexico, which is a short drive from san diego. therefore hunter had cheap labor supply. this all contributes to the price of the rotor.

    so, what is the 'true' price of a rotor?

    i think it is about $4. include freight, $5.

    poly pipe (1" x300') i believe is about $22/roll. Freight could cost as much as $5/roll.

    What do the rest of you think?

    Brian
     
  2. jerryrwm

    jerryrwm LawnSite Bronze Member
    Posts: 1,274


    I'm wondering where you get the information that Hunter used all cheap Mexican labor at the factory. Every time I have been to the factory (several times), there are workers of every ethnicity and of both genders. And guess what, these manufacturing plants are under scrutiny from the INS and each and everyone of their employees has submitted an I-9. This holds true for the Toro/Irritrol plant in El Paso and Riverside, the Weathermatic plant in Dallas, the Rainbird plant in Glendora, and I would guess anywhere else that irrigation products are made.

    The labor is a part of the manufacturing cost, and is kept lower by the machines that manufacturer's develop and use. They have tool and die makers in house making the tools that they need. And they are continually up-grading and revising the tools. Some of those molds that they use in manufacturing may cost them over $500K ea. and they may have several of them to use. It takes time and efficient machines to get any sort of ROI in the manufacturing end.

    I was a Regional Sales Mgr for an irrigation manufacturer about 10 yrs ago. The cost to produce a rotor head then was about $5.35 ea. They were sold to supply houses for $6.20 - $7.50 depending on volume ordered. Freight was paid by the customer unless the order was large enough then it was freight paid.

    Also is there a point to finding out what manufacturing costs are? The cost of the rotor to the contractor is what is important because that determines what the price to the consumer will be. If I make a decent mark-up on product, I don't care what the manufacturer makes. It I buy it for $.05 over manufacturing costs or I buy it for $5.00 over costs, I don't care as long as I get my margins.

    Jerry R
     
  3. greenworldh20

    greenworldh20 LawnSite Senior Member
    Posts: 659

    jerry,

    thank you for the reply...i am saying all hunter industries uses is ' cheap' immigrant labor. many american companies place manufacturing plants on our country's borders to take advantage of the mexican labor supply. and not to get off on another subject hunter does have a machine put the componets together, but hunter has people assembling the heads by hand the last time i was out there...2000. there were more females than males. i believe in college that a professor told me females could do this type of work better than males.


    in any event, these are the facts.

    the information i was seeking was the 'actual' price of the material we use. i always thought it was "more" before i started to break the whole process down.

    it seems i was not far off.

    just like purchasing a car, i would like to know how much 'wiggle' room i have for negotations.

    when i began in irrigation, i was paying $14/rotor...the supplier was making a good $ off of me...know i know my numbers and i really like my npm.

    brian

    ps. jerry, if your irrigation company purchased 3 pallets of hunter pgp rotors last season, would you like to pay $5 more rotor or $5 less?

    brian
     
  4. jerryrwm

    jerryrwm LawnSite Bronze Member
    Posts: 1,274

    Brian,

    Agree on paying the least I can for parts. But there is a point that cannot be passed.

    Most irrigation supply houses work on a 25% GP mark up as their starting point for wholesale prices. Some items they go higher on. So if they are paying $7.00 for a rotor head (before rebates and early order discounts) they will sell them for $9.50 (case qty), $10.00 ea. Some may sell them as low as $8.50 case qty as a loss leader.

    Now the 'wiggle room' comes in when you buy pallet quantity, which for PGPs is 1440 heads. I have seen some suppliers sell the head at $7.50 in that instance which is about 6.7% GP. Can't survive long on that. How ever they get a hefty rebate at the end of the year for meeting or exceeding their early order quota. Sometimes it is as much as an extra 15%. Of course those suppliers have to agree to buy many pallets in order to qualify for that rebate. If they don't reach the quota, no rebate. And the manufacturers raise the quota every year - 5 - 10 - 15% depending on the product. It is a big mess when doing early order projections, because the manf. expect the supply house to buy a product mix. If they want a boatload of PGPs, they are also required to buy a certain amount of valves, controllers, and spray heads also.

    Best time to get the deals on rotor heads is August. The reason being is that the fiscal year ends sometime in October or November, and the supply house has just received their fourth quarter shipment, and they are wondering how in the hell they are going to move all those rotors. The next best time is just before the supply house does their physical inventory. They don't want 4 or 5 pallets of theose things sitting in the warehouse that they are going to pay taxes on. Tell them you can take some of them off their hands if the price is right.

    Jerry R
     
  5. Grassmechanic

    Grassmechanic LawnSite Silver Member
    Posts: 2,697

    Correct me if I'm wrong, but I remember reading in the newspapers some time back that Rainbird was closing it's manufacturing plant in Glendora, Ca and moving it's operations to Mexico. The only thing left in California is the company headquarters. I forget how many jobs they said would be lost, but it was quite substantial. My guess is that a rotor would cost around a dollar to make in Mexico.
     
  6. greenworldh20

    greenworldh20 LawnSite Senior Member
    Posts: 659

    jerry,

    thank you for the insight on the supply side. we all know that the supplier and manufacturer has to make a profit...this is what makes the world go round. i just wanted to see if what i pay per rotor, valve, etc... was what it should be...which it seems it is.

    i did not know that august is the best time to purchase material. i shall save my pennies for august.

    thanks again for the insight. are you still on the supply side or did you jump to the 'contractor's' side?

    brian
     
  7. jerryrwm

    jerryrwm LawnSite Bronze Member
    Posts: 1,274

    Back in the trenches for the last 5 yrs. Mainly repair and maintenance. I'll leave the install chasing to the knuckle heads that are still pricing systems at the same price we did 20 yrs ago.

    Jerry
     
  8. Georgia Bull Dog

    Georgia Bull Dog LawnSite Member
    from NJ
    Posts: 47

    Brian:
    You would be shocked if you knew the actual costs. I agree the pgp is around $3 the pipe is around $7 1 inch 300 '. I just got in from Ecuador , so brian give me a call when you can.
    Noel
     
  9. greenworldh20

    greenworldh20 LawnSite Senior Member
    Posts: 659

    i shall...noel.

    brian
     

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